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European commission open innovation 2012


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The Open Innovation Platform of the European Commission posted an article which represents one perspective of the need to create a new societal fabric for user-centric innovation, especially for the …

The Open Innovation Platform of the European Commission posted an article which represents one perspective of the need to create a new societal fabric for user-centric innovation, especially for the services sector. The knowledge-intense services will be the key for the creation of new growth beyond the economical and partly societal turmoil we are currently in. Also, in this paper, possible new drivers for growth are elaborated, as well as the possible enablers for new types of entrepreneurship and sustainable societal and economic development.

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  • 1. Open Innovation 2012 Information Society and Media
  • 2. EUROPEAN COMMISSION Open Innovation 20122012 Directorate-General for the Information Society and Media
  • 3. Europe Direct is a service to help you find answers to your questions about the European Union Freephone number (*): 00 800 6 7 8 9 10 11 (*) Certain mobile telephone operators do not allow access to 00 800 numbers or these calls may be billed.LEGAL NOTICEBy the European Commission, Directorate-General for the Information Society and MediaNeither the European Commission nor any person acting on its behalf is responsible for the use which might be made ofthe information contained in the present publication. The European Commission is not responsible for the external websitesreferred to in the present publication.Disclaimer: This report represents the views of the authors, and is not the official position of the EuropeanCommission services.This work is licensed under a creative commons Attribution-Noncommercial-Share Alike 3.0 Unported licence, available are free to Share — to copy, distribute and transmit the work, and to Remix — to adapt the work, under the followingconditions:Attribution — You must attribute this work to the author, but not in any way that suggests that they endorse you or your useof the work.Non-Commercial — You may not use this work for commercial purposes.Share Alike — If you alter, transform or build upon this work, you may distribute the resulting work only under the same orsimilar licence to this one. a link to this web page.More information on the European Union is available on the Internet ( data can be found at the end of this publication.Luxembourg: Publications Office of the European Union, 2012ISBN 978-92-79-21461-5doi:10.2759/67300© European Union, 2012Reproduction is authorised provided the source is acknowledged.Printed in Luxembourg
  • 4. ContentsFOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8CHAPTER IPOLICY DEVELOPMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.1 Services innovation: complexity, openness, modularity, and structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 1.2 The drivers for new societal fabric: why active measures for the new societal dialogue are needed for creativity and growth in the wisdom society . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 1.3 Unlocking the digital future through open innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 1.4 Reflections on policy, regulation and governance for open innovation: towards a research and policy ‘enabling framework’ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 1.5 Rights or limitations: an autopsy of business-model based copyright regulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .36 1.6 Socio-economic impact of open service innovation supporting the Digital Agenda . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42 1.7 Pioneering regions and societal innovations as enablers for the Europe 2020 strategy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .48 1.8 New governance models towards a open Internet ecosystem for smart connected European cities and regions . . . . . . . . .62CHAPTER IITRENDS AND COUNTRY REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72 2.1 Innovative cross-border eSolutions and eServices development in the Danube eRegion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 . . . . . . . . . . . . .80 2.3 Managing innovation in the public sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .91 2.4 Innovation partnerships for next generation public services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .94CHAPTER IIIINTERESTING CASES AND EXAMPLES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98 3.1 Idea Crowdsourcing at Nokia — 12 months wiser . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .98 3.2 How cloud computing can take service innovation to the next level . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 103 3.3 SAP Research Living Labs — a perfect infrastructure to drive open innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105 3.4 Promoting serendipity in research: semantic keyword analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109 3.5 The application of Open Innovation 2.0, engaged scholarship and design science research in the Innovation Value Institute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .114 3.6 Navigating intellectual capital of nations for service Innovation in the European Union . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 118 3.7 Mapping the intellectual capital of post-Soviet states . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123 3.8 Dialogues Incubator: open service innovation in the financial sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 130ANNEXOPEN INNOVATION STRATEGY AND POLICY GROUP OISPG . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135
  • 5. 4 O P E N I N N O V A T I O N 2 0 1 2 Dear colleagues and partners in service innovation! Experimentation (EAR, Experimental and Applica- tion-oriented Research) has increasing importance It is a great pleasure for me to introduce you the for achieving scalable results more rapidly, as faster third edition of Open Innovation 2012. The year- innovation cycles are key success factors on which books have gained a good reputation describing Europe needs to build its future competitiveness. new developments and emerging ideas of open innovation in services domain. Co-creativity and user involvement are ingredients in professional services development in the new The first articles illustrate the most recent policy Internet era. We need to move from PPP (Public- developments and highlight some emerging trends. Private Partnership) to PPPP (Public-Private-People Moving forward in the yearbook, you can find a partnership) where scalability, reuse and functional good collection of insights to service innovation and semantic standardisation of the solutions are based on studies, real-world cases and practical essential. The open data concept is emerging with experience ranging from the national to regional its natural progress towards open standardised and company level. information, enabling mash-up of the data to meaningful applications and new services. Stand- The term ‘open innovation’ is used in many strat- ardisation of information will be as important egy documents in relation to the contribution of for the creation of the new web-based services openness to growth and jobs, and for sustainable industry in Europe as was the standardisation of societal development. The experience leads to a communications for the creation of a strong Euro- reflection on how new entrepreneurial forms of pean mobile communications industry some open innovation ecosystems can be fostered as 20 years ago. well as user engagement as creators giving value to open community-based innovation and user-centric Welcome to the community of service innovation! service development. I wish you an interesting and inspiring read! The new entrepreneurship ranging from micro- multinationals, new knowledge-intense local ser- vice providers and, for example, social enterprises, all taking advantage of next generation Internet and the societal transformation, are examples on how new service innovation can contribute to the Bror Salmelin growth, jobs and well-being. It is about creating a Adviser to the Directorate H favourable environment for letting ideas turn into European Commission products and services in real-world settings. Directorate-General for the Information Society and Media
  • 6. 5IntroductionWelcome to a very exciting issue of the OISPG Open governments has become more and more impor-Innovation Yearbook 2012. Globally, we are seeing tant. In the 21st century, mastery of and improvingincreasingly more frequent and deeper levels of net- productivity of knowledge assets will be at least asworking and interaction between different organisa- important as mastery and improvement of physicaltions and new virtual innovation ecosystems being assets and resources. EU Digital Agenda Commis-established. Open Innovation 2.0 could be defined sioner Neelie Kroes recently said that ‘Data is theas the fusion of Henry Chesbrough’s open innova- new gold,’ as she spoke about the EU open datation concept and Henry Etzkowitz’s triple helix in- strategy meaning that public data, generated bynovation concept. Triple helix innovation is about many administrations can become the feedstockachieving structural innovation improvements for many new services and applications. Similarly,through proactive collaborations between industry, EU Research Commissioner Maire Geoghegan Quinnacademia and government. We are seeing more and said at her EU hearing prior to her appointment thatmore open innovation increasingly based on a ‘triple ‘knowledge is the crude oil of the 21st century,’ andhelix’ arrangement of industry, government and uni- thus our ability in Europe to leverage the collectiveversity interaction. The impact of this collaborative intelligence of the entire community can createinnovation goes well beyond the scope of what any great opportunities in our future knowledge society.organisation could achieve on their own. Intel’s an-nouncement of collaboration with Imperial College Two of the flagship initiatives of Europe 2020,London and University College London to create a Digit al Agenda and Innovation Union, have gainedsustainable and connected cities research institute increasing traction and are accelerating in London will go beyond this to include broader so- In parallel, there is a growing case for specific focusciety in a quadruple helix innovation arrangement. on, and enablement of, open innovation. The exist-Collaborating with citizens to understand what they ing seventh framework programmes and the fu-might want in a future sustainable and connected ture Horizon 2020 programme are key supportingcity maps very well to the idea of user-centric and mechanisms for open innovation but we need moredriven innovation which we discussed in previous research and education around open innovation.OISPG reports. The numerous research publications of the OISPG in the past year have made important contributionsIn a generative knowledge economy, industry is to this area. Bruno Hoyer’s report, ‘Unlocking theseen as the locus of production (product or ser- -vices), governments provide a stable and defined lectual Capital Approach’, provides a critical analy-regulatory environment, o en as well as invest- sis of open innovation as structural capital. In addi-ments and investment incentives, whilst the role tion, the report OSI: Socio-Economic Impact of Openof universities is changing from primarily providing Service Innovation, led by Logica in the Netherlandsa supply of trained people and education to also is an important contribution to defining the valueproviding primary knowledge for the innovation from open service innovation.process. One example of triple helix innovation isIntel’s network of Exascale Computing labs which In Europe, we need to emphasise high expectationhave been established in Belgium, Germany, Spain entrepreneurship as a mechanism for stimulat- ing jobs and sustainable growth. High expectationuniversities and national agencies to jointly perform entrepreneurship occurs when an emerging disrup-the research which will inform the design of the tive technology collides with high ambition and isExascale computer of the future as well as under- especially important as, according to the Global En-standing how best to take advantage of Exascale trepreneurship Monitor, high expectation entrepre-capabilities. neurs contribute up to 80 % of all jobs. Knowledge- based service industries are especially suitable asAs the information or knowledge intensity of prod- candidates for high expectation entrepreneurship.ucts and services increases, the creation, diffusion We should consider what we need to do to help theand utilisation of knowledge in industry and
  • 7. 6 O P E N I N N O V A T I O N 2 0 1 2 We should consider how Europe can be a leader in harnessing and creating value from the three mega trends I discussed in last year’s foreword (i.e. digital transformations, sustainability and mass collab- oration). With the accelerating confluence of these Prof. Martin Curley, three trends, I think, for Europe, opportunity knocks. Director, Intel Labs Europe Happy innovating! Chair, EU Open Innovation Strategy and Policy Group
  • 8. 7AcknowledgementsLast name First name Company/organisation E-mailAlmirall Esteve ESADE Business School esteve.almirall@esade.eduAyvazyan Naira Center for Scientific Information Analysis and Monitoring, Yerevan, ArmeniaBakici Tuba ESADE Business School tuba.bakici@alumni.esade.eduBlažina Igor Cave Postojnska jama Igor.Blazina@Postojnska-jama.siBratkovič Chamber of Commerce of Dolenjska and Bela KrajinaBria Imperial College London Henry Garwood Center for Corporate Innovation and Haas School of Business, UC Berkeley and ESADE Business School, Ramon Llul University, SpainCurley Martin Intel Labs Europe and National University of Ireland MaynoothDamaskopoulos Takis The European Institute of Interdisciplinary Research (EIIR)de Vos Henny Novay Henny.deVos@novay.nlDonnellan Brian Innovation Value Institute Brian.Donnellan@nuim.ieEdvinsson Leif Universal Networking, Intellectual Capital, Norrtalje, SwedenErkinheimo Pia Nokia pia.erkinheimo@nokia.comGričar Jože University of Maribor -Mb.siGzoyan Edita Center for Scientific Information Analysis and Monitoring, Yerevan, ArmeniaHaaker Timber Novay Timber.Haaker@novay.nlHarjanne Karoliina Nokia karoliina.harjanne@nokia.fiHoyer Bruno European Commission, Directorate-General for the Information Society and Media (2010–11)Huuskonen Mikko Directorate-General for the Information Society and Media, European Commission (10.2011–2.2012)Janssen Wil Novay Wil.Janssen@novay.nlKovačič Iztok Municipality of Šentrupert Iztok.Kovacic@Sentrupert.siKrauchenberg Georg Danube Region Strategy Georg.Krauchenberg@WKO.atKune Hank Educore hankkune@educore.nlLankhorts Marc Novay Marc.Lankhorst@novay.nlLee Melissa ESADE Business School melissajo.lee@alumni.esade.eduMarkkula Markku markku.markkula@aalto.fiMeijer Geleyn Amsterdam University of Applied Sciences (HvA) g.r.meijer@hva.nlMusacchio Saman Hypios sam@hypios.comPuschke Carsten SAP AG carsten.puschke@sap.comRoos Jaspar Dialogues Incubator Corporate Venturing of ABN AMRO BankSadowska Anna The European Institute of Interdisciplinary Research (EIIR)Salmelin Bror European Commission, Directorate-General for the Information Society and MediaSargsyan Gohar Logica gohar.sargsyan@logica.comStankovic Milan Hypios milstan@hypios.comTurkama Petra Aalto University, Center for Knowledge and Innovation Research (CKIR)van Dorenmalen Harry IBM Europe Jonathan ESADE Business School jonathan.wareham@esade.eduYeh-Yun Lin Carol National Chengchi University, Taipei, Taiwan by:Honka Anni European Commission, Directorate-General for the Information Society and Media
  • 9. 8 O P E N I N N O V A T I O N 2 0 1 2Executive summary The Open Innovation 2012 follows the Service same time, the fair share of the developed value Innov ation Yearbook 2009–10 and the Service spills over back to the initiators. This, together with Innovation Yearbook 2010–11. All these yearbooks increased societal capital, enables better value have three complementary parts: the first on policy propositions for all stakeholders. development, the second on trends and weak sig- nals in service innovation, and the third on cases In the third part, the case descriptions and coun- and open innovation development in countries and try reports follow the recent development of open regions. innovation practices through cases, for example, in the context of Dutch or Danube region or in In the first part, new societal drives for service the cases presented by, for example, Nokia. Col- in novation merging from Maslow’s hierarchies of laboration partnerships between public and private needs and from Schwarz’s universal values are sectors are illustrated as well. In this context, it highlighted. The first part also covers the creation is important to analyse the different roles of the of innovation-friendly environments and the links stakeholders. Cloud computing seems to be one between the Digital Agenda and open innovation important tool which enables new types of interac- creating societal and structural capital for competi- tions needed for co-creativity and innovation. This tiveness and sustainable development. In addition, is illustrated in the articles by IBM and SAP. Articles discussions on the need for embedding open inno- about interesting approaches to semantic keyword vation into policy measures, including new openings analysis and open innovation models in practise in the legislation to foster fair sharing as a basis for show both the problematics and the power of Open wealth creation, have arisen. Innovation 2.0. The first part reflects also the findings of the study The third part of the yearbook contains also inter- OSI: Socio-Economic Impact of Open Service Inno- esting follow-up to the last year’s edition: Intel- vation. This study was published earlier in the lectual and structural capital trends in several OISPG publication series, but its key findings are countries are analysed, with an interesting new also available in this yearbook. approach focusing on service innovation potential. The second part interlinks regional innovation with - the overall concept of open innovation ecosystems book, one can clearly see that open innovation is leading to new policy measures for the regions. knowledge society’s approach to well-being and To have a holistic range of actions supporting the sustainable development, both societally and eco- emerging innovation processes and ecosystems, nomically. Open innovation can be very relevant discussion on the governance models of the future when seeking and verifying the applicability of dis- Internet and its implementation to service society ruptive innovation outcomes in the society. These has arisen. Issues like privacy and trust are very insights from a variety of views to service inno- important in the open development processes. vation are hopefully very stimulating to the reader They ensure the business potential and, at the who wishes to enter the new mainstream.
  • 10. 9CHAPTER IPolicy development1.1 Services innovation: complexity, openness, modularity, and structureAs is evidenced by volume, it is now well known that to treat services as peripheral to their core business.most leading economies in the world are increas- Now services are at the core of a new, larger, fasteringly dominated by services businesses. Yet we growing business for each of them.know surprisingly little about how such businessesadvance and improve over time. Most of what we Services can also strengthen a company’s competi-know about innovation comes from decades of tive position, making it harder to attack. Consider theresearch into the creation of new products and iPod, iPhone and iPad. Companies like Dell, Microso ,technologies. But services are not the same thing and Google have tried valiantly to unseat Apple inas products and technologies. They are not phys- the cell phone and personal music player markets. Toically tangible, they are usually consumed when date, though, their efforts have been unavailing, anddelivered, they cannot be inventoried, and theyo en require close interaction between the provider iPhone are no longer merely products. Instead, theyof the service and the consumer. If we are to con- are platforms for the distribution and delivery of atinue to advance innovation in the 21st century, we range of services that make Apple’s devices far moremust learn how to advance innovation in services valuable for their customers. So a competitor cannotbusinesses [1]. succeed in an attack against Apple on the basis of a better product alone. Instead, that competitor mustUnderstanding services innovation requires us to orchestrate an alternative array of services on therethink business in fundamental ways. Product- competitor’s device (a capability we explore below inbased businesses utilise artefacts to convey cus- Modularity and systems integration) that collectivelytomer requirements to suppliers and those same deliver a superior experience for users.artefacts help customers determine whether or notthe supplier has met their needs. In services busi- Here are four considerations that are vital tonesses without those artefacts, the relationship successful services innovation:with customers and suppliers changes. The com-pany cannot fully specify its needs in advance to 1. Complexitythe supplier, while the company cannot describe 2. Opennessfully its capabilities to meet the needs of its 3. Modularity and Systems Structurecustomers. 4. Organisational Structure.A services perspective also changes the competitive Complexitylandscape. Customers can become partners, as can The lack of a tangible product means that eachsuppliers. Competitors become collaborators. Stran- party in a transaction needs the other’s knowledgegers become important, even vital, to competitive in negotiating the exchange. On the one hand, thesuccess. Integrating these disparate inputs into new, provider lacks the contextual knowledge of the cus-coherent systems and architectures becomes a key tomer’s business and how the customer is going tosource of value in a world dominated by services. leverage the offering to compete more effectively in the market. At the same time, the customer doesAdopting a services innovation perspective requires not know the full capabilities of the provider’s tech-making significant changes, and such drastic nologies or its experience from other transactionschanges are costly, and time-consuming for compa- in assessing what will work best.nies. Yet many companies have profited from mak-ing the change. Consider IBM in enterprise comput- This contextual difficulty should not be carried tooing. Or Rolls-Royce and GE in aircra engines. Or far. The prevalence of services in advanced indus-Xerox in copiers and printers. Or Philips in electronics trial economies shows that suppliers and customersand (now) healthcare. Each of these companies used usually are able to exchange enough information
  • 11. 10 O P E N I N N O V A T I O N 2 0 1 2 to accomplish the exchange. When the service participants in the industry, more companies can provided is modest in complexity and repeatedly experiment in parallel with possible ways of utilis- provided over time (think of a haircut in a salon, ing and combining knowledge [4]. No single com- for example), the provider and customer need to pany can hope to compete with this external explo- exchange only limited amounts of information, and sion of potential offerings by relying entirely on its can do so over many repeated attempts, so that own internal knowledge. While internal knowledge errors at one exchange can be corrected in the next. and resources may be deep, they are necessarily limited in scope. Combination and experimentation When the complexity of the exchange becomes proceeds in series within the firm, rather than in very large, and when the exchange is repeated only parallel in the market. The only way forward is for seldom or not at all (think of installing and operat- firms to become integrators of both internal and ing an enterprise resource planning system for your external knowledge. company), the technical complexity and the lack of repeated experiences between the parties makes Performing the integration function effectively the full exchange of information vitally important requires a high degree of systems knowledge, of to achieve, yet daunting to accomplish. how the various elements of a system work, and how they might be combined together in useful As technical complexity rises, the services cus- tomer becomes a co-producer of a service innova- of the system without regard to the overarching tion, intimately involved in defining, shaping and system (and its further development), are at risk integrating the service into his organisation. The of falling into a ‘modularity trap’ [5]. In this trap, supplier of the service can extend an offer of what the design rules and interfaces that connect the is to be provided but, as we shall see below, it can- specific part of the system to the overall system not entirely specify the requirements of the service. evolve over time in ways that disadvantage firms Instead, the supplier designs its processes to elicit who have lost essential knowledge of the system’s this information from its customers, and modifies architectural evolution. the offering in response to customers’ needs before sale. In turn, customers select their service provider Modularity and systems integration on the basis of the capabilities they offer, and the By developing a standardised product design based extent to which the customer is able to shape those on modular components that can easily be config- capabilities to serve their particular needs. ured and reconfigured for a variety of customers needs, firms can combine the cost advantages of Openness high-volume production (components) with high In an open model of innovation [2], firms use in- flexibility or customisation of final product. The ternal and external sources of knowledge to turn interfaces linking components into a system can be new ideas into commercial products and services made compatible so that multiple components can that can have internal and external routes to mar- be specified, adjusted and integrated in various pre- - determined ways to the varying customer or mar- nies like the BBC face the challenge of successfully ket demand. Modularity provides a resolution to the responding to the proliferation of new digital media trade-off between price and customisation: offer- technologies and markets [3]. The BBC set up a kind ing the cost advantages of economies of scale and of open source community to engage with numer- scope in standardised component production, while ous external individuals and firms through a pro- providing a higher degree customisation of the final cess of open innovation experiments called ‘BBC product. Backstage’. External developers were encouraged to use its website established in May 2005 — of- Although the literature on modularity and plat- fering live news feeds, weather and TV listings — to forms is almost exclusively concerned with manu- create innovative applications. factured products, the industrial marketing litera- ture suggests that such approaches can be applied Openness allows organisations like the BBC to to combinations of product-service offerings [6]. focus on combining its internally generated con- The hardware or ‘product components’ are the tent with externally sourced content, to simulta- physical pieces of technology that form a specific neously create greater economies of scope for function in the overall system; and the so ware or its audience, and economies of scale for its con- ‘service components’ are the knowledge or intan- tent producers. A related benefit comes from the gible human efforts to solve customer’s problems participation of many more firms in the market. by performing activities to design, build, operate With the diffusion of more knowledge to more and maintain a product.
  • 12. 11Like product components, services can be developed while reducing its dependence on in-house tech-into standardised, simplified and routinised methods nology by offering to design, integrate and supportof operation. Rather than being offered on an ad hoc a competing vendor’s products (e.g. HP, Microsobasis at the request of a each customer, services and Sun) if this was required to provide integratedcan be developed and ‘packaged’ into routines and solution to customer needs [9].performed as repeatable processes. However, aswith products, there are limits to standardisation As noted above, the customer must interact within highly complex service situations, because ser- the supplier at various points in the services processvices are o en individually designed and tailored without recourse to tangible artefacts like a specific customer’s needs — such as an air- Product-based businesses leave it to the customerline, telecoms operator or railroad company — and to perform the final installation and integration ofuniquely provided to address phases in life of a spe- the item into the customer’s process. Service busi-cific product, such maintaining and support a fleet nesses deliver the benefit to the customer by takingof trains. over the integration of the item.Given the potential value in identifying, assem- Organisational structurebling, connecting, integrating and testing complex The above elements of services innovation thatservices, the evolution towards services is usher- we have identified, including the role of complex-ing in a new kind of value-added activity: systems ity, the value of openness, and the importance ofintegration. Those who provide this capability are systems integration, all have powerful implicationsresponsible for the overall system design, selection for organising services innovation. On the one hand,and coordination of product and service compo- organisations need to provide intimacy with the cus-nents supplied by a network of external suppliers, tomer, to enable the customer to co-create solutionsthe integration of components into a functioning to their specific needs. The organisation likely willsystem, and the continuing development of know- want to offer a broad services integration capabilityledge to keep pace with future generations of to its customers, enabling access for the customertechnology and system upgrades [7]. to a vast array of offerings through the organisa- tion. In this sense, the organisation will need to gen-In an industry characterised by outsourcing and erate substantial economies of scope in serving the‘open innovation’, systems integrators are uniquely many and diverse needs of its customers.positioned to link or couple upstream develop-ments in technology and products with down- New organisational structures are emerging tostream requirements of customers and rapidly provide customer-focused services and solutionschanging markets. The systems integrator model of based on a range of standardised and customisedindustrial organisation emphasises the advantages offerings. These new structures are designed toof specialisation at the systems and component resolve the trade-off between standardisation andlevels, based on modular components supplied by customisation. They are responsible for developingmany external companies, standardised interfaces, standardised ‘solutions-ready’ components, thatand an ability to integrate multi-vendor sources of can be combined and recombined at much lesstechnology, products and services [8]. cost than solutions comprised of entirely custom- ised components [10]. Each solution can be tailoredAn example of the emergence of a systems inte- to a customer’s unique requirements using stand-gration capability comes from IBM. The IBM ardised, reusable and easy-to-deploy modularSystem/360 was based on a modular design, but products and components.the so ware components and interfaces were pro-prietary. Once a customer had purchased an IBM Some large companies that have developed growingcomputer, the complex operating system made it services businesses — such as IBM, Sun Microsys-difficult to switch to another vendor’s system. The tems, ABB, Nokia and Ericsson — have reorganisedcustomer was locked in to IBM’s hardware, so ware to form ‘front-back’ structures designed for efficientand service support. By the 1980s, a new organisa- and repeatable solutions provision [11]. These busi-tional model challenged the traditional advantages nesses have formed ‘front-end’ customer-facingof vertical integration. Many specialised suppliers units to develop, package and deliver customisedof modular components began to challenge IBM’s solutions for individual clients across product anddominant position. Rather than mirror the structure geographic lines. The traditional product-based divi-of the industry by breaking up IBM to create a num- sions have been reorganised into ‘back-end’ provid-ber of specialised suppliers, Louis Gerstner, IBM’s ers of standardised solutions-ready components,CEO, executed a strategy to move into services, o en developed as common technology and product
  • 13. 12 O P E N I N N O V A T I O N 2 0 1 2 platforms that can easily be configured for individ- Contact ual customers. In addition, some companies have set up service divisions — such as IBM Global Ser- Henry Chesbrough vices and Ericsson Global Services — as back-end providers of services, capabilities, processes, guar- for Corporate Innovation antees for service reliability, pricing and resources. Both types of back-end units provide solutions- UC Berkeley ready components that can be mixed and matched Information Systems Professor, ESADE Business in different combinations by the front-end units. School Ramon Llul University, Spain A ‘strategic centre’ manages the interfaces and flows of knowledge and resources between the two operational units. This ‘reconfigurable organisation’ References can adapt and respond to continuous changes in technology, sources of component supply and cus- [1] Chesbrough, H. and Davies, A. (2010), ‘Advancing world’s largest supplier of cellular phone networks) Kieliszewski, C. and Spohrer, J. (eds), Handbook of Service Science, Springer, New York, NY. has created back-end units — Ericsson Gobal Ser- vices and Ericsson Systems — and formed 28 mar- [2] Chesbrough, H. (2003), Open Innovation: The New Imperative for Creating and Profiting from Technology, ket units and individual front-end units — such as Harvard Business School Press, Boston, MA. Ericsson Vodafone — dedicated to the requirements of its large cellular network customers [1]. [3] Bessant, J. and Davies, A. (2007), ‘Managing Service Innovation’, DTI Occasional Paper, No 9, Innovation in Services, 65–94. Companies like Amazon now offer their back-end transaction processing services over the Web [4] Baldwin, C. Y. and Clark, K. B. (2000), Design Rules: The Power of Modularity, MIT Press, Cambridge, MA. through the Elastic Cloud computing service. Utilis- ing Amazon’s Elastic Cloud service gives companies [5] Chesbrough, H. and Kusunoki, K. (2001), ‘The access to world-class IT processes, and saves them Modularity Trap: Innovation, Technology Phase-Shi s and the Resulting Limits of Virtual Organizations’, the cost and headaches of developing and main- in Ikujiro N. and Teece, D. (eds), Managing Industrial taining such an infrastructure. Amazon also clearly Knowledge, Sage Publications. benefits, both from the additional revenue that [6] Davies, A., Brady, T. and Hobday, M. (2007), comes from opening its infrastructure to others, ‘Organizing for solutions: systems seller vs systems and also from sharing its infrastructure costs with integrator’, Industrial Marketing Management, Special a larger base of volume. So Amazon’s internal costs Issue, Project marketing and marketing solutions, go down, even as its revenues go up [12]. 36: 183–193. [7] Brusoni, S., Prencipe, A. and Pavitt, K. (2001), Conclusion ‘Knowledge specialization and the boundaries of This volume clearly establishes the growing impor- the firm: Why do firms know more than they make?’, t ance of services — and services innovation — in Administrative Science Quarterly, Vol. 46, 597–621. an advanced economy. We can learn much about [8] Prencipe, A., Davies, A. and Hobday, M. (eds) (2003), innovating services from the product management The Business of Systems Integration, Oxford University Press, Oxford. literature. Yet important departures from the world of products are necessary in order to grasp the [9] Gerstner, L. V. (2002), Who Said Elephants Can’t challenges and opportunities inherent in innovating Dance? Inside IBM’s Historic Turnaround, Harper Collins Publishers, London. services businesses. [10] Galbraith, J. R. (2002b), Designing Organizations: Innovative service organisations must be mindful An Executive Guide to Strategy, Structure, and Process, Jossey-Bass, Wiley, of the underlying systems knowledge required to identify, access, and leverage the wealth of external [11] Davies, A., Brady, T. and Hobday, M. (2006), knowledge surrounding them. They must be open, ‘Charting a path toward integrated solutions’, MIT Sloan Management Review, Spring 2006, 39–48. and strive to avoid the ‘not invented here’ syn- drome that neglects the external as they develop [12] Chesbrough, H. (2011), Open Services Innovation: the internal. And they would do well to consider Rethinking Your Business to Grow and Compete in a New Era both the customer-facing side of their business and the back-end transactional side of their business, in order to achieve both economies of scale and scope in their markets.
  • 14. 131.2 The drivers for new societal fabric: why active measures for the new societal dialogue are needed for creativity and growth in the wisdom societyThis article represents one perspective of the need did before, just ‘better’ and ‘more effectively’, veryto create a new societal fabric for user-centric much based on those paradigms we were familiarinnovation, especially for the services sector. The with in the industrialised society.knowledge-intense services will be the key for thecreation of new growth beyond the economical and -partly societal turmoil we are currently in. out putting enough thought into the fundamen- tal change we are in. It is not about transformingThe knowledge society is in transformation to the something into an electronic format. The change iswisdom society, where information and knowledge much more profound. Society is moving from a hier-is not only seen as a raw material for normal activi- archical and controlled to something where citizenties, but where the structural use (mash-up) of empowerment together with value-based commu-societal and technology innovation is based on new nities will have a profound role. This is already seentypes of connectivity and value aggregation. around us in people’s behaviour, but also in the new innovation processes where connectivity of skillsIn this article, possible new drivers for growth are and values are increasingly important.elaborated, as well as the possible enablers for newtypes of entrepreneurship and sustainable soci- What has changed? When we look at the technologyetal and economic development. We need to see revolutions and the following industrial and societalhow to build the new societal fabric for innovation revolutions a hundred, two hundred years ago weand sustainable development both societally and need to have a focus on the transformative natureeconomically. most recent revolution, the ICT revolution, has itsBackground transformative power in the fact that, for the firstWe are in a bigger societal change than ever before time in mankind’s history, our society is moving toin mankind’s history. The information and commu- less hierarchical one, simultaneously both in timenication technologies have already affected human and space.behaviour fundamentally, by enabling wide demo-cratic connectivity and easy information availability What does that mean? Now, more than 10 yearsat our fingertips. a er the beginning of this revolution we see the power of crowds, and also new business modelsHowever, when we look at the current eDrivers seriously conquering the old ‘dinosaur’ models(eCommerce, eGovernment, eServices, etc.), we still which were valid in the industrialised era. We aresee that there is a strong trend to do things as we now in the hype of the ‘knowledge society’ whereFigure 1. A lot of keywords — what is behind them — the real world in change!
  • 15. 14 O P E N I N N O V A T I O N 2 0 1 2 Fundamental change – a revolution! Figure 2. Handicraft Industrial E-business E-life + e-work Space Local Multinational Inherently global Operation Sequential Parallel Strategy Win-lose Win-win Competitive factor Skills Capacity Multi-skill Innovation Energy Transportation Materials Individual Information Communication mobility processing 1800 1850 1900 1950 1980 2000 information and knowledge is accessible and being assume that Maslow’s hierarchies of needs are a part of the competitiveness of organisations and also individuals. But, the biggest issue is still how to create the societal fabric which will take Largely, in the Western world, the basic physiologi- us to the wisdom society, following the enablers cal and safety needs are in policy focus and, there- and also drivers ICT is creating, for connectiv- fore, we also can say that those are not necessary ity, for leadership leading to a both societally and the main issues for new policy actions, enabled by environmentally sustainable society. societal connectivity. The drivers of individuals and society When looking at the changes in societal behaviour, The change is inevitable. However, we need to see in we see that the levels of esteem and self-actuali- this new context some of the time-invariant drivers sation start to grow both in ICT applications (social over the various revolutions. Can we, for example, media) and the offerings enabled by (modern) ICT. !""#$%&##&(%)*%+,(&)-.(%/0#$,$1/2%3$0#(%1/,45# Figure 3. Upper levels of Maslow’s hierarchy drives change enabled by ICT [2] #4,6&#3%62%789 morality, creativity, spontaneity, problem solving, lack of prejudice, Self-actualization acceptance of facts self-esteem, confidence, achievement, respect of others, Esteem respect by others friendship, family, sexual intimacy Love/belonging security of: body, employment, resources, Safety morality, the family, health, property breathing, food, water, sleep, homeostasis, excretion Physiological
  • 16. 15We need to be much more active in focusing policy embedded knowledge. The ‘Maslow pyramid formeasures towards the new societal fabric, whichis clearly built on the upper levels of the Maslow this perspective. The most critical levels of successhierarchy. are cross-organisational issues, innovation culture (open, experimental, sharing) and the organisa-What does that mean for innovation? The focus of tional agility to position the competencies of thesuccessful innovation will be driving towards satis- company in the society, vis-à-vis other organisa-fying the upper-level needs, those factors increas- tions, but also among the citizens. Citizens are iningly being the differentiation factors between the new understanding not ‘objects’ for innova-successful and non-successful innovation. Hence, tion, but due to the societal fabric and nature ofuser-centricity, and even user-driven innovation innovation active players, ‘subjects’.paradigms, should be our new (European) approach. The challenge is to support the move towardsOpen innovation environments enable the wide higher level in the Maslow hierarchy to satisfyinteraction necessary for success. What is even societal needs for sustainable society. It requiresmore important is to understand the role of proto- an infrastructural change and also experimentationtyping, because then the various drivers are inter- and prototyping to see how we can match the soci-acting in a concrete way, not only conceptually. Our etal drivers, organisational drivers and individualresearch and development actions should build on needs in a robust way. To achieve a robust society,creating a strong, open innovation culture based a strong leadership is needed. A leadership enablingon prototyping (not piloting, as innovation is a true new societal contract between individuals and themash-up, no longer sequential). society, the inclusive wisdom society is the critical asset for the future.The same change can be seen in enterprises/organisations. In the industrial era, the drivers were Groups, especially value groups are driven bycost-oriented, focused on the basic, predictable agglomerated values. How to transform theand calculable value of the company or company described needs towards values is one of theclusters. key questions when we try to see new openings for growth and entrepreneurship in the field ofHowever, when we see the new operating citizen-close services.environment for knowledge-intense companieswe see the transformation from tangible products The universal value theory of Schwarz createsto intangible ones, or products and services with an interesting approach in the strategic thinking The innovatio culture and agility are the drivers for future enterprisesFigure 4. The innovation culture and agility are the drivers for future enterprises and organisations [3] and organizations soft impact on organizational success organizational measurability of bebefits agility innovation culture cross-org collaboration employee satisfaction customer satisfaction revenue generation cost-savings hard
  • 17. 16 O P E N I N N O V A T I O N 2 0 1 2 Figure 5. The universal values by Schwarz create an interesting framework to look at the values of new types of entrepreneurs and enterprises [4] Openness to Self- Change Direction Universalism Self- Creativity, Social Justice, Transcendence Freedom Equality Stimulation Exciting Life Benevolence Helfulness Hedonism Pleasure Conformity Tradition Obedience Humility Devoutness Achievement Success, Ambition Security Power Social Order Conservation Authority, Self- Wealth Enhancement Organized by motivational Source: similarities and dissimilarities of how to transfer the individual needs described also in special focus when looking at new entrepre- by Maslow to a more group and society-oriented neurship: how to create platforms for global develop- ment and experimentation for the ideas to be veri- fied in real-world settings, without too much risk, and Based on interesting study results, we see new providing a fair share of the return to the creators. types of values emerging, supporting the openness to change, self-direction and also self-enhance- Necessity of new approach ment. A good in-depth analysis is found, for exam- When speaking about the creation of new societal ple, in the discussion papers of the Selusi project fabric, new entrepreneurial forms and new extra- [5] funded by the European Commission. The project preneurship, co-creativity of services is important. focuses on social enterprises and entrepreneurs, The need to create knowledge-intense services widening the definition also to profit making com- based on open platforms enabling new service panies operating in the societal fabric, creating it, offerings also combining the cyber world with real- and also with usually large well-established com- world offerings is increasingly important. panies. These new enterprise ecosystems seem to be more stable than the traditional ones compris- ing of old type of businesses and also, remarkably, ICT enabled platforms, the new business models, the innovation capability of these new generation of and the increased personification of services put entrepreneurs is significantly higher than those in the end-user in the driver’s seat for the new ser- traditional sectors. vice society. Knowledge per se is no longer seen as an asset, but rather a raw material only, as only As shown in the study, the traditional entrepreneurs increasingly combined with human experience and focus very much on values like power and tradition societal values can we create sustainable develop- whilst the new generation of entrepreneurship is ment, in the wisdom society, where the new societal much more based on universalism and stimulation fabric for well-being is created. based on creativity, for example those micro-multina- Growth in well-being can increasingly be achieved tionals in gaming. Micro-multinationals, that is small by intangible actions and services, provided that companies operating on global platforms, should be the basic needs are fulfilled. Hence, the drivers
  • 18. 17Figure 6. What does the average value profile of a social entrepreneur look like? [6] Universalism* Self-direction# Benevolence Social entrepreneurs appears to be Stimulation* Tradition* much less conformist and radically more Hedonism* Conformity* universalist than mainstream entrepreneurs Achievement Security* Power* Employees(ESS) Entrepreneur(ESS) Social entrepreneurs(SELUSI)from the Maslow and Schwarz theories are worth Conclusionbeing taken into closer consideration when develop- The next generation of Internet is emerging, withing new European citizen-centric innovation policies. mobility, true broadband, active interactivity andThis should also stimulate new entrepreneurship highly personalised services. However, we are cur-and new forms of wealth in the economy. rently relatively weak in driving the applications forward following the paradigm shi s in society,The traditional innovation pyramid is reversed, and setting the user in the centre (user equals citizens,there is no return. firms, etc.) We need to have a deeper look at the new societal fabric for innovation, building on theFigure 7. Reverse innovation pyramid [7] Traditional approach New open innovation models Service to the customer market - no user involvment - innovation ecosystem (including users, business partners, individual App developers, etc.) Wealth generation by the service provider - no user involvment - users as innovators / participants Users as in new services creation participants of innovation - service providers capturing new services by service ideas from the users creation by providers innovating service/ service/ technology technology development development Wealth generations: - innovation Share profit - user as a customer adoption by users - service provision and adoption service providers and service - innovation ecosystem partner - fair exploitation providers dissemination and uptake - upscaling - costs - costs
  • 19. 18 O P E N I N N O V A T I O N 2 0 1 2 mash-up of societal drivers, value drivers and References technological (mainly ICT) enablers. [1] Salmelin, B. (1999), Presentation materials. Moving to user-centricity and co-creativity enabling [2] the fair and safe trial of new services on open plat- forms also requires new thinking of the legal and [3] policy approaches for the wisdom society, captur- maslow-s-hierarchy-of-enterprise-2-0-roi/ ing the societal dimension of the knowledge society. [4] Can we build new practices and principles based on the rights and the roles of the citizens in the [5] society? Can we create a set of fundamental rights [6] Stephan U. (2011), Creativity and Innovation of in the digital context which cannot be violated in any situation, thus enabling more freedom to make Conference, Brussels, 6 October 2011. prototypes and trials on new business and service [7] OSI Consortium (2011), Socio-Eonomic Impact models in the real-world settings? of Open Service Innovation Directorate-General for the Information Society However, when we look at the real issues, we need and Media (SMART 2009-0077) (http://ec.europa. to be very active on the political level to create ). rules, principles and practices on how the new society is shaped. What are the rules of the game regarding privacy, commercial v citizen rights? What do we want the future societal fabric to look like? Can we move into a development paradigm based on real-world prototypes and trials, encompass- ing the technology, society and policy frameworks, integrating them in experimental way, developing simultaneously the various components of the future society? It is right time to think about a new approach seriously, and lead the way by courageous pan-European actions. Now is the time to initialise the debate on the future wisdom society, its values and principles. What is the new contract between citizens and the society, in the new era? Contact Bror Salmelin Adviser to the Directorate H Directorate-General for the Information Society and Media European Commission
  • 20. 191.3 Unlocking the digital future through open innovationNeelie Kroes, Vice-President of the European this case the actions and policy formulations of theCommission and EU Commissioner for the Digital Digital Agenda, to be successfully delivered.Agenda for Europe (DAE), argues, “key to achievingmany of our competitiveness and innovation ambi- Digital Agenda for Europe — the contexttions in the coming years (…) is to embrace open The European Commission, in consultation with dif-innovation and platforms, so that we avoid wasteful ferent stakeholders, launched the Digital Agendaplatform competition, and anticompetitive lock-ins, for Europe to exit the economic crises and to faceas well as stimulating development and investment societal challenges such as demographic changein new generations of online services” [1]. and global competition in all economic sectors.The Digital Agenda for Europe was launched on The Digital Agenda sets out 101 actions clustered19 May 2010 as the first of seven flagship ini- in seven pillars; these actions shall ensure thetiatives under the ambitious Europe 2020 strat- emergence of a European digital single market andegy which sets out the EU growth strategy for society. The seven clusters of action are Vibrantthe coming decade to a smart, sustainable and single market, Interoperability and standards, Trustinclusive European economy. Research and Development (R & D), Digital literacy,In order to challenge the economic crises, slowed Inclusions e-Skills and Societal challenges (publicdown economic and social progress and exposed services, health, environment) [2]. The seven fieldsstructural weaknesses in Europe’s economy, the of action link technological and societal innovationoverall aim of the Digital Agenda is to deliver sus- within a strong framework for the future knowledgetainable economic and social benefits from a digital society, which is based on ICT infrastructures. Thesingle market based on fast and ultra-fast Internet use of ICTs in Europe is crucial to address policyand interoperable applications [2]. To achieve this, objectives in societal and economic key areasthe Digital Agenda proposes actions defining the such as an ageing society, climate change, reduc-role information and communication technologies ing energy consumption, improving transportation(ICTs) will have to play if Europe wants to succeed in efficiency and mobility, empowering patients andmaximising the social and economic potential of ICT ensuring the inclusion of persons with disabilitiesfor the benefit of European businesses and citizens. [2]. It is believed that by the right deployment of ICTs in the above mentioned fields, a digital societyIn the broader context of the policies and actions will be created with benefits for all actors involved.outlined by the DAE, it appears as if interoperabil-ity and standard-setting both for inclusive digital The deployment of ICT is a critical element inservices and eGovernment services are in need addressing climate change. So far, the EU has com-of pan-European platforms to coordinate cross- mitted to cutting its greenhouse gas emissions byborder service creation in partnership. The remain- at least 20 % by 2020 compared to 1990 levels anding question, which has been largely neglected by to improving energy efficiency by 20 % [2]. ICT forthe Digital Agenda till now, is how these emerging environment has a cutting-edge role setting stand-platforms can be aligned under common principles ards and measurement frameworks for ICT servicesand common architectures to build a genuine single and products targeted at reducing energy use andmarket ecosystem for services development and greenhouse gas emissions across Europe. Withinteraction between public, private sector actors, regards to a fast deployment of ICT-based solutionsand people. Henceforth, this article gives an insight for smart-grid and meters, near-zero energy build-into the discussion: Can open innovation give rise ings and intelligent transport systems, cooperationto open, interoperable platforms and ecosystems and partnership between industries, public authori-enabling successful implementation of policies and ties and other sectors is of vital importance to ena-actions outlined in the Digital Agenda for Europe? ble citizens and organisations to reduce their own carbon footprint [2]. ICT solutions are needed to fur-It will be argued that, from an intellectual capital ther monitor, analyse and visualise energy consump-perspective, open innovation represents the struc- tion and emissions of buildings, vehicles, companies,tural capital, while industry, academia and private cities and regions. In particular, smart grids are con-users present the human capital. Both structural sidered to lead towards a low carbon economy. ICTcapital and human capital raise the relational solutions such as open transmission-distributioncapital which enables the intellectual capital, in infrastructures, communication platforms and
  • 21. 20 O P E N I N N O V A T I O N 2 0 1 2 control panels therefore ensure cooperation and eHealth policymaking, should thus be embedded interoperability between different grids. in the general context of eGovernment services like eBusiness,eLearning, eInclusion, eSecurity and The Commission has recognised the importance of many more to make sure that developments and healthcare to European citizens as well as the tre- policymaking is not excluded from other fields of mendous potential ICT bear for stimulating market eGovernment services, which may be working on growth and innovation in healthcare systems and the same issues in different development stages. pharmaceutical and medical devices throughout Therefore, private-public-people partnership and Europe. Therefore, the DAE subscribes huge impor- consultation is vital to address the development of tance to accomplishing its eHealth targets in order eHealth services with a real-life approach. to create sustainable healthcare and ICT-based support for dignified and independent living. Pre- Broadly speaking, eGovernment which often is requisite to eHealth creating benefits for all, how- referred to as eGov, digital government or online ever is, the removal of legal and organisational government [4] refers to services enabled by a barriers, particularly those to pan-European inter- new ICT environment. eGovernment services offer operability, and strengthening cooperation among a cost-effective route to better services, for busi- Member States [2]. It appears as if there is no doubt nesses and citizens and significantly reduce time, that eHealth has the potential to create benefits for cost and administrative burdens for public adminis- all actors in society. However, eHealth does not by trations. In Europe, some eGovernment services are far present the salutary approach to the structural already available in most Member States; however, shi in healthcare that seems to be inevitable. As huge differences exist between the levels of take- Mars (2010) argues, policymakers face critical up amongst Member States. According to the Com- challenges as they attempt to develop borderless mission, in 2009, only 38 % of EU citizens used the eHealth policy amid competing demands on funds Internet for accessing eGovernment services, com- and resources [3], which as a consequence, might pared to 72 % of businesses [2]. Hardly any pub- broaden the digital divide between those capable lic services are accessible either across borders or of using and participating in the digital society and across different industrial sectors within Member those remaining excluded. This not only links to the digital literacy of Europeans, but indeed challenges pushing for a swi implementation of user-centric, eHealth and the lack of uniformity in healthcare personalised and multi-platform eGovernment policies across the 27 EU Member States, as no services by 2015. common responsibility to eHealth exists among the Member States’ policymakers. Mars [3] points out The main prerequisite for seamless cross-border how in 13 countries, the main health policymakers eGovernment services in a digital single market however is the interoperability of eGovernment ser- eHealth policy, multiple ministries and/or national vices which are accessible by businesses and citizens stakeholders are involved in planning policy. across borders. The Commission aims at challenging the lack of cross-border public service applications In addition, eHealth policy targets vary across by driving towards pan-European public services Member States resulting in a lack of adherence to solutions. In order to do so, Europe needs better seemingly common goals [3] which leads to very administrative cooperation to develop and deploy poor universal policy implementation outcomes at cross-border public online services [2]. the Member State level, lacking any real-life prac- tice. Departing from this, even though there is only ‘The European eGovernment Action Plan 2011–15 little doubt that further R & D on eHealth will stir — Harnessing ICT to promote smart, sustainable technologies, applications and services facilitating and innovative Government’, proposes key priorities the emergence of a pan-European eHealth sector. to realise the objectives on eGovernment approved There is a huge danger that eHealth applications unanimously by the fi h Ministerial eGovernment and services are implemented without increasing, Declaration, also known as the Malmö Decla- at the same time, digital literacy among patients as ration. Overall, the Malmö priorities push towards well as medical staff. It is thus of most importance more resource-efficient usage as well as engage- to take citizens on board already in the early devel- ment with citizens. The use of ICT with innovative opment stages of eHealth applications and services technologies such as service-oriented architectures to make sure that technology is user-friendly and (SOA), or clouds of services, together with more functional. With regard to research, R & D frame- open specifications which allow for greater sharing, works need to be adopted with a strong focus on reuse and interoperability reinforce the ability of security policies, practices and broadband services. ICT to play a key role in this quest for efficiency
  • 22. 21in the public sector. The eGovernment action plan, collaboration between industries, academia, andthus, complements the Europe 2020 strategy as small and medium-sized businesses, private andwell as the DAE by aiming at the implementation of public actors. In this vein, and in the context of thecross-border e-Government services for businesses Europe 2020 strategy, EU funding and frameworkand citizens by 2015, which by then shall be used programmes present the EU’s strategic approachby 50 % of EU citizens and 80 % of businesses. towards a common strategic framework for research and innovation.The Digital Agenda for Europe aims at bringingEurope back on track towards a digital single mar- -ket based on ultra-fast Internet. In order to moni- tiative focuses on advancing Europe’s R & D poten-tor the success of the DAE actions, the Directorate tial. According to the Commission, in Europe: inno-General Information Society and Media at the vation is our best means of successfully tacklingEuropean Commission has established the Digital major societal challenges, such as climate change,Agenda Scoreboard, which will be published on an energy and resource scarcity, health and ageing,annual basis at the Digital Agenda Assembly. which are becoming more urgent by the day [5]. The Commission argues that Europe has no shortage ofOverall, the Digital Agenda has a very strong inter- innovation potential, but instead fails to leverage itsnational approach to complete the actions in the potential by continuously underinvesting in R & D, indifferent clusters of action. The key challenge of the particular in comparison to the US or Japan. More-DAE, however, is the implementation of its actions over, unsatisfactory framework conditions, rangingacross Member States in accordance with the from poor access to finance, high costs of IPR (Intel- - lectual Property Rights) to slow standardisationsion will set up an internal coordination mechanism and ineffective use of public procurement [5] createto ensure effective implementation of the proposed serious disadvantages for companies who want toactions. The core principle of implementation is invest in R & D. Thereby, in Europe, we experiencecooperation and partnership with Member States, high fragmentation and costly duplication [6] acrossthe European Parliament and other stakeholders. In sectors.order to establish close cooperation with all actorsinvolved, the Commission aims at establishing a It appears as if the key challenge for the EU and‘High-Level Group’ to work together with Member its Member States is to adopt a common strategicStates, foster consultation and dialogue with mem- framework to innovation, based on common prin-bers of the European Parliament and set up large- ciples and overarching policy objectives, regulatedscale stakeholder events in the different fields of across Member States at the highest political level.action to facilitate debate and partnership. In this vein, the Innovation Union sets out such a bold, integrated and strategic approach [5], which,The Digital Agenda Assembly presents the cutting- in the next decade, has the potential to createedge event bringing together actors from Member 3.7 million jobs and increase annual GDP by closeStates, EU institutions, citizens’ representatives, to EUR 800 billion by 2025, if the Commission, inand industry to evaluate progress and emerging cooperation with public and private actors, man-challenges to the Digital Agenda for Europe. In ages to increase funding for R & D to 3 % of GDP bythis vein, the Commission published, in May 2011, 2020. Policies set out by the Innovation Union aimthe first annual Digital Agenda Scoreboard, which at strengthening Europe’s knowledge base by pro-provides a first, however, very early, update on posing actions to complete the European Researchsocio-economic developments as well as progress Area by 2014, bridging the gap between Europeanof DAE actions. As improving the EU research and and national research policies towards a commoninnovation funding and innovation partnership pro- cross-border policy approach, based on increasinggrammes, is one of the key prerequisites in order business-academia collaboration. The Commissionto stir European ICT innovation, it is worth analys- fosters the creation of a genuine single Europeaning programmes currently in place to support the market for innovation to attract innovative compa-targets set out by the Europe 2020 strategy. Thus, nies and businesses as well as to stimulate privatethe next section examines the nature and organi- sector investment in R & D and European venturesational developments of the most prevailing EU capital investments.research and innovation funding programmes. One of the most central themes of the InnovationEU research and innovation funding Union is to pool innovation efforts by involving eve-Successful implementation of actions and policies ryone in the innovation process. What has beenof the DAE requires innovation partnerships and coined European Innovation Partnerships refers to
  • 23. 22 O P E N I N N O V A T I O N 2 0 1 2 a new way of bringing together public and private processes across geographical and vendor bound- actors at EU, national and regional level to tackle aries, to advance Europe’s R & D efforts. The EU the big challenges we face such as climate change, funding programmes invest huge financial means energy and food security, health and an ageing into the innov ation cycle, largely independent of population [6]. Europe needs to efficiently pool its each other. Thereby, the EU programmes poten- innovation efforts for cooperation and partner- tially increase R & D results within each programme, ship, not only among Member States and regions, however, lack a strong cooperation and partnership approach, which would lead to more efficient use of scale in cooperation with third countries as inter- the EU budget as well as efficient R & D results to national partners. Open access to EU R & D pro- the benefits of all societal and economic actors in grammes and agreement on common research Europe. In order to increase innovation partnership, infrastructures with third countries are crucial - issues towards global scientific cooperation for ben- net Public-Private Partnership as well as the Hori- efits of all actors involved in the knowledge society. zon 2020 initiative which both aim at establishing a Therefore, The Innovation Union flagship initiative cooperation and co-creative innovation landscape to contains more than 30 actions and policies. maximise R & D benefits to European businesses and citizens. Besides, their isolated nature, EU research The Innovation Union thus makes a clear state- and innovation programmes face several shortcom- ment for better linkage of research and innovation ings with regards to their ability to boost European activities across Member States. In this vein, fund- R & D efforts. Usually, EU programmes are consid- ing of R & D should focus more on policy objectives ered to be much too complex in their deadlocked addressing societal challenges, thereby becoming structural approach to fund innovation activities in more results-driven and leveraging other public Europe. Most of the time, over-bureaucratic rules and private sources of funding. Collective inno- and procedures as well as the lack of a transparent vation efforts across Europe, in the past, presented whole-chain approach to innovation makes it diffi- a rather shattering image of high fragmentation cult to simplify and broaden access to EU funding and wasteful duplication of services and product programmes to, for example, SMEs or third-country - companies. son, EU action is needed, while the Innovation Union has kicked off integrated EU-wide strategies for Due to the lack of pan-European R & D objectives research and innovation, EU-wide programmes are linked with the current fragmented nature of EU also critical for closing our gaps with inter national programmes, R & D efforts across the Member competitors. According to the Green Paper on a States constantly create wasteful duplication and common strategic framework for EU research and inefficient spending of funding. It can be stated that innovation funding, now called the Horizon 2020 EU programmes operate in an environment in which initiative, EU research and innovation programmes most public funding for research and innovation are needed to generate a higher number of world- is administered by Member States. Yet, still too class scientific breakthroughs as they help gener- o en, this fails to take proper account of the trans- ate excellence through European-wide competition. national nature of research and innovation, leaving Moreover, an integration of policies and EU fund- synergies with the programmes of other Member ing from research to market (as in the European States or those of the EU largely unexploited [6]. Innovation Partnerships) will make Europe better at Consequently, better organisation and structure turning knowledge into innovation and the provision of EU funding programmes in close cooperation of services to support innovation processes beyond with national and regional funds for research and technological innovation will help in seizing market innovation is needed to avoid wasteful duplication opportunities for innovative solutions [6]. of R & D efforts and spending. Therefore, funding instruments should be pooled under a pan-Euro- EU-wide research and innovation programmes are pean strategic agenda, to leverage added value of crucial instruments to close the gap to Europe’s R & D to citizens, businesses and public actors. global competitors, to leverage private investment as well as to make Europe an attractive investment In order to implement a successful research and location. innovation framework in Europe, the Commission has kicked off both the PPP and Horizon 2020 ini- The Commission is all too aware of the need to tiatives, pointing towards pan-European co-crea- adapt to future Internet technologies, increase tive research and innovation efforts. While these the cooperation of the public and private sectors actions move in the right direction of collaborative as well as standards and openness of innovation platform innovation, however, stronger involvement
  • 24. 23of citizens and SMEs in the innovation processes is innovation has begun, firms which do not cooperatefundamental to Europe’s success in implementing a and which do not exchange knowledge reduce theirresearch and innovation landscape which is able to knowledge base on a long-term basis and loosecope with future societal and economic challenges. the ability to enter into exchange relations withIt is thus fundamental to establish a EU research other firms and organisations. In fact, Enkel [11]and innovation funding environment that fosters states that the future lies in an appropriate bal-digital as well as real-world open innovation plat- ance of the open innovation approach (…), today’sforms and innovation ecosystem creation, to enable business is not based on pure open innovation butcooperation and co-creative services development on companies that invest simultaneously in closedunder the common objectives set out by the Europe as well as open innovation activities. Thereby, the2020 strategy. Thereby, as Neelie Kroes, Vice- open innovation paradigm presents a valuablePresident of the Commission and Commissioner for model for innovation strategies of businesses andthe Digital Agenda for Europe put it, ‘Unlocking the organisations; however, it is by no means a salu-digital future through Open Innovation’. tary approach to innovation management, since, its practicability is subject to various challenges.Open innovation — unlocking thedigital future Societal capital and creative commonsThere exist various definitions of the open inno- beyond the cross-licensing modelvation concept itself and when talking about open Besides the above examined cross-licensing modelinnovation one can get lost in buzzwords and catch to open innovation by Chesbrough which focusesphrases quite easily without secure knowledge of mainly on collaboration and exchange of ideasthe very foundations of the open innovation model. between companies, Jacqueline Vallat’s reportWhat do we mean by ‘open innovation’, or, in the Intellectual Property and Legal Issues in Opencase of services, ‘open service innovation’? How Innovation in Services co-published by the Euro-does open innovation work in practice and how do pean Commission and the Open Innovation Strategywe create an innovation ecosystem which is most and Policy Group (OISPG), for the first time intro-likely to kick off innovation processes with a user- duced the societal capital and creative commonscentric approach? What are the limitations and approach to the open innovation concept. Her reportchallenges to the open innovation concept? presents a broader perspective to open innovation introducing the societal capital and creative com- mons dimension to the innovation processes. Thisrecently the term ‘open innovation’ has become means that the focus lies on the involvement of alla major buzzword in innovation management [7]. actors in the innovation ecosystem; including end-Nevertheless, behind the buzz lies a fundamental users and end-user communities, brought togethermessage which has given ground to a new inno- to share experience, information and best practices,vation paradigm based on openness and continu- and build strategic alliances and cross-disciplinaryous interaction and collaboration among different collaboration [12]. According to Vallat [12] only theactors within innovation ecosystems and platforms. societal capital and creative commons approach to open innovation maximises benefits to the fullThe term ‘open innovation’ has various commonly extend, by creating knowledge and experience,accepted definitions, which are all subject to contin- companies take on board and further develop.uous change. It has been argued that the idea thatinnovation is a collective process which involves Departing from this, it is believed that peoplemany actors and their interactions is not new, and within their communities and in their different rolesdates back to the concept of collective invention in daily live (e.g. professional role, consumer role,by Allen introduced in 1983 [8]. Open innovation, community role) contribute to a huge degree tousually, can be referred to as the use of purposive the common pool of knowledge and experience,inflows and outflows of knowledge to accelerate therefore acting as so-called creative commonsinternal innovation and expand the markets forexternal use of innovation, respectively [9]. Thereby,open innovation is opposed to closed innovation, in Bearing the important role of individuals withinwhich companies use only ideas generated within their communities in mind, it is of crucial import-their boundaries (…), open innovation is character- ance to create innovation ecosystems and frame-ised by cooperation for innovation within wide hori- works between all societal actors involved inzontal and vertical networks of universities, start the innovation process. What has been coinedups, suppliers and competitors [7]. Koschatzky [10] as ‘organisation (…) to reflect the idea of livinghas argued that especially since the era of open innov ation ecosystem, which develops from its
  • 25. 24 O P E N I N N O V A T I O N 2 0 1 2 living components’ [12], can be identified in par- community-driven approach to innovation calls ticular in Europe with its huge cultural diversity and for broader perception and a continuously review- multiculturalism. According to Vallat [12], Europe ing process of the open innovation concept, which presents an ideal environment for ‘organisation’ to refers to a service pull model of innovation where happen, due to its rich cultural and economic diver- the role of the user is critical. Innovation thus sity which creates highly diverse living innovation becomes a co-creative collaborative procedure ecosystems, which present very valuable qualities, between the industry or service provider and the with the potential to yield (…) advantages as the user, for example via crowdsourcing tools to cap- improvement of companies’ absorptive capacities ture valuable ideas produced by communities [12]. and a higher productivity in the knowledge creation In this vein, this new co-creative collaborative pro- process. cedures to innovation can only be enabled by open access and open functional platform architecture, In the societal capital, creative commons approach, which allow two-way communication between the the user is at the very heart of the innovation pro- user and service provider to take place. These open cess. Generating ideas and input to the innovation platforms make it possible to capture ideas from processes through crowdsourcing enabled by com- wide communities in a costless and effective way, munity-based innovation. In addition, ICTs, in par- thereby these platforms are increasingly becoming ticular Web 2.0, have contributed to strengthen the central to the way service providers view service dialogue between industry and users throughout provision in the future: as a way for the user to the innovation process towards a co-creation role orchestrate between the different services he needs subscribed to the user. The user is also the object and personalise them completely [12]. of a developing service convergence, facilitated by technology convergence; service convergence The open innovation paradigm increasingly relies places the user at the centre of business concern, on digital and real-world ecosystems, which enable and makes the provision of highly context-sensitive communication between the various stakeholders services the key driver of business models [12]. involved in the innovation ecosystem. Even though Hence, open platform architecture is a prerequisite it might be a tough one to sell to intellectual prop- to enable individualised services provision to the erty lawyers, the trend in innovation strives towards user. mass collaboration and coopetition between users and small and medium-sized companies and large Generally speaking, openness lies at the very foun- companies. Underlying the discussion on whether dations of any open innovation approach. open innovation ecosystems and platforms need to be source and open access, are fundamental to the opened, partially openness and balanced open creation of creative commons innovation ecosys- access to innovation platforms is the most appro- tem architecture. Along these lines the concept priate and beneficial for all actors involved. We are, of ‘organisation’ fully relies on an open system however, only in the very early phase of open inno- enabling users to receive input and generate output vation ecosystems and platform architecture; these in response. The societal capital, creative commons processes are still in the very early development Figure 1. Roles of a mobile individual in a real context [12] Roles of a mobile individual in a real context Professional Role munity (stabile) Family/Social Member Role Com “Enterprise VPN” “Family VPN” diate (dynam Work/Life me ic) Balance Im Spatial Solutions & Smart Materials ual (mob Well-being ivid ile & Social Aspects nd ) I Living Logistics & Maintenance eLearning Environments Inhouse Proximity mCommerce Nieghbourhood Proximity & Identification City Community/Citizen Role Consumer Role eVoting Society mShopping eGovernment services mLocationing
  • 26. 25stage. Nevertheless, it can be argued that digi- to business leaders and researchers to conceptu-tal ecosystems point towards the future of global alise, categorise, measure and manage intellectualinnovation processes. capital as key factor, within the emerging knowl- edge society, to thrive and prosper towards anThe openness and collaborative approach of open innovative and sustainable future service economy.innovation ecosystems, without a doubt leads in theright direction for industry, governments and users. According to Auer [14], by the end of the 20th cen-Open innovation ecosystems thereby create a new tury, the industrial society was replaced by a knowl-approach to organise R & D process within large edge society with a heavy focus on services andand small organisations in cooperation with private organisational knowledge. Since the 19th century,users. While, in the past, fragmented and closed the working sector has dramatically changed frominnovation has been the prevalent concept within agrarian to manufacturing and then towards aR & D, nowadays, cross-border interoperability on service-oriented business society in the late 20tha global level creates a new approach to inno- century, continuously emphasising the advance-vation business strategies. Various trends around ment of organisations’ intellectual assets to cre-the concept of open innovation and ecosystem ate profit and innovation. It is believed that in thearchitecture are challenging the state of the art of present knowledge society, knowledge does notthe open innovation paradigm. As has been pointed evolve as just another resource alongside the tra-out above, the societal capital, creative commons ditional factors of production — labour capital,and community approach to defining open inno- and land — but in fact that intellectual capital pre-vation presents a highly valuable concept pointing sents the key problem-solving capability of knowl-towards an open innovation paradigm which fos- edge organisations to increase their innovationters societal innovation by increasing societal capi- competence [15].tal for all actors involved in the knowledge society.It needs to be added that mobile computing (via Behind the obvious buzz related to the term ‘knowl-smartphones) linked to the increasing adoption of edge society’, there is a fundamental message.the smart city innovation paradigm, social networks It is believed that within the knowledge society,and cloud computing will result in the next big shi increasing the intellectual capital of organisationsto open innovation enabled R & D in the near future. is causally linked to the organisations’ economic success. Managing and enhancing intellectual cap-Intellectual capital management system ital has evolved as the key challenge to successful— open innovation as structural capital business strategy and innovation competence ofIt ought to be noted that, innovation and intellec- organisations.tual capital are strongly connected within the 21stcentury knowledge economy. As Wu [13] points out, Within the knowledge society, intellectual capital toorganisations with strong structural capital will cre- enable innovative competence requires human capi-ate favourable conditions in which to utilise human tal to release their individual intellectual capital incapital and allow the realisation of its fullest poten- cooperation with organisational knowledge acqui-tial to increase the innovation competence and sition processes. It is thus, individual and organi-relational capital of organisations. Consequently, sational working with the intellectual capital whichthe intellectual capital approach together with the adds up to the total of the organisational explicit andopen innovation model acting as structural capital tacit knowledge creation [14]. In order to facilitate ICpresents a highly interesting approach, to boost the to increase innovation competences of organisationscollaborative innovativeness of all stakeholders within the knowledge society, organisations rely oninvolved in the implementation process of the 101 information management, which refers to IT solu-Digital Agenda actions to unlock the digital future tions for fast communication between project teamsfor the benefit of European citizens and markets. and also to quick access to information and data online. While, information management is a manda-To begin with, the field of Intellectual Capital (IC), tory tool of the knowledge society that allows dataalso known as intangible assets was introduced in to be converted into information and to store, dis-the early 1990s. Coined for the first time by Edvins- tribute and re-find information contents (…) knowl-son, the term ‘intellectual capital’ was used, instead edge management is strictly human-driven [15];of the accounting term ‘intangible assets’ to however, largely enabled by effective informationdescribe (hidden) non-financial value in the Swed-report. Ever since then, a debate has been ongoing In the context of the Digital Agenda, it has to beon how intellectual capital has increased challenges noted that the Digital Agenda for Europe actions,
  • 27. 26 O P E N I N N O V A T I O N 2 0 1 2 focus very much on addressing challenges and assets [20], intangible assets [21] and intangibles demands created by the transmission-process [22]; it seems, however, as if the terminology of from a industrial society towards a service-oriented intellectual capital has enforced itself. knowledge society and economy in Europe. As it is beyond the scope of this paper to deal with any- Departing from this, the OECD, in 1999, presented one’s work on IC, only IC matters relevant to the a definition that categorised the economic value of overall research question will be discussed. It is IC into intangible assets of organisational (struc- believed that key to creating European innovation tural) capital (SC) and human capital. This definition ecosystems and environments is fostering effective presents a solid foundation for further categorising information management platforms and architec- components of IC; moreover, it makes an appropriate tures and, most importantly, to increase and man- distinction by locating IC as subset, rather than the age intellectual capital assets of organisations overall intangible asset base of a business as has and EU projects to increase their innovation com- been stated previously [23]. Throughout the years petences and, thereby, enable them to contribute of IC research, many attempts have been made to effectively to the problem-solving in the key areas subcategorise IC. The first categorisation was made of the actions set out by the DAE. by Sveiby [18], who identified three subcategories: employee (individual) competence; internal struc- To start off, while a universally accepted definition ture; and external structure. Others added further of intellectual capital does not exist, there is agree- cat egories or, as Edvinsson [24] did, termed the ment on what intellectual capital constitutes. Gen- three subcategories in human capital, organisational erally speaking, intellectual capital can be thought capital and customer capital. Besides the various of as the knowledge-based equity of a company attempts to categorise IC by the use of different ter- [16]. It therefore represents the most important minology, there is the tendency to harmonisation of asset of a knowledge-based organisation [14]. Ever since intellectual capital entered the stage of human capital, organisational (or structural capital) debate in the early 1990s, there has been a grow- and relational capital (Sveiby [18], Bontis [15]). ing awareness and interest in research and concep- tualisation of IC. While Stewart [17] and Sveiby [18] According to Auer [14], these three categories of IC argue intellectual capital has been considered by are highly interactive, as the human capital raises many, defined by some, understood by a selected the structural capital: both together create the few, and normally valued by practically no one. structural capital. In this categorisation approach to It appears as if what constitutes IC is not clearly IC, human capital represents the knowledge crea- defined, and what exists is an assortment of ter- tion potential of employees. This category refers to minologies that have basically the same meaning the skills, motivation, expertise and competences [19]. Throughout the years, there have been many of individual employees and their willingness to definitions of IC, sometimes referred to as invisible share their knowledge and thereby contribute to Figure 2. Uncovering the assumed IT dependence for knowledge creation [14] Information Management Knowledge Evolution Expertise Experience Know How Knowledge Information Data Sign +Syntax +Semantic +Context +Application +Practice +Acting Efficiency Explicit Knowledge Implicit (tacit) Knowledge Intellectual Capital
  • 28. 27problem-solving mechanisms inside the organisa- and processes in the emergence of the knowledgetion. Organisational or so-called structural capital society, cause organisations to rapidly change theis possibly the most complex component of IC; it very foundations of working routines and processes.includes features such as innovation, culture and The degree to which employees are open, flexibleprocesses within an organisation, but also refers to and willing to adapt to ever-changing competitiveIT platforms, services architectures and innovation, business environments, is thus an important pre-communication infrastructures. The third subcat- requisite to increase intellectual capital and therebyegory represents the relational capital generated by advance the innovation competence and businesshuman capital and structural capital, which refers success of an the external relations of an organisation with,for example, research institutions, industry or other In sum, human capital is different from structuralstakeholders. capital in managing knowledge; it is the source of innovation as people contribute their creativ-In addition to the three subcategories of intellec- ity while sharing and transporting knowledge [25].tual capital described above, so-called social capi- The essence of human capital, therefore, is thetal and entrepreneurial orientation of an organisa- sheer intelligence of the individual organisationaltion have major impacts on the intellectual capital member.performance of an organisation. While human capital’s output contributes to aHuman capital, organisational (structural) large extend to increasing intellectual capital andcapital and relational capital innovation competence, an innovative organisationIn the intellectual capital framework, human capital requires an organisational culture that constantlyrefers to the value of knowledge, skills and experi- guides its members to strive for innovation and fos-ence held by individual employees in a firm [24]. The ters a climate that is conducive to creativity [25].human capital of employees working in an organi- This organisational capital or so-called structuralsation can be regarded as the main driver of inno- capital deals with the mechanisms and structuresvation, as it represents the individual tacit knowl- of the organisation that can help support employ-edge embedded in the mind of employees which ees in their quest for optimum intellectual perform-hardly can be replaced by IT solutions [25]. Pena ance and therefore overall innovation competence[26] points out human capital can be defined as the and business performance. The next section willaccumulation of personal attributes (i.e. knowledge, examine the structural capital component ofabilities, personality, health, etc.) that allow human intellectual capital in more detail.beings to function. It is without a doubt that humancapital represents a crucial resource for economic The organisational capital or so-called structuralvalue creation in an organisation. Instead, what is capital of the intellectual capital framework referssubject to discussion is how to increase human cap- to the infrastructure of an organisation to provideital and how much human capital is needed for an a platform for employees to release their humanorganisation to create a true value to its innovation capital. Therefore, a good structural capital willcompetence. provide a good environment for rapid knowledge- sharing, collective knowledge growth, shortenedAccording to Mayo [27], human capital can be lead times and more productive people [28]. Individed into three dimensions: capability and poten- this vein, according to WU [13], organisations withtial, motivation and commitment and innovation strong structural capital will create favourableand learning. Departing from this, capability and conditions in which to utilise human capital andpotential of employees’ human capital refers to the allow it to realise its fullest potential and therebyeducational level, professional skills and experi- boost the relational capital and overall intellectualence, attitudes, personal networks, values and tal- capital of an organisation. Thus, it is believed thatent, employees are able and willing to evolve within an organisation requires a high developed struc-an organisation. Secondly, intangible assets such as tural capital, as, otherwise, the human capital ofthe mindset, motivation and commitment to work individuals cannot be released to the full extent,define an important part of human capital, pre- which as a consequence will limit the overall intel-cisely whether employees align their own interest lectual capital development. According to Even-with those of the firm and different working groups son and Westphal [28], from an economic sectorand mentalities within the organisation [25]. The definition, organisational (structural) capital can bethird dimension of human capital can be referred divided into three subcategories; first: firms’ oper-to as the openness to innovation and learning by ating capabilities, such as product design systems,employees. This means that, new business models production management and engineering (…), input
  • 29. 28 O P E N I N N O V A T I O N 2 0 1 2 Figure 3. Classic diagram of IC as commonly used in literature [14] True Value of knowledge-based Organizations Hard organsational assets Immaterial organsational assets Monetary resources Plants & equipments Intellectual Property Intellectual Capital Copyright© Patents Brands Design & Models Human Capital Structural Capital Relational Capital Potential for Organisational Embedded future success routines external relations · Skills · Methods · Customers · Competences · Concepts · Suppliers · Experience · Processes · Research Institutions · Expertise · Culture · Investors / Owners · Commitment · Intrastructure · Society · Motivation · IT Technology · Other Stakeholders outsourcing (supply channels), and market tech- the organisation establishes external relations nologies. Secondly, the organisational capital of an with, for example, customers, suppliers, research organisation can be divided into investment capa- institutions, society or other stakeholders. bilities, such as advanced project selection mecha- nisms [28], personnel training, and financial engi- As presented above, intellectual capital has evolved neering in fundraising and risk management. Most as the acknowledged key driver of innovation important, however, in the context of this discus- competences of organisations, while much has sion’s approach to intellectual capital, is the third been written on how to measure and standardise subcategory of structural capital which, according an Intellectual Capital Management System (ICMS). to Evenson and Westphal [28], refers to innovation capabilities, such as unique research and develop- Open innovation and intellectual ment (R & D) procedures (…), adaptive capacity for capital — bridging the gap learning from others, communities of practice to The analysis has shown that, as indicated by Neelie share information among employees, as well as Kroes [1], Commissioner for the Digital Agenda, a decision and legal procedures for appropriating who stated that ‘by following an open innovation maximal benefits from intellectual property. ecosystem and open platform approach to organ- ise the structural capital of the DAE, we can avoid Thereby, structural capital relates to the methods, wasteful platform competition, and anticompetitive concepts, processes, culture and overall IT infra- lock-ins, as well as stimulating development and structure that an organisation adopts to embody, investment in new generations of online services in empower and create a supportive infrastructure line with the DAE actions’. of human capital [24] in order to create relational capital. Consequently, organisational capital is The European Commission itself has pointed crucial for an organisation’s overall performance out the importance of embracing open platform in increasing intellectual capital, since without architecture as a precondition for the success- appropriate use or even existence of organisa- ful implementation of DAE actions, the analysis, tional capital, only human capital remains while however, presented a rather deflating picture of relational capital would be absent. Thus, organisa- the openness and collaborative nature of inno- tional capital is the major (…) resource that affects v ation processes across EU research and inno- performance and growth of intellectual capital as vation funding programmes, which, at the moment, well as, in cooperation with human capital, creat- act largely isolated from each other. While the ing the relational capital of an organisation. Which, as has been stated above, is created by linking the Horizon 2020 — the framework programme human capital with structural capital. By doing so, for research and innovation, drive towards a new
  • 30. 29more interoperable co-creative service architecture security, digital literacy of staff and users, futureinnovation paradigm. Internet service architectures and user involvement in the R & D processes, overlap. Consequently, openThe key challenge of the Digital Agenda for Europe platform architectures and innovation ecosystemsis the implementation of DAE actions across Mem- facilitate digital as well as real-world community-ber States. Especially in the fields of eGovernment, based innovation ecosystems to increase the Intel-eHealth and eEnvironment applications, but also lectual capital of various actions in the fields offor actions heading towards a Digital single mar- ePublic services. In addition, it is certainly worthket and seamless broadband connections in Europe, questioning if Europe suffers from a shortage in ICTinteroperability and open platform communication human capital in industries, employees or higherbetween EU institutions, industry (especially SMEs), education institutions, as usually stated by the EUacademia, and users is needed. Henceforth, par- institutions. Instead, what the European innovationticular private end-user communities, who at the environment is in need of is more entrepreneurialmoment are largely ignored by eServices R & D pro- orientation and a slight increase of social capital.cesses, must be taken on board to the innovationprocesses to ensure that future Internet services Huge financial means are invested in the inno-and applications are user-friendly and functional. vation cycle; however, lacking a full innovation chain approach, this has resulted in a large amount ofOverall, it appears that the existence or possible investment wasted in deadlocked R & D projects.emergence of an organisational capital driven by Consequently, European research and innovationopen innovation ecosystem creation does not exist. funds, at the moment fail to establish an organisa-Rather, we seem to be witnessing the existence of tional capital which provides an infrastructure for theisolated islands of sectors of industry, units in the human capital of the Commission, industry, SMEs,EU institutions and other stakeholders who all lack a academia and private users to maximise the value ofstrong structural capital providing the infrastructure every euro the EU invests in research and facilitate the creation of relational capital, basedon the human capital of the European Commis- Besides the importance of organisational capitalsion together with industry, academia and private in increasing intellectual capital, social capital alsousers to implement the DAE actions and achieve the entails an important role in enabling necessaryEurope 2020 targets. Thus, the extent to which the communication between different stakeholders instructural capital of the DAE at the moment, is able an open innovation ecosystem. Weak and strongto increase the DAE’s intellectual capital needed to social ties between employees increase socialimplement the DAE actions is highly limited, due to capital and contribute to information exchangethe fact that the organisational capital of the DAE and problem-solving solutions within an innovationdoes not facilitate open access platform architec- value chain. In the case of the DAE and open inno-tures to organise human capital of all stakeholders vation acting as structural capital, this means thatinvolved in the research and innovation processes avoiding so-called structural holes in open inno-to create relational capital, thereby increase the vation ecosystems is fundamental to maximise theintellectual capital of the DAE actions. innovation competence of all stakeholders involved in the DAE. Again with regard, to DAE actions ofOpen innovation ecosystem architectures, which eGovernment, eHealth and eEnvironment applica-are in common use to increase innovation compe- tions, those employees of the Directorate-Generaltence in the private sector, present collaborative for the Information Society and Media, the Directo-innovation environments that strive towards open rate-General for Research and Innovation and theor partially open platform architectures, enabling Directorate-General for the Enterprise and Industrycommunication between stakeholders involved in and all other stakeholders within the EU institutionsthe innovation process. The mass-collaboration and from the private and academic sectors shouldand coopetition of digital as well as real-world open make use of open innovation ecosystem platformsinnovation ecosystems provides an organisational to avoid wasteful platform competition and insteadcapital potential that is in favour of interoperable embrace collaborative, co-creative innovation andinnovation methods, concepts and processes to partnership to maximise the innovation competenceprovide open platforms for stakeholders involved and intellectual capital of the the DAE actions to collaborate and exchangeinformation. This open innovation attitude is espe- The European Commission, along the Directorate-cially needed in the fields of eGovernment, eHealth General for the Information Society and Media,and eEnvironment applications, where many is responsible for the implementation of the DAEoverlapping spheres of interest, such as privacy and actions, is all too aware of the need to adopt open
  • 31. 30 O P E N I N N O V A T I O N 2 0 1 2 innovation platform architecture as structural Contact capital to advance the innovation competence and implementation of the DAE actions across Mem- Bruno M. Hoyer ber States. Thereby, embracing social innovation European Commission, Directorate-General for and increasing societal capital to the benefit of all the Information Society and Media, 2010–11 actors in the knowledge society. References focus on increasing societal capital by increasingly taking private users, especially digital natives, on [1] Kroes, N. (2010), Vice-President of the European board of the innovation value chain of the DAE. It Commission responsible for the Digital Agenda, is of crucial importance that the DAE actions are Unlocking the digital future through open innovation, fourth pan-European Intellectual Property Summit not implemented by detached public bodies and Brussels, 3 December 2010, ( organisations but that instead people in Europe who actually will need to use, for instance, the ePublic mat=HTML&aged=0&language=EN&guiLanguage=en). service architectures, have a chance to make their contribution to the innovation value chain of ser- (2010), Communication from the Commission to vices and legislation enforced by the DAE actions. the European Parliament, the Council, the European The focus should lie on the involvement of all actors Economic and Social Committee and the Committee of the Regions, Brussels (SEC(2010) 1161). in open innovation ecosystems, including end-users and end-user communities, so-called creative com- [3] Mars, M. and Scott, R. E. (2009), ‘Global E-Health mons, to share experience, information and best Policy: A Work In Progress’, Health Affairs 29, No 2, pp. 239–245. practices with those who are in charge of R & D and implementation of the DAE actions. Thereby, [4] Misuraca, G. C. (2009), ‘eGovernment 2015: embracing open innovation platform architectures exploring mgovernment scenarios, between ICT driven experiments and citizen-centric implications’, Technology and innovation ecosystems as structural capital Analysis & Strategic Management, Vol. 21, No 3, within the intellectual capital approach to the DAE pp. 407–424. leads to a more problem-driven instead of science- based innovation approach. Taking the experiences (2010), Communication from the Commission to of people in Europe within their communities and the European Parliament, the Council, the European roles in daily lives on board, to contribute to a user- Economic and Social Committee and the Committee of centric approach to innovation, which will increase the Regions, Brussels (SEC(2010) 1161). societal capital to the benefits of the all actors [6] Green Paper From Challenges to Opportunities: involved in the knowledge society. Towards a Common Strategic Framework for EU Research and Innovation funding (COM(2011) 48). It is therefore of high importance, especially in the fields of ePublic services actions of the DAE, Innovation Increasing the efficiency and effectiveness to foster co-creative open innovation partnerships of the innovation process’, Open Innovation Accelerator and open platform ecosystems towards a future Survey 2009, RWTH Aachen University, Technology & Innovation Management Group. Internet public-private-people partnership (PPPP). [8] Ozman, M. (2008), The Two faces of Open Innovation: Network Externalities and Learning, Working document Overall, the EU’s innovation performance is at a No 2008–24. crossroad. The Commission is all too aware of the situation and calls for ‘smarter’ investments in both [9] Chesbrough, H. (2011), Lead article, ‘Open services innovation — a new mindset to find new sources of public and private research as well as cross-border growth’, in Service Innovation Yearbook 2010–11, and cross-sector cooperation in research and inno- Publications Office of the European Union, Luxembourg. vation to meet the Digital Agenda for Europe time- [10] Koschatzky, K. (2001), ‘Networks in innovation line and the Europe 2020 targets. This discussion research and innovation policy — an introduction’, in has made an argument for using the open inno- Innovation vation paradigm embracing open platform architec- Networks: Concepts and Challenges in the European ture and open innovation ecosystems to advance Perspective, Physica Verlag, Heidelberg. the structural capital, within the intellectual capital [11] Enkel, E., Gassmann, O. and Chesbrough, H. of the Digital Agenda for Europe’s innovation per- (2009), ‘Open R & D and open innovation: exploring the formance, which obviously requires major improve- phenomenon’, R & D Management 39, 4, 2009. [12] Vallat, J. (2009), Intellectual Property and Legal on the table: it is now up to the policymakers to Issues in Open Innovation in Services, Luxembourg: Office make the right use of it. for Official Publications of the European Communities.
  • 32. 31[13] Wu, W. Y., Chang, M. L. and Chen, C. W. (2008),‘Promoting innovation through the accumulation ofintellectual capital, social capital, and entrepreneurialorientation’, R & D Management 38, 3.[14] Auer, T. (2011), ‘Identifying, controlling, measuring,and reporting innovative competence’, in ServiceInnovation Yearbook 2010–11, Publications Office of theEuropean Union, Luxembourg.[15] Bontis, N. (1998), ‘Intellectual capital: anexploratory study that develops measures and models’,Management Decision, 36/2, pp. 63–76.[16] Brennan, N. and Connell, R. (2000), ‘Intellectualcapital: current issues and policy implications’, Journal ofIntellectual Capital, Vol. 1, No 3, pp. 206–240.[17] Stewart, T. (1997), Intellectual capital: the newwealth of organizations, Doubleday, New York, NY.[18] Sveiby, K. (1997), The new organizational wealth:managing and measuring knowledge-based assets,[19] Choong, K. K. (2008), ‘Intellectual capital:definitions, categorization and reporting models’, Journalof Intellectual Capital, Vol. 9, No 4, pp. 609–638.[20] Itami, H. (1991), Mobilizing Invisible Assets, HarvardUniversity Press, Cambridge, MA.[21] Hall, R. (1992), ‘The strategic analysis of intangibleresources’, Strategic Management Journal, Vol. 13,pp. 135–44. Intangible Assets:Measurement, Drivers and Usefulness, 15 pp., NYU.[23] Tan, H. P., Plowman, D. and Hancock, P. (2008), ‘Theevolving research on intellectual capital’, Journal ofIntellectual Capital, Vol. 9, No 4, pp. 585–608.[24] Edvinsson, L. and Malone, M. S. (1997), IntellectualCapital: Realizing your Company’s True Value by FindingIts Hidden Brainpower, Harper Business, New York.[25] Ngah, R. (2009), ‘The Relationship of IntellectualCapital, Innovation and Organizational Performance:a Preliminary Study in Malaysian SMEs’, InternationalJournal of Management Innovation Systems, Vol. 1, No 1.[26] Pena, I. (2002), ‘Intellectual capital and businessstart-up success’, Journal of Intellectual Capital, Vol. 3,No 2, pp. 180–198.[27] Mayo, A. (2001), The Human Value of the Enterprise:Valuing People as Assets — Monitoring, Measuring,Managing, Nicholas Brealey Publishing, London.[28] Evenson, R. E. and Westphal, L. E. (1995),‘Technological change and technology strategy’, inHandbook of Development Economics, Elsevier Science,Amsterdam.
  • 33. 32 O P E N I N N O V A T I O N 2 0 1 2 1.4 Reflections on policy, regulation and governance for open innovation: towards a research and policy ‘enabling framework’ Introduction multiple tools and mechanisms. Governance can This paper outlines an approach to the analysis operate through several other equally important of policy, regulation and governance conditions channels such as institutional design, decision- that can facilitate and extend practices of Open making structures and procedures, social norms, Innovation (OI). The approach stems from several and technology. streams of research currently underway at the European Institute of Interdisciplinary Research In order to operationalise the term in the context (EIIR) that address trajectories related to the of OI, it might be useful to refer to political sci- ence and political economy terminology regard- is designed to identity and evaluate key enablers ing the exercise of power in social and political of, and barriers to, OI specifically framing them in - ways that make them subjects for policy and regu- ernance’, ‘policy’ and ‘policy implementation’ are latory action, along with the modalities of imple- fundamental to the overall governance process: mentation, specifically the identification of the key ‘governance’ is about ‘who’ has rights to take actors/decision-makers/stakeholders, as well as decisions, to exercise power in a given domain of the institutional vehicles, whose engagement and concern; ‘policy’ is about ‘what’ policies and rules involvement is deemed critical for the design and are to be implemented in order to achieve the implementation of OI initiatives. goals of those who exercise power; ‘policy imple- mentation’ is about ‘how’ to put into place and Defining OI as a policy, regulation and enforce the policy, which opens up the question governance field of democratic participatory regimes, and their Current research demonstrates that whether the alternatives [4]. Internet is viewed as ‘polymorphic networks of networks’ or as an ‘execution environment for This broader problématique of governance is par- smart applications, services, interaction, experi- ticularly relevant when it comes to discussions of ence, and data’ [1], defining OI as a technology OI policy and regulation design. One way to con- problem is not at all straightforward. It is less so ceptualise a fruitful approach that addresses the when it comes to policy, regulation or governance. policy, regulation and governance aspects of OI OI as a policy and regulation field is not obvious, is with reference to ‘layers’ of governance. This self-evident or a subject of consensus among its approach argues that modern communications key stakeholders, be they researchers, practition- networks, and specifically the Internet, should be ers or policymakers. In fact, the OI ‘field’, in much understood as a series of ‘layers’ rather than as an assorted complex of different technologies. best be conceptualised as a ‘contested terrain’ The approach lists at least three such layers: encompassing positions that range from ‘minimal- (i) a physical infrastructure layer, through which ism’ to ‘maximalism’ regarding the role of policy, information travels; (ii) a code or logical layer that regulation and governance [2] [3]. An important controls the infrastructure; (iii) a content layer, part of the work outlined here is to animate this which contains the information that runs through field as a ‘forum’ in order to enable the OI com- the network [5]. munity to identify paths that might lead to equi- table and consensus-based policy responses that The approach is by no means exhaustive. It is pos- generate optimal benefits. sible to change the names of the ‘layers’ or include several additional ‘layers’. The point is not which There are several debate currents on the optimal specific layers we choose, but that OI as a policy, level of policy, regulation and governance of OI. regulation and governance field can be broken up Most of them focus not so much on ‘policy’ or into discrete analytical categories. As a conse- ‘regulation’ as much as on governance. The term quence, OI governance can be organised on multiple ‘governance’ does not refer exclusively to acts ‘layers’ that have diverse magnitudes of impact in or duties of government. Governments do play different domains that individually might affect the an important role in many forms of governance. development of the whole. One important issue in However, the concept is broader, and extends this respect concerns synchronisation or coherence beyond merely the state apparatus. Governance, of decisions at different ‘layers’ that might affect apart from traditional policy and law, includes the development of OI as a whole.
  • 34. 33Towards a multilevel policy and More specifically, it might be appropriate to exam-regulatory analytical framework for OI ine OI policy, regulation and governance from twoIn terms of a methodological approach to the analytically distinct, but in reality interrelated per-analysis and design of OI policy, regulation and spectives: (i) OI policy, regulation and governancegovernance, it is important to break with tradi- as seen from a ‘technology perspective’, andtional conceptualisations of policy as blueprinted (ii) OI-relevant technology as seen from a ‘policy,‘intervention’ or ‘guidance’. A more productive way regulation and governance perspective’.is to think through the concept of ‘enabling frame-work’. Such a framework is focused on removing The merit of this approach is that it opens certainbottlenecks to OI practices in ways that enhance dialogue terrains that cannot be accessed by adopt-economic and social dynamism and the innovation ing a single — either ‘technology’ or ‘policy, regu-capacities of social, economic, and policymaking lation and governance’ — perspective. The issue isparticipants. It is driven by an underlying model of one of interdisciplinarity [7] — but more importantlypolicy, regulation, and governance design that views one of inter-epistemological challenges in con-social networks as ‘living systems’ evolving over structing effective bridges of communication acrosstime depending on the composition of the politi- diverse decision-making communities involved in thecal, social and economic environments in which OI — be they in the public or private sectors. In otherthey exist, and other factors rooted in location and words, though establishing cross-disciplinary pathshistory. of communication is important, an emerging funda- mental issue concerns addressing the challenges ofThis approach stresses the importance of a key how knowledge is built within different disciplineschallenge policymakers face: prioritisation. Priori- and stakeholding communities and the challengestisation and implementation of OI initiatives cannot of establishing knowledge complementarities acrossrely exclusively on government. It is at least argu- that competition under globalisation, alongwith the growing intensity use of ICT, alters the One way to construct such bridges is to pursue thestructural conditions of policy and regulatory inter- formation of a multilevel governance frameworkvention. Government is an important factor in shap- that would allow us to explore linkages between EU,ing OI environments but so are companies, univer- national, regional and local/urban policies and wayssities and public and private research bodies, and the strengthening of linkages across them mightother institutions of government and civil society. more effectively address OI challenges. A multilevelGovernment itself, on the other hand, is not the uni- governance framework calls for the narrowing ortary entity it appeared to be when macro-policies closing of the policy ‘gaps’ between levels of gov-defined government intervention. At the micro- and ernance through the adoption of mechanisms andmeso-policy levels, relevant for the implementation tools for vertical and horizontal cooperation.of OI, many different types of government agenciesat all levels of administration and geography have The vertical dimension of multilevel governancean impact. And this is fundamentally a question recognises that EU institutions and national govern-not of government but one of governance among ments cannot effectively implement OI strategiesdifferent stakeholding organisations within a spa- without working closely with regional and urban/tially dispersed system of competencies geared to local governments as agents of change. A multi-achieving potentially conflicting objectives [6]. level governance approach also recognises that urban/local governmental authority required to actIn other words, OI-related policies should be cra ed in areas related to OI is o en ‘nested’ in legal andwith the input of civil society, business, govern- institutional frameworks at higher scales. Thus, ament, and technical experts. The participation of two-way — ‘top-down’ and ‘bottom-up’ relation-all relevant stakeholders is needed to develop and ship that involves agents of state, government,implement OI objectives. An effective and inno - civil society and individuals — exists between EU,vative multi-stakeholder approach is needed for gov- national, regional and urban/local action levels onernment, the private sector, the Internet technical OI as each can enable or constrain the, civil society and individual, or commu-nities of, users to jointly shape the policy, regulatory The horizontal dimension of multilevel govern-and governance environment of OI. ance acknowledges the opportunity for learning, information transmission and cooperation acrossIn this context, it is critical to adopt a ‘dialectical EU, national, regional, and urban/local govern-perspective’ that expresses the interdependencies ance structures. Horizontal governance activitiesacross OI-relevant policy and technology dynamics. can give government, business, research and
  • 35. 34 O P E N I N N O V A T I O N 2 0 1 2 non-governmental organisations influence in the OI tendencies of rea sser tion of national policy dialogue process. The horizontal dimension sovereignty in the Internet ‘space’; of multilevel governance is also associated with trends towards the commercial ‘digital improving coordination across EU, national and territorialisation’ of the Internet; regional authorities to implement cross-sectoral trends towards the protection of, and challenges OI initiatives. Horizontal relationships at the sub- to, ‘net neutrality’; national level can also exist in the form of national sets of political, legal, social and secu- and transnational networks and coalitions involving rity reasons that act as drivers of potential urban bit also rural regions [8]. fragmentation; the role of cities (‘smart’ and otherwise); Emerging policy, regulation and scenarios of ‘fenced’ Internet systems and governance areas in OI governance mechanisms across them; Applying this methodological framework, it is pos- trends in the regulation of network operators sible to identify key policy, regulation and gov- (specifically regulatory variance regarding ‘open ernance issues that need to be addressed from a access’); dialectical standpoint in order to generate criti- the Internet of Things and the Internet of Doing cal capacity mass across different disciplines and Things; stakeholding communities in order to establish Internet-driven social impacts (social networks, knowledge and action complementarities across fraud, piracy, etc.); them. Below, we outline a few such issues. trust, privacy and security. In terms of a policy, regulation and governance as Contacts seen from a ‘OI technology perspective’, such issues include: Dr Takis Damaskopoulos Executive Director online identity, including anonymity, digital European Institute of Interdisciplinary presence, rights to delete information, etc.; Research (EIIR) security of communications, including legal implications; cloud computing, including the risks and Dr Anna Sadowska benefits of virtual access to information, etc.; Manager for Eastern Europe content regulation, including copyright, licences, open access, etc.; European Institute of Interdisciplinary eDemocracy, including transparency, open gov- Research (EIIR) ernment data, empowered citizenship, services to citizens, etc.; digital citizenship, including individual and References corporate rights and responsibilities, etc.; digital inclusion, including access and use of the Internet by vulnerable populations, etc.; Internet Assembly Research Roadmap — Towards trust, including risk drivers, actors at risk, risk May 2011 ( management, etc.; ). online communities, including social networks, [2] The open Internet and net neutrality in Europe virtual relationships, etc.; (2011), Communication from the Commission to the the Internet of things, and the connections European Parliament, the Council, the Economic and between people and devices; Social Committee and the Committee of the Regions, distributed knowledge production, including The open Internet and neutrality in Europe, Brussels, eScience, eLearning, etc.; 19 April 2011. cybercrime and cyberlaw, including phishing, cracking, cyberterrorism, etc. In terms of technology as seen from a ‘OI policy, [4] Kapur, A. (2005), Internet Governance: A primer, regulation and governance perspective’, such issues United Nations Development Programme. include: to Users: Shi ing the Deeper Structures of Regulation social and political dynamics of unification and Towards Sustainable Commons and User Access’, Federal fragmentation of the Internet; Communications Law Journal, 52, 561, (2000).
  • 36. 35[6] OECD (2001), Communiqué on Principles of InternetPolicy-Making, OECD High Level Meeting on the InternetEconomy, Paris, 28 and 29 June 2011.Version 4.1 of 13 July 2009 ( Corfee-Morlot, Jan, Lamia Kamal-Chaoui, MichaelG. Donovan, Ian Cochran, Alexis Robert and Pierre-Jonathan Teasdale (2009), ‘Cities, Climate Change andMultilevel Governance’, OECD Environmental WorkingPapers, No 14, 2009, OECD publishing, © OECD.
  • 37. 36 O P E N I N N O V A T I O N 2 0 1 2 1.5 Rights or limitations: an autopsy of business-model based copyright regulation ICT is a moving target. A problem with making Legislation is based on beliefs of things to come and laws to hit a moving target is that the mindsets of the best choices for the society. Beliefs are often those who make law are very much tied with what amplified by those who want to influence in lawmaking they have come to know already: old regimes and — lobbyists of various organisations and stakehold- established business models. In this article, I shall ers. More o en than not, the act of lobbying requires analyse the copyright Directive 2001/29/EC (the certain amount of resources and therefore economic InfoSoc Directive) [1] asking what follows when power. Lobbying — the amplification of beliefs — is regulation is based on fixed business models. not possible for those who have no voice in the system. The said Directive seems to be outdated, and I Beliefs are dominated by claim this is largely due to the legislation being existing business models written to suit the old analogue world’s rights- In order to illustrate the difficulties of business based business models. These exclusivity-based model-based legislation, I shall analyse, not the models that functioned well in the analogue con- law text itself but the background beliefs of the so- text were transferred to the digital environment as called InfoSoc Directive. It is apparent that the busi- such, rather than in order to facilitate completely ness models that were originally discussed during new business models. On the other hand, the Direc- lawmaking were analogue business models and not tive had a ground-breaking obligatory copyright those that later developed from the technological exemption regarding interim copies on the Internet, possibilities of the Internet. It also seems that there which has proven successful — at least if success already existed uncertainty on whether to believe in is measured by the dissemination of the Internet the benefits of exclusive rights or their limitations. and the success of the telecommunications indus- try. The liberalisation of the copyright regime in this The purpose of the InfoSoc Directive is to promote respect has enabled the Internet to grow and pro- and support the development of European infor- duce new, innovative business models, whereas the mation society through harmonisation of copy- rights-based exclusivity regime was less success- right legislation. As stated in the preamble to the ful, suffers from broad piracy and may need to be directive itself: re-evaluated [2]. This [purpose] requires, inter alia, the existence of A word of warning — traditional copyright concerns an internal market for new products and services. such as the cultural importance of copyright pro- Important Community legislation to ensure such tection or the artists’ income issues are not dis- a regulatory framework is already in place or its cussed here. This article concentrates on the rela- adoption is well under way. Copyright and related tion of copyright and technological development. I rights play an important role in this context as they understand very well that copyright is an important protect and stimulate the development and market- part of the creators’ income, even if it is by nature ing of new products and services and the creation ‘superstar economy’ [3]. However, the underlying and exploitation of their creative content. question in this article is, whether, in conditions of (Directive 2001/29/EC, preamble, paragraph 2) mass use, even the artistic profession might benefit more from compensation-based regulation rather What I want to show is that the preamble of the than the present exclusivity-based but largely InfoSoc Directive not only embodies a strong belief unenforceable regulation. in a rights-based approach, but at the same time offers broad arguments in favour of limitations to Mutual beliefs as the basis of law copyright. This contradictory groundwork laid forth In his essay ‘Opposite Mirrors’ Eerik Lagerspetz in the preamble is not quantified in any manner built an interesting theory on ‘mutual beliefs’ [4]. and thus leaves room for interpretation in both the Mutual beliefs form the basis of conventional analysis and the implementation of the document. facts [5]. Our knowledge about the beliefs and actions of others is always subject to substantial This confusion was an indication that the legal uncertainty. The role of conventions in life is to instrument had become a battlefield of ageing diminish this uncertainty. Mutual beliefs enable business models. The discussion was dominated by the development of cooperative strategies in the representatives of the established industries societal action. leaving other possibilities untouched.
  • 38. 37InfoSoc Directive: rights or limitations? foster investment. The first part of this should beMuch of the discussion concerning copyright seems rather obvious from an economic point of view:to indicate a belief that copyright law is in essence clear market conditions enhance market activities.about price regulation or organisation of the market The second point is equally clear, since the strongerstructure — which it clearly is in only rare occa- the rights holders position is, the more likely thesions. In the first place, what copyright law regu- protected property can be used, for example,lates are the negotiation positions of the parties — as collateral to help finance further investment.rights holders, commercial and end-users — which In other words, the lower the risk, the better themake analysis on the level of economy treacherous. chances to attract investment [8].Some have more market power and negotiationskills than others. The nature of copyright, however, is somewhat more complex. Copyright may well be there toConcerning copyright law as a vehicle for policy- protect property that has no economic valuemaking, there are basically three stages: copyright at all, as it may also cover assets of significantexclusivity, limitations to that exclusivity, and total financial value. A comparison to other forms ofexemption from liability [6]. These correspond to property law may illustrate the point. Consider, forthe essential elements of copyright which can be instance, two pieces of real estate property, one inclassified as follows [7]: a remote area in Lapland, the other in the centre of Helsinki, of roughly the same size; these may exclusivity (property right); drastically differ in financial value while remaining economic compensation (liability rule); subject to the exact same real estate registration moral rights: paternity, respect (inalienability). system and its attendant rights framework. The relation of supply to demand behind the differ-The copyright belief ence, forming the basis of all market behaviourThe InfoSoc Directive’s opening statement in its in general, is not controlled by the property rightspreamble reflects the four freedoms framework system. Moreover, as all competitors enjoy theof the European Union (free movement of goods, same rights, differentiation cannot be based onservices, labour, and capital). The harmonisation the rights system.of laws between the Member States on copyrightand related rights contributes to the achieve- What this means is that even though copyrightment of non-distorted internal market (Directive protection serves as a framework for legal pro-2001/29/EC, preamble, paragraph 1). The European tection, it is by no means the maker, let alone theCouncil has stressed the need to create a general guarantor, of the value of the property. The ques-and flexible legal framework at community level in tion remains: Does the end result, the productorder to foster the development of the information itself, satisfy the needs or desires of the individualsociety in Europe (ibid., paragraph 2). potentially interested in it? Or, to put it differently, is there someone prepared to exchange money for it?belief regarding the relation between copyright andeconomic activity: Paragraph 4 of the of the preamble in the InfoSoc Directive addresses both content provision andA harmonised legal framework on copyright and information technology (IT); yet, these wouldrelated rights, through increased legal certainty and appear to be at least partly competing areas ofwhile providing for a high level of protection of intel- investment. Some companies, to be sure, maylectual property, will foster substantial investment operate on both markets but, in general, the twoin creativity and innovation, including network infra- remain distinct businesses from one another. Therestructure, and lead in turn to growth and increased is also a buyer-seller relationship between the busi-competitiveness of European industry, both in the nesses, that is content is distributed to customersarea of content provision and information tech- via telecommunications networks and with thenology and more generally across a wide range of help of necessary IT equipment. Emphasising copy-industrial and cultural sectors. This will safeguard right would make the content providers’ negotia-employment and encourage new job creation. tion position stronger, and emphasising limitations(Ibid., paragraph 4.) would enhance the negotiation position of the IT technology companies.The core of this belief can thus be said to be theassumption that increased legal certainty and a The InfoSoc Directive, rather surprisingly, endorseshigh level of protection of intellectual property will both theories.
  • 39. 38 O P E N I N N O V A T I O N 2 0 1 2 What, then, is considered to be the proper business A major exception, in line with what is stipulated in to protect? To the extent that investment in content the eCommerce Directive, is specified in paragraph 27: is encouraged, the rights holder’s position rises to the forefront. Higher copyright protection creates The mere provision of physical facilities for en- a better negotiation position for the copyright and abling or making a communication does not in itself related rights holders, or their business. amount to communication within the meaning of this Directive. The limitations belief It may, however, appear that temporary or initial Article 5(1) of the Directive accompanied with this low levels of copyright protection provide a boost statement ensures that the telecommunications for certain business areas such as equipment sales industry will not be part of the copyright liability and decrease the time-to-market for new prod- chain. In this regard, at least, we can then recog- ucts, through decreased transaction time — and nise a limitation of the main copyright exclusivity may even decrease the transaction costs. If high rule; moreover, one that almost certainly has and levels of protection lead to overly difficult trans- will have broad consequences for the organisation action mechanisms (in Europe, the ‘27 issue’), of the telecommunications industry. a disincentive for investment is created. Without the exception, the telecommunications Providers of information technology may very well operators would have found themselves in a pos- profit from low levels of copyright protection for ition trying to agree on licensing with regard to dev- the content, whereas high levels of protection may astating amounts of network traffic. We could see worsen the negotiation position of the equipment this as a clear indication of the legislators’ belief manufacturers at the low end of the chain. that no good follows from subjecting telecommuni- cations networks to copyright obligations. Mass use Paragraph 5 of the preamble to the InfoSoc Direct- and exclusivity do not coexist. ive pays attention to the role of technology: Techno- logical development has multiplied and diversified Paragraph 31 of the preamble tries to explain the vectors for creation, production and exploita- the reasons behind the prima facie contradictory tion. Paragraph 9 stresses the need for high levels approach to regulating the rights versus limitations of copyright protection: relationship: Any harmonisation of copyright and related A fair balance of rights and interests between the rights must take as a basis a high level of pro- different categories of rights holders and users of tection, since such rights are crucial to intellec- protected subject matter must be safeguarded. The tual creation. Their protection helps to ensure existing exceptions and limitations to the rights as the maintenance and development of creativity set out by the Member States have to be reassessed in the interests of authors, performers, produc- in the light of the new electronic environment. ers, consumers, culture, industry and the public at large. Intellectual property has therefore been There is a similarity between the structure of the recognised as an integral part of property. preamble and the articles: definitions of various (Ibid., paragraph 9.) rights are given in Articles 2 through 4, with a long list of exceptions and limitations following in Ar- This emphasis on rights is repeated in paragraphs ticle 5. This is surely based on a careful analysis and 10 through 12, and again in paragraphs 21 through evaluation of the economic and societal impact of 25. But the tone is slightly confusing in between: the rights as well as the exceptions and limitations, but at some points it may be difficult to find the This Directive should seek to promote learning and culture by protecting works and other sub- legislative technique is not flexible for dynamism — ject matter while permitting exceptions or limi- we have no fixed idea what the future businesses tations in the public interest for the purpose of will look like and will likely be constantly surprised. education and teaching. (ibid., paragraph 14). The initial conclusion remains that we still do not know nearly enough about the actual effects that Reading this very literally would indicate, with rights, exceptions, and limitations will have among a possibility to confusion, that learning and cul- different industries. Given the need to make it ture require the protection of copyright while the acceptable to all the Member States, however, it needs of education and teaching seem to call for may be that the Directive text simply had to be its opposite? designed like this.
  • 40. 39Does copyright benefit or hamper business? and international level to gain recognition for theirEven if paragraph 4 of the preamble to the InfoSoc rights, arguing that phonographic recordings wereDirective represents the lawmakers good intentions, just another form of reproduction [11].one of the major conflicts of interest — exclusiverights and their limitations — in the field remains In response, the argument of the recording industrylargely unanalysed in the Directive. However, the representatives was that the recognition of thesehistory of copyright legislation shows that this is not rights would mean financial ruin for their field,at all the first time in the history of technologic al which, moreover, had been built in good faith and inbreakthroughs that the rights versus limitations the absence of any legal restrictions to begin with.issue is discussed. The early stages of the voicerecording industry may serve as an example. It may be amusing that a century ago the recording industry lobbied for copyright limitations, but withoutIn the early 20th century, the impact of the Sec- those limitations, the whole industry might not haveond Industrial Revolution was beginning to show its developed as quickly to such magnitude as it did.full force as the development of new media formswas rapid. Should new forms of media be arranged Ricketson’s claims illustrate an interesting shi inon the basis of strict exclusive copyright or should the way arguments are advanced regarding thethe new media be somehow arranged differently in relationship between copyright regulation and eco-order to encourage its development? nomic development. Traditionally, copyright has been seen as a vehicle for encouraging creativity.The arguments in favour of the benefits of new In a closer examination of Ricketson’s argument, ittechnology emerged as an important factor in the becomes clear that he, like Brennan, attributes theadaptation of compulsory licensing in the early 20th rapid growth of the phonogram industry to the lackcentury. The compulsory licensing model applied in of enforceable rights. The argument could even bethe patent system of, for example, German legisla- turned upside down, posing the question whether,tion allowed for the use of patented material against if the development of a technological phenomenonequitable compensation under certain circumstances. is to be encouraged, instead of granting copyrightAdapting this idea to the copyright system meant it might be better not to provide such protection atthat it would not be illegal to make a voice recording all, at least in the initial stage of the business.of someone else’s material, but the author of thatmaterial had a right to compensation. This required Stretching Ricketson’s argument a little, one mightbalancing measures within the copyright system [9]. draw the conclusion that had the exclusive right ofAs an overall statement, the technological develop- control over the recording of a work been estab-ment gave rise to a new media economy, which in lished early on, the development of the industryturn required new institutional balancing of interests. might not have been as fast and pervasive as it now turned out to be [12]. Yet, it would be pushing theAccording to Brennan, the new industry was initially point too far to claim that, for Ricketson, the devel-able to flourish untroubled by the Berne Convention opment of the recording industry demonstrated acopyright obligations. Copyright owners perceived negative trend: rather, his point was to illustrate thethis to be doubly unfair: the popularity of the new position of the industrial entrepreneur who seizestechnology meant that their sales of printed music an opportunity knowing that legislation lags behind.began to decrease, while they continued to receiveno share of the profits generated by the widespread Looking at the InfoSoc Directive from this perspective,use of copyrighted materials in the applications of in retrospect, the limitation concerning interim copiesnew technology. Given the tendency in economic seems to have worked in favour of the disseminationand institutional theory to stress the role of legal of the Internet, whereas all other parts of the legisla-framework as ‘the rules of the game’, seen by tion have proven more or less technology-dependentmany as facilitating the spread of market economy, and thus running the risk of being outdated.Brennan claims that the rapid development of therecording industry could take place only because of We could also see the evolution of latest technol-the lack of legal norms [10]. ogy innovators such as Google and YouTube as examples of the same approach: from early on, theThe well-known Berne Convention specialist Sam companies adapted an operating mode of realis-Ricketson argues along the same lines, point- ing their mission first and worrying about nationaling out as one of the factors contributing to the copyright regimes later.rapid growth of the recording industry the lack ofenforceable rights by copyright owners. Copyright Copyright protection may then either benefit orowners had initiated campaigns at both national hamper business, with the question being simply
  • 41. 40 O P E N I N N O V A T I O N 2 0 1 2 about whose business it is that we are talking about. 2. Impracticality argument Mass use of copyright-protected works makes the present stage faces major challenges from broad problems of exclusivity-based copyright fairly clear. piracy, which makes copyright protection in the Consider a cable television system with a capacity traditional sense very difficult to manage. Tackling for, say, 200 television channels. Each channel pro- piracy without limiting individuals’ freedom to net- vides programming 24 hours a day, seven days a working is problematic and there is no better instru- week at the rate of approximately two programmes ment for keeping contact with beloved artists than an hour. the Internet [13]. Each of the programmes involves at least 10 to 20 Examples of discussions on alternative rights holders, and in the case of major productions perspectives to copyright may even number hundreds or even thousands, The issue of limitations was debated to a greater including cooperators claiming at least some degree extent when cable television started to spread and of authorship of the creative elements of the pro- developed an economically significant outcome for gramme. We can assume the average number of copyright holders. I shall end this brief article with such rights holders to be 100 per production. Let us a look at some of those themes which, in my opin- further assume that the licences for cable retrans- ion, may have relevance even today. What is com- missions were to be negotiated individually with mon to these ideas is approaching copyright more an average of 100 rights holders per 30-minute as a system of compensation for mass use rather programme. A simple calculation then reveals than trying to uphold the idea of exclusivity where that for only one TV channel, the total licences to it does not work. be negotiated and agreed on will amount to 24 x 2 x 100 = 4 800 licences per day. In the case of the 1. A right to compensation as a surrogate for 200 channel cable operator, this would mean 200 the rights to exclude x 4 800 licences per day, that is 960 000 licences. In the United States, during the enactment of the This is clearly not only impractical, but impossible. cable television compulsory licensing provision, key And it is obvious that the complexity involved in the questions arose regarding the juridical grounds for Internet is very much greater than in cable TV. doing so. The main issue was, owing to the consti- tutional power of the Congress to grant authors the The impracticality argument was used in the Con- exclusive right to their writings, were it not uncon- gress during the preparation of the United States stitutional to create compulsory licences which ren- 1976 Copyright Act, underlining the impractical- der the author’s copyright less than exclusive, by ity and undue burden in the requirement that taking away from authors the right to deny poten- every cable system operator negotiate separately tial users access to their copyrighted works? The with every copyright owner whose work was to be issue, however, was never settled in court. retransmitted over the system [16]. On the other hand, in 1909, when the principle of 3. The need to subsidise an infant industry compulsory licensing was first enacted, the song- The argument focusing on the support needs of a writers affected feared that if they successfully new and innovative industry has been raised sev- challenged the new Copyright Act, they might be eral times in copyright history. The perspective le with no protection whatsoever against mechan- was also brought up in the discussions concern- ical reproduction of their songs, in which case the ing the amendment of the Berne Convention to issue would fall under the fair use regime [14]. So, include the compulsory licensing exemption for the feasible alternative for compulsory licensing phonorecords [17]. was not exclusivity but fair use. In the United States, the ‘emerging industry’ argu- Brennan has compared the compulsory licensing of ment has been widely used especially in relation to retransmissions to the classic example of the light- cable television. The argument has been put for- house in economics as presented by R. H. Coase. ward that a developing industry needs the protec- In Brennan’s estimation, the two are comparable tion of a reliable and reasonable compulsory licence in the sense that in both cases actual exclusion to make planned growth possible [18]. of outsiders from the use of the service is diffi- cult or impossible. A right to remuneration there- Conclusion fore serves as a surrogate for the right to actually The rights limitations dilemma should be approached exclude [15]. in a constructive fashion, for example by analysing more closely the complex technology-related issues
  • 42. 41 means permission to use a work without payment (fairnow only touched on above. The issue of artists’ use) or via a statutory or compulsory licence (againstincome is important, but being ‘superstar economy’, payment). In what follows, I will also not discusscopyright system should be constructed differently separately statutory (or legal) and compulsory licenceto be an effective safety net for the bulk of artists but instead use the term ‘compulsory licence’ whennot enjoying major success. No perfect solution can discussing non-voluntary expected to be attained from such work, but at [7] With corresponding rights components as suggestedleast the common ground for further discussion by Calabresi and Melamed (1972) indicated in parentheses. Calabresi, G. and Melamed, A. D. (1972),may thereby become broadened [19]. Regulating a ‘Property Rules, Liability Rules, and Inalienability: Onemoving target in a highly innovative environment View of the Cathedral’, Harvard Law Review, Vol. 85/6,requires a liberty-based regulation. April 1972, pp. 1089–1128. [8] We could advance a ‘high risk, high profit’ argumentContact to support a claim that higher level of opportunity invites more investment, but in general the assumptionDr Mikko Huuskonen of money’s being conservative seems correct.Counsellor Brussels as an era of important technological impact onDocent, Business Law copyright, see Ricketson, S. (1987), The Berne ConventionLappeenranta University of Technology for the Protection of Literary and Artistic Works: 1886– 1986, London. According to Koktvedgaard, Mogens:NEPT, Directorate-General for the Information Immaterialretspositioner, Copenhagen 1965, pp. 440–Society and Media (10.2011–2.2012) 441, the artistic skill of an inventive genius had to way to modern and more impersonal protection during the 20th century, with the modern immaterial rights tendency resulting in the inventions being protected as products of impersonal rather than personal effort.References [10] Brennan, D. J. (2003), Retransmission and the US[1] Directive 2001/29/EC of the European Parliament Compliance with TRIPS, The Hague, p. 11.and of the Council of 22 May 2001 on the harmonisation [11] Ricketson, p. 94.of certain aspects of copyright and related rights in theinformation society (the InfoSoc Directive). [12] While this may represent a not entirely legitimate extension of Ricketson’s argument, it helps to illustrate[2] Deloitte, Background Document in support of the the ‘mutual beliefs’ that observers have in assessing theDigital Agenda for Europe, final report, Brussels, March effects of rights on an economic activity.2010, p. 106: ‘One of the main challenges for the sectorlies in the music industry with its losses on CD salesover the last years. In this respect, the music industry concerning the legendary jazz guitarist Mike Stern via hisblames the illegal P2P networks for the losses they areexperiencing (their estimations of losses are in the order [14] Cassler, R. (1990), ‘Copyright Compulsory Licensesof 300 billion in Europe)’. — Are They Coming or Going?’, Journal of the Copyright[3] ‘Superstar economy’ refers to an economy where Society of the USA, Vol. 37, No 2, January 1990, p. 237.the distribution of income is grossly uneven. This is [15] Brennan, p. 103.typical in the copyright economy. See, for example,Towse, R. (2001), Creativity, Incentive and Reward;An Economic Analysis of Copyright and Culture in the Compulsory Copyright License’, Federal CommunicationsInformation Age, Edvard Elgar, United Kingdom. Law Journal, Vol. 42, No 2, April 1990, pp. 202–203.[4] Lagerspetz, E. (1995), The Opposite Mirrors: An Essay [17] Berne Convention for the Protection of Artistic andon the Conventionalist Theory of Institutions, Kluwer Literary Works, Paris Act 1971 (Berne Convention), 1986,Academic Publishers, p. 10. The standard definition of p. belief includes a series of reiterated beliefs [18] Cassler, p. 246.ascending to infinity. Lagerspetz’s reformulation of thenotion goes as follows: use of copyrighted material, see Huuskonen, M. (2006),It is mutually believed in a population S that p iff (if and Copyright, Mass Use and Exclusivity, Helsinki.only if):(i) everyone in S believes that p;(ii) everyone in S believes that everyone in S believes thatp, and so on ad infinitum.[5] Lagerspetz, p. 13.[6] Without going into detail as to how the internationalinstruments regulate exclusivity and its limitations, hereI simply rely on the definition formulated by Sen leben,M. (2004), Copyright Limitations and the Three-Step Test,Kluwer Law International, p. 22: limitation of copyright
  • 43. 42 O P E N I N N O V A T I O N 2 0 1 2 1.6 Socio-economic impact of open service innovation supporting the Digital Agenda In 2011, the study OSI: Socio-Economic Impact of The case study analysis led us to a new open inno- Open Service Innovation supported by the Euro- vation model by reversing the innovation pyramid pean Commission’s Directorate-General for the where the user is one of the key drivers and wealth Information Society and Media delivered the final generators in the new open innovation ecosys- report to be published [1] [2]. The study assesses tem. This model is also new to the research and the economic and societal potential and impact industrial community. of an open service innovation approach in Europe. The OSI study was coordinated and led by Logica Policy should be used to remove barriers that business consulting, Dr Gohar Sargsyan. The con- would not be removed by normal market mecha- sortium consisted of IBM, Nokia, Intel, Novay and nisms. Market failures or systemic failures can pre- the Innovation Value Institute. The study consid- vent the uptake of innovations or new innovation ers the role of users and citizens in open, user- mechanisms, such as open innovation in services. driven service innovation, as part of the indus- trial ecosystem, in the context of societal and ICT As an industry-led study, this study’s findings and developments. recommendations on open service innovation policy are grouped from the perspective of the market: The OSI report offers modern models, methods and namely, from the perspective sharing ideas (input), approaches to open innovation, as well as analyses the interaction process of open service innovation, of the challenges of economic values, wealth gener- and wealth generation in socio-economic terms. ation in socio-economic terms and creation of com- This three-perspective grouping is new to the mar- mon values. It also suggests successful business ket on open service innovation approach and we ecosystem approaches for service innovation. call it the ‘Open-Box’ model. Here are the three perspectives. The study’s final published report elaborates on open service innovation: then it classifies schemes 1. Given that open services innovation is about for open innovation for a better comparison of dif- sharing ideas, (half-)fabricates and results of ferent forms of open innovation and different types intellectual creativity, what, then, are the bar- of underlying Intellectual Property Rights (IPR) con- riers for people and organisations to make this structs. Our methodology gives an overview of the input available? Are there policies that enable literature, leading to an open service innov ation novel sharing principles and accelerate the model with society’s participation in innovation availability of this input? processes, which is new to the research commu- 2. The processes of open services innovation as nity. The model forms the basis of the case analy- described in the model section of this study indicate that the most productive driver for innovation policies in EU Member States in relation innovation is end-user and their interaction to open service innovation. with producers and service providers. The case studies indicate likewise. What, then, are the A er a more detailed justification of the research barriers that we seek to remove to improve this approach, the report describes the case study interaction process? approach: 15 detailed case analyses from different 3. Open service innovation seeks to create value EU Member States on open service innovation on for our society and our economy. Harnessing innovation process, firm, network, service, society the available input into a productive interac- level questions are described. A er detailed analy- tion process must lead eventually to services sis of the case questions, we show the cross-case that benefit our European society and economy. analysis and summarise the key barriers and les- What, then, are the barriers that keep us from sons learnt. The relation to Europe’s Digital Agenda exploiting the creativity of our organisations has been identified. We also identified several and people and how can be stimulate wealth issues beyond the Digital Agenda’s current actions, generation in socio-economic terms? as we believe that not all the identified barriers and the lessons learnt in our study are fully covered in The above mentioned approach is illustrated in the the actions of the Digital Agenda.
  • 44. 43Figure 1. Open service innovation ‘Open-Box’ Model C A BFindings and recommendations Recommendationson sharing creativity Open data of public bodies: a proactive attitude is required by public and semi-public bodies.Creative society What is the new ‘industrial open’, the newThe rise of a class that takes open services inno- ‘industrial trust’?vation as the baseline has an impact on society. Open data is a must, but conflicts will ariseWe see the growing impact of information, commu- with the protection of personal integrity. Opennication and media on social interaction [3]. Each data of one’s own body is strictly private. Here,person is connected to several communities at the deeper insight into ethical issues is required.same time, both in the real world as well as in vir- What is the new security, the new individualtual worlds. These are the communities in which openness?you work, do sport, absorb culture, live, recreate,share emotions and experiences. Creation of virtual Findings and recommendations oncommunities will allow new groups to form, defined a productive interaction processby their media interests. The services chainA large number of the old barriers entering the -creating sector have been removed by digitalisation. tion chain differs profoundly from the earlier water-Entry costs are no longer determined by the costs fall model in that it starts and ends with the end-of hardware and distribution networks. Using and user. This forms a loop in which experimentationrebuilding information leads to new prominent com- and creation follow each other iteratively. Livingpanies. The user will live in a cloud of information. Labs have been introduced as a means to measureSimpler and cheaper access to public information is and optimise the usability. Therefore, the innova-needed for governments to be heard. Open design, tive aspect of the creative technology chain is thatopen access, open architecture are in order. Crea- it runs from science via valorisation into education,tive commons and open sources are searching for impact and social innovation.their way next to protected creative or intellectualproperty. New rules may be implemented as new The services creation partnerslaws or as new habits. Old barriers will go. We better Services innovation happens where the creativeparticipate to make that happen. core plus research and development plus industry
  • 45. 44 O P E N I N N O V A T I O N 2 0 1 2 meet. The challenge is in the scaling up from an and their legal frameworks that bring the crea- idea to production. The problems in scaling up tive core and corporate players to a level play- are primarily due to broken links in the technol- ing field. Production vouchers or production ogy chains. At the heart of services innovation performance contracts are promising directions. are small organisations, ad hoc cooperative ven- Implement the approach IPR protection with tures, freelancers and one-person businesses. At openness requirements, for example, Creative the other end are big industries with production commons, open licensing. A shared process in experience and capacity. At yet another end is the which knowledge is made available openly and research world in universities and institutes with transparently for all to develop Internet-based its own average world-class reputation, practi- products and services on the new platforms. cally inaccessible to small organisations. The crea- In Intellectual Property and Legal Issues in tive core, science and industry need to meet. The Open Innovation in Services [4], specific issues essence of creation is to be at the same place, the concerning IPR and networking, user involve- same time and in the same mood. Nothing can ment of open platforms are identified and replace that. Therefore, the creative climate has recommendations are provided. proven to be an important attractor. The creative climate is to be stimulated regionally. Education Despite all development, end-users o en lack the Collaborative skills are o en lacking. Shared ideas, innovation, entrepreneurship and ICT skills to actu- values, and processes are lacking. There is a lack ally participate in open innovation and creative of joint vision on open service innovation processes, society. Think of hospitals, where both nurses as due to an immature innovation and R & D culture in well as practitioners lack ICT awareness to be suf- services firms. ficiently open to new services and participation in service development. Think of users’ motivations The parallel (versus the sequential waterfall on participation in open innovation. There is a tre- approach): the classical sequential model of in- mendous gap between potential and current state novation does not always work but different open of affairs. This also holds for public authorities and innovation mechanisms are applied in parallel and civil servants that lack the skills to play a role as in a networked organisation. lead customer in service innovation. Recommendations Services are all about experience. To stimulate the Take the end-user of a service (the one who end-users to participate in services’ creation or applies a service) as the co-creator. The impli- usage, gaming methods are o en applied. Games cation is that no matter if people are inside or are highly stimulating and improve the end-user’s outside of an organisation, the right triggers motivation. Highly motivational games, exploration must be applied. This is not financial reward of information and media sources, and direct feed- only, although a sustainable living must be back through wearables are the best assets for life- possible when one is adding ‘value’ to someone long learning, where the player needs to know in an else’s business. instance whether the answer is right or wrong. The Create and experiment with new forms of open distinction between learning at school and learning laboratories (digital design labs and virtual in life will fade. Learning for personal development laboratories) where institutionalised R & D per- will be supplemented by learning for sustainability sonnel work together with non-institutionalised and society. researchers from the creative core of SMEs. Include the informal R & D professionals in Recommendations the established R & D networks including the Vitalise education: teach a new generation how flagship initiatives. Open up the labs, create to operate in a networked society where firms, workplaces and invest in digital infrastruc- the network and people are all actors in the ture to share data, models, half-fabricates and same ecosystem. knowledge. Traditional careers will differ. A lifelong employ- Create new forms of PPPs (Public-Private ment with a corporate firm will be replaced by a Partnerships) or PPPPs (Public-Private-People lifelong employment in a network. Partnerships) to stimulate the creation of new What is the new lifelong employment? services. Educate service professionals: raise aware- Stimulate the role of corporate industries as ness of ICT potential, clearly distinguishing between hype and truth. Additional ICT in the or create new fiscal and financial instruments classroom can significantly improve learning
  • 46. 45 experiences and access to education (especially employee and shareholder all refer to the same in disadvantaged regions in Europe and glob- individual, albeit in different roles. Our society is ally), empowering and training teachers to use becoming aware of the role the individual is play- technology to change lives. ing in the well-being of everything around us. The Invest in ICT knowledge of civil servant/pub- consequence of this trend is that we also have to lic authorities that o en lack the knowledge reverse think about the innovation cycle. We have and skills to play a reinforcing role in service to start at the individual and focus on what is add- innovation. ing the most value to that individual. This thinking Support and participate in education transfor- is described as reversing the innovation pyramid mation — increase student competitiveness, build job skills and competencies, support eco- nomic development and provide social cohesion. In the reversed innovation pyramid, we have to find This includes assessment, the ability to assess a new understanding of ‘share of profit’. 21st century skills. Encouraging student participant and interest What makes people contribute? Why would they in STEM (Science, Technology, Engineering, and do that? Maths) will fuel technical advancement and How is added value capitalised into wealth and opportunities. the benefits shared over all contributors?Findings and recommendations Wealth generation for the marketon wealth generation The innovation (in product, service, or delivery) mustThe definition of wealth generation is undergoing raise and create value for the market, while simulta-a revision. In the corporate thinking of many of neously reducing or eliminating features or servicesthe case study participants, it is no longer share- that are less valued by the current or future marketholders profit only, but a mix of client satisfaction,employee satisfaction and shareholder satisfaction. never offered to customers before, so called simul- taneous pursuit of differentiation and low cost and the combination tries to highlight the sweet spotemployee and shareholder satisfaction in equal in the middle. We extend that to stay that ‘buyers’terms. In fact, this means a further rise in the or ‘users’ can be both consumers and innovators/role of the individual because, in the end, client, participants, given all of the supporting conditions.Figure 2. Innovation ecosystem: traditional and new open innovation model Traditional approach New open innovation models Service to the customer market - no user involvment - innovation ecosystem (including users, business partners, individual App developers, etc.) Wealth generation by the service provider - no user involvment - users as innovators / participants Users as in new services creation participants of innovation - service providers capturing new services by service ideas from the users creation by providers innovating service/ service/ technology technology development development Wealth generations: - innovation Share profit - user as a customer adoption by users - service provision and adoption service providers and service - innovation ecosystem partner - fair exploitation providers dissemination and uptake - upscaling - costs - costs
  • 47. 46 O P E N I N N O V A T I O N 2 0 1 2 Figure 3. Value Innovation [5] is not to enter a big corporate, but to exploit one’s own intellectual capital at the stage of innovating. If we manage well as a society, we can exploit a vast resource of creative and entrepreneurial minds. Costs Push a new service mindset versus a new prod- uct mindset: this new mindset will place the cli- ent experience at the centre of a business’s pur- pose. It will unlock greater value for customers Value in their dealings with providers. It will redesign Innovation business processes and business models lead- ing to renewed growth for the business, and for an economy of such businesses, see also [6]. Encourage users to participate in the innovation process and creation of new services by studying Buyer Value the innovation ecosystem and users’ motivations [7]. Stimulate heterogeneous cluster forming and create financial and fiscal constructs to help - ogy, societal issues, users/creator groups and Wealth generation in an inclusive society artistic forms. The right combination of creativity, content and Initiate an EU-wide creative council where technology will generate services that close the employers, unions, public agencies, politics digital divide. New devices will bring inclusion to the and SMEs are represented. Promote creative elderly and the handicapped by story tables, moni- thinking as a foundation for open services toring wearables, devices and individualised mem- innovation. ory access from public broadcast archives. Closing Build a single market for services in Europe with the digital divide pays off in social values. Social the active participation of its users. coherence needs specific attention in response to the fragmentation of society by television and pas- The key driver to ‘the individual-corporate’ is ICT. sive Internet use. Reintroducing storytelling in com- As we have seen from our case studies, individ- puter settings almost without interfaces will serve ual-corporates cover different sectors; however, societal coherence. all are driven by ICT. So, what new industries are coming up that incorporate this openness approach Wealth generation for well-being already? ICT-led Creative Industries. There are many opportunities once the worlds of information, monitoring and communication have The information motor been brought together. Sharing content and cre- Several new ways are open ahead of us. A differ- ativity by the Internet will create new well-work- ent style of working has entered the stage with less ing lifestyles: wherever and whenever. Wearable emphasis on control and more on initiative and self- technology supported by Internet coaching will reliance. The lifestyle is more conscious in society, create well-being lifestyles for young people and better informed about energy, body and security the elderly. Hence, it will control healthcare costs to ensure longer living at home when we grow old. by communication as needed. Sustainable energy, Art is more important than ever to many as the sustainable water and sustainable material use will meaning of life in a society with less religion. And require a complete turnaround in our daily practices: there is an effect on the habitats we live in, from for companies, for individuals, for the government. the anonymous world of the Internet to the social media. Recommendations Adopt a policy to stimulate social innovation sci- The creative lifestyle, the individual-corporate ences in the recognition that wealth generation The key driver to ‘the individual-corporate’ is ICT. is driven by the right balance between citizens, Many people are beginning to work and to live clients, employees and shareholders’ interest. the creative way. They work in a high degree of In the Netherlands alone, a high percentage of autonomy and, as the other side of the same coin, freshmen from higher education start their own with a high degree of purpose and result. They cre- enterprise. Their ambition, at the start at least, ate something individually and, at the same time,
  • 48. 47 [3] Kroes, N., Vice-President of the European Commissionoperate in a network of relationships. This is a life- responsible for the Digital Agenda (2010), Unlockingstyle where responsibility and accountability are the digital future though open innovation, fourth pan-important assets. Leading the shi are the peo- European Intellectual Property Summit, 3 Decemberple in many diverse fields who create for a living, 2010.not only products, so ware or designs but also [4] Vallat, J. (2009). Intellectual property and legaleducation, strategic advice and science. This new issues in open innovation in services. Europeaneconomic class is generally known as the ‘creative Commission, Directorate-General for the Information Society and Media.class’. Artists and designers are only a small subsetof the class we have in mind. What makes the crea- [5] Chan, K. and Mauborgne, R. (2005), Blue Oceantive sector unique is the integrated way of living Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, Harvard Businessand working and regulating with an emphasis on School Press.self-motivation and flexibly networked. At the coreof the creating class are information, communica- [6] Chesbrough, H. (2011), Lead article, ‘Open services innovation — a new mindset to find new sources oftion and media. growth’, In Service Innovation Yearbook 2010–11. Publications Office of the European Union, Luxembourg.Considering the urgency to turn our study recom- [7] Benkler, Y. (2006), The Wealth of Networks, Yalemendations into an action today, the partners and Press.the contributors of the OSI study are progressingwell on turning it into an action plan. The results of [8] Baiyere, A. (2011), Disruptive Innovations at the bottom of the pyramid: Can they impact on theour study attracted industry representatives, poli- sustainability of today’s companies?, University ofcymakers, educational institutes, students, artists,and researchers. The study results have already Thesis of Information Management, 1 June, 2011, p. 25,been addressed and discussed in number of papers pp. 79–80, p. 91.and scientific works [8] [9]. We are also working at a [9] Janssen, W. Van Buuren, R. and Sargsyan, G.national level within the participating EU countries (2011), Samenwerken in innovatie — Ervaringen uitfor the follow-up action plan. vij een Europese cases, Informatie maandblad voor de informatievoorziening, jaargang, 53/8, October.ContactsDr Gohar Sargsyan, MBASenior Business ConsultantLogicaNetherlandsgohar.sargsyan@logica.comDr Geleyn R. MeijerChairman Media, Creation and InformationAmsterdam University of Applied Sciences (HvA)Netherlandsg.r.meijer@hva.nlReferences[1] Europe’s Information Society Thematic Portal,Newsroom (2011), OSI: Socio-economic impactof open service innovation (SMART 2009-0077)( ).[2] OSI Consortium (2011), OSI: Socio-EonomicImpact of Open Service Innovationthe Directorate-General for the Information Societyand Media (SMART 2009-0077) (http://ec.europa. ).
  • 49. 48 O P E N I N N O V A T I O N 2 0 1 2 1.7 Pioneering regions and societal innovations as enablers for the Europe 2020 strategy Abstract Europe’s primary goal today must be to get Europe This article is about the need for transformation back on track. The track, however, is not the same and societal innovation in Europe. In order to as it used to be. Old practices and structures are achieve the objectives of the Europe 2020 strat- not enough to achieve the goals Europe has in mind egy, policymakers at all levels must make clear for welfare and quality of life. It is time to invent decisions, and back them up with actions enabling the future of Europe. countries, regions, organisations and citizens to contribute actively to creating an innovation soci- The focus is defined by the Europe 2020 strat- ety in Europe. The road ahead has been described egy and the seven flagships. The implementation and now the real challenge for Europe is implemen- at practical level by the policymakers in Member tation. There is a need to bridge the gap between States and regions requires new kinds of collabo- existing research results and actual practice. Soci- ration between public, private and third-sector par- etal innovations — broader than technological ties. The measures concern all aspects of govern- and social innovations — are required. Pioneering ance in the public and private sectors, and much regions and regional innovation ecosystems will more collaboration is needed than before. Europe play a central role in this. Entrepreneurial initia- needs powerful initiatives to concentrate our energy tives that translate grand challenges into local pri- and focus on clear priorities, to connect the crit- orities and address pressing needs are important. ical actors and motivate them to engage with each They should employ the best experts and change other, and cooperate across borders of all kinds. agents from diverse fields to pioneer innovative This calls for creativity to overcome the obstacles solutions. Prototyping promising solutions and the we see and the courage to meet the challenges we rapid implementation of the best are important have chosen to address. ways of providing value for citizens and fostering a European innovation culture that works. Transformation based on research and innovation This article cites relevant European sources on the The Europe 2020 strategy calls for transforma- nature of the radical changes required, providing an tion. European actors already have much of the overview of policy and practice. It explores several high-level research results required, and the Euro- examples of initiatives already under way, focus- pean Research Area has good systems in place to produce more. However, these are not consistently people can learn from these programmes and how used in political and business processes and gov- to move further. ernance. There is a huge gap between the latest research knowledge and real-life practice here, The key ideas of various experts and experiences while Asian businesses and political decision-mak- seem to converge on a simple message: move ers are actively using European knowledge as the quickly from words to deeds, demonstrate the cour- engine for their global business development. In age to creatively address the challenges agreed on, China and several other countries, the potential of work together, across borders of all kinds, at the globalisation is being realised in practice. Economies level where change impacts the system directly, of scale and rapid innovation have been combined there where government is closest to the people — with the determination to succeed. Are Europeans at the level of innovative cities and regions. incapable of reacting quickly? Has too much success in the past bred a culture of complacency in which The challenge for Europe radical transformation looks like too much to ask? The EU political leadership has called for the renewal of societal and industrial structures and Europe must inspire and leverage its entrepreneur- processes. To accomplish this, Europe needs radical ial, pioneering spirit in order to unlock its enormous transformation and societal innovations. Europe existing resources and focus on fast improvement. cannot recover from the financial crisis with short- As the failure of the Lisbon strategy indicates, good term measures alone. The situation has been suc- intentions, correct analyses and even good plan- cinctly summarised by the flagship initiative Digi- ning are not sufficient. Brave leaps to the future tal Agenda for Europe [1]: The crisis has wiped out years of economic and social progress and exposed and short-term responses will not provide what is structural weaknesses in Europe’s economy. required. There is a deepening malaise, which must
  • 50. 49Figure 1. Europe’s Blue Ocean strategy focusing on societal challenges Creating New Innovative Solutions to Grand Societal Challenges Inn Open art on ov Sm lisati ati cia on pe S PIONEERING REGIONAL INNOVATION ECOSYSTEM set F Dig ull U ind ge M an High-level University ita se o Ch lisa f Research tio n Multi-level Governance Platform: Regional Innovation Ecosystem, Local digital Agenda, Knowledge Triangle, Living Labs, Modernising Triple Helix, Innovation Partnerships, Shared Ownership, Multi-financingbe addressed forcefully: with respect for the fear smart specialisation, full digitalisation and mind-of change, but recognising that only those who do set change — have been defined. Europe can andchange will prosper and survive. Cities and regions should create something unique for global welfaremust become real implementation fields for the and sustainability. This can be achieved by integrat-Europe 2020 strategy. ing Europe’s strong cultural diversity and research excellence with relevant public and private businessRegions should be turned into innovation platforms opportunities through the digital single market.for strategic change. They need to be enabled and This powerful capacity to tackle societal challengesempowered to become the new ‘republics of tomor- does not exist elsewhere. That is why we call thisrow’ — knowledge-fuelled, future-centred drivers the European Blue Ocean strategy. The focus shouldof innovation, providing processes and tools for now be on commitment to concerted action.government and business, products, services andnew jobs for citizens, with an impact felt from the Territorial pacts to implement the Europe 2020 strategynew dynamic understanding of regional innovation The Committee of the Regions (CoR) has definedecosystems, where public, private and the third sec- territorial pacts as instruments that enable regionstor learn to operate together, instilling a new and to take an active role in the implementation ofcreative mood in society. the Europe 2020 strategy. Analysing the ongoing preparation and implementation of the flagshipAll across Europe good experience has been gained initiatives from the CoR perspective, the main con-in the new open research, development and inno- cerns are that they remain too much at a blueprintvation platforms and methodologies which mobi- level and their impact reaches the member stateslise public-private partnerships and encourage the — not to mention the regional level — too slowly.participation of people. The ongoing changes are Too o en, the flagships are considered to concernalready taking hold: in the future, they will have only the European Commission. There is no active resistance to change but, in the current economicshows, the key elements for the full implemen- situation, passive waiting is just as harmful.tation of Europe 2020 already exist: the direc-tions for addressing societal challenges through The territorial pacts should focus on a fewmultilevel governance — including open innovation, tailor-made priorities which have a special value
  • 51. 50 O P E N I N N O V A T I O N 2 0 1 2 for the region concerned. They should not become multicultural, human-centred, focused in soci- a new bureaucratic instrument, but work to etal innovations and capabilities for creating strengthen the natural components of the National better structures for the welfare society and Reform Programmes (NRPs) in order to ensure laying the groundwork for the digital single compliance with the multilevel governance and market development. partnership principles. They could take the form of political commitments, possibly complemented by The EU must have the courage to make quick deci- contracts established on a voluntary basis between sions to fund a few new types of wide-scale R & D public bodies, while focusing on governance and initiatives that transfer the newest global research the implementation of the Europe 2020 strat- knowledge into practical real-life applications in egy. Territorial pacts could especially target policy a creative, multidisciplinary way. These must be areas where regional and local authorities are key pioneering initiatives that employ the best experts actors in relation to the design and implementation and change agents of several fields. It is clear of the Europe 2020 headline targets and flagship that prototyping promising solutions and the rapid initiatives [3]. implementation of the best ones are strategically important both for providing value for citizens and This initiative is officially endorsed by the Commit- for fostering a European innovation culture that tee of the Regions and by the European Parliament: works. so far, it has received political support from the European Commission, the European Council and The critical governance level of Europe 2020 the Belgian, Hungarian and Polish Presidencies of actions needed is local and regional: municipali- the EU. ties, together with regional decision-makers, are the ones to make the Europe 2020 to come true — In his letter to the CoR President Bresso, Presi- or not. The territorial pacts need to apply a multi- dent Barroso stated: “I am pleased that the Euro- strategy approach, keeping in mind the different pean Council confirmed its intention to maintain historical and cultural backgrounds of the regions close cooperation with the Committee of the and their diverse opportunities to utilise the vari- Regions and to fully involve regions in the imple- ous flagship initiatives. This means local differentia- mentation of policy reforms, so as to ensure tion and emphasis on different EU targets, so that ownership. In addition, the Commission is encour- each region only concentrates on a few focus areas aging Member States to set up territorial pacts which have a special value for that region. on a voluntary, basis. These pacts will enable close involvement of regional and local authori- Implementation of the Europe 2020 ties in the implementation of the Europe 2020 strategy is the real challenge strategy. (...) Regional and local governments can To challenge you to think more creatively about make a substantial contribution to the prepara- the broader context, we quote the foreword of the tion and implementation of the national reform Lisbon Council report, An Action Plan for Europe programmes” [4]. 2020 [5], written by Wim Kok, former Prime Min- ister of the Netherlands: ‘Comparing the situation So what does Europe need now? The target has today to 2004, when I was in charge of produc- to be bridging the gap between existing research ing a report on the midterm review of the Lisbon results and actual practice. Structures and pro- agenda, the situation is much more serious. … cesses in cities and regions must be developed, There appears to be a structural lack of connectiv- even radically changed, in accordance with the ity between what is said in Brussels and what is latest research results. We have defined the perceived as being urgent in the Member States. following as the guidelines for immediate actions. … Until now, all European agendas have been seen as too abstract and isolated to be in the national The focus must be on creating and imple- interest. … We have always known that implemen- menting innovations at a practical level, based tation was Europe’s weak spot, so the question of on values and mentality, in order to achieve enforcement is key. … the best way to deal with concrete results for the well-being of citizens. difficult, interconnected issues is to be as forward- Political decision-makers should consistently looking and open-minded as possible. … This can demonstrate the courage needed to aim for the mean shi ing budget priorities around, so that highest ambitions and bring forth something leaders have the financial resources to invest in radically new. areas where tremendous benefits can be reaped Regions and cities should create pioneer initia- from a first-mover advantage, for instance in tives that are genuinely European by nature: eco-innovation.’
  • 52. 51Different articles in the same action plan for Europe incentive to raise their R & D level and to apply2020 frame various aspects of the European successfully the full range of new technologies.’challenges. The report goes further, clearly recognising that Andreas Schleicher: “Never before have skills achieving the goal of an innovative Europe ‘requires been as central to the prosperity of nations and a new paradigm of mobility, flexibility and adapt- better life chances for individuals as today.” ability … [one which] cannot be confined to the Martin Schuurmans: “Unless everyone starts to narrow domain of R & D and innovation policy, recognise innovation as the encompassing fac- import ant though that is. Simultaneous and syn- tor for research, education and industry with chronous efforts are needed at different levels’. entrepreneurship in the driver’s seat, Europe will Cutting across all levels is ‘the necessity for more continue to stall.” positive European attitudes and culture towards Alessandro Leipold: “A growth-enhancing struc- entrepreneurship and risk-taking’. tural reform effort has become even more crit- ical in the wake of the crisis and its legacy of What do these messages coming from top experts high unemployment and depressed potential mean for the changing role of regions in European output.” policy? We want to review these, and integrate Harry Verhaar: “As we tackle the challenges of them with some of the main conclusions coming sustainability and climate change, the direction from the CoR’s sixth Territorial Dialogue [7] on ter- we need is crystal clear, but the momentum is ritorial pacts to implement Europe 2020 (organised just too weak.” Geoff Mulgan: “Systemic innovation matters as much in society as it does in the economy.” The dialogue focused on the CoR’s proposal for territorial pacts at the country level, as a tool for versus “industrial economy”. It is about figur- national, regional and local authorities to design ing out how the digital economy will transform and implement the national reform programmes in industries and societies, improve productivity partnership, working together — through contrac- and increase added value.” tual agreements, where relevant — in an integrated Mark Spelman: “Conventional wisdom views and coordinated manner. The point was made that ageing as a problem. The ‘greying’ of the popu- cities and regions need to perform better as spear- lation represents a significant untapped growth heads for innovation — which should be understood opportunity.” as more than just research.Much of what is stated in the Europe 2020 strat- There was a unanimous view that the strategyegy could already have been envisioned years would deliver only if built on each region’s existingago. As evidence, we quote the outcome of the EU assets. The closer to the regional and local levels, - the more policy choices would reflect underlyingter Esko Aho. The report [6] published in January needs and be effective. Coordination of efforts will2006 presents a strategy to create an Innovative only bring results if policymakers focus on fewerEurope: achieving this requires a combination of a actions: territorial pacts could serve this purpose. Inmarket for innovative goods and services, focused his statement during the dialogue, MEP Lambert vanresources, new financial structures and the mobility Nistelrooij expressed a strong conviction that Europeof people, money and organisations. Together, these needs a new kind of governance to enhance jointconstitute a paradigm shi going well beyond the responsibility and ownership of policies. He pointednarrow domain of R & D and innovation policy. out three important concepts which must serve as a platform for specific government measures:The report crystallises some fine insights verifying concentration, connection and cooperation.the need for more in-depth understanding of howmarkets function: ‘More resources for R & D and The key ideas of various experts and authoritiesinnovation are a necessity but they are an insuffi- seem to converge on a simple message: movecient means to achieve the goal of an Innovative quickly from words to deeds, working together atEurope. A paradigm change is needed in which Euro- the level where change impacts the system directly,pean values are preserved but in a new social struc- there where government is closest to the people —ture.’ The report continues: ‘Our proposal is to create at the level of innovative cities and Europe a market that stimulates and encouragesinnovation and in so doing provides firms with the
  • 53. 52 O P E N I N N O V A T I O N 2 0 1 2 Increasing competitiveness and social 5. Promote scientific research to understand the cohesion through intellectual capital world, improve people’s lives and stimulate Throughout history, cultural richness and enrich- innovation. ing collaboration between cultures have been the 6. Promote design processes, thinking and tools, strengths of Europe. Due to the globalisation and understanding the needs, emotions, aspirations the network society business practices, the competi- and abilities of users. tiveness of Europe must now be seen in a new light. 7. Support business innovation that contributes to Competitiveness must be strengthened in diverse prosperity and sustainability. ways, on the one hand putting emphasis on criti- cal success factors and focus themes and, on the This manifesto is very ambitious, and we know from other hand, on the skills, abilities and well-being of experience that it won’t happen simply because all regions and their inhabitants, thus improving the experts say it. Regions and cities need plans, probability of development and success. Competi- equally ambitious, which can be followed with tion is a positive thing when it aims at improving the persistence. And people — throughout the com- quality of life and skills of all participants. It is not a munities and at all levels of society — need to be question of some parties being oppressed and some engaged. Social cohesion is one of the main respon- successful, but of increasing the common good. sibilities of regional and local governments in the EU. It is o en their legal obligation to design, fund Competition is indeed an excellent motivator. And, and carry out policies aimed at integrating peo- to be sure, Europe is facing strong competitors. ple who are excluded from the labour market. The Looking at the global players, we see the BRIC objective is to use legal competencies and tailor countries with their boundless energy, determined various programmes to meet local needs, with a focus and positive images of what the future can special focus on young people and children. Effec- bring. These positive images alone can be major tive integration is needed in the areas of educa- drivers for change, and these countries are working tion, housing, urban planning, social sector, security, incredibly hard to make them come true. In order to and cultural activities. Most of all, citizens should be able to compete effectively, Europe must create come to understand, accept and actively contrib- its own stories of positive futures, and back them ute to pursuing shared European goals; they should up with the same dedication and focus. resonate with the confidence that they are part of a positive and important enterprise: ensuring future The successful implementation of the Europe 2020 welfare and quality of life for themselves and their strategy depends on systemic change. This calls for children. strong purposefulness and goal-setting based on a deep understanding of the interconnection and What does this mean on a regional level? Too o en, mutual dependencies of various factors and phe- people still remain the objects — or even the vic- nomena, as well as targeted collaborated actions tims — of ad hoc actions, rather than becoming by different decision-making bodies operating on diverse activity levels. Old ways of working do not reason, the main target for the renewal measures function effectively anymore. Europe needs courage is not changing the structures, but changing the and the skills for open renewal. All actors need to working culture and thus mobilising various stake- resonate with the confidence — this, especially, at holders. Of course, some structural changes are all levels of society — that Europe is serious about necessary in order to improve the preconditions open renewal. The manifesto of the European Year for developing this working culture, and to enable of Creativity and Innovation 2009 [8] provides a citizens to flourish and realise their potential. This solid cultural basis for the renewal needed during requires strengthening the role of cities, but not, the next few years. however, in their old role as service providers. The new role of cities is to enable proactive collabora- 1. Nurture creativity in a lifelong learning process tion and business activities. Europe’s cities should where theory and practice go hand in hand. create a regional culture of collaboration, charac- 2. Make schools and universities places where stu- terised by responsiveness to the motives, aims and dents and teachers engage in creative thinking resources of people, communities, and local busi- and learning by doing. ness, including social cohesion as part of their core 3. Transform workplaces into learning sites. businesses. They must be aware of the challenges, 4. Promote a strong, independent and diverse capable of translating them into the language cultural sector that can sustain intercultural that motivates people and business, consistent in dialogue. engaging people at different levels of society and
  • 54. 53supporting them, where needed, to co-create their Renew the working culture to break downown futures. management silos which prevent efficient ser- vice development. Develop customer-centredCreating synergy through flagships — production and optimise costs, organisationsthe model for Smart Regions need open-minded working practices that crossCohesion policy is one of the key policy areas organisational boundaries at both memberthrough which regional and local authorities can state and local level, addressing third-sectorcarry out many of the flagship initiatives. The ‘Ter- parties and businesses as well.ritorial pact on Europe 2020’, as a distinctive partof the strategy’s governance, should be used as a It is essential that regions are able to translatepractical instrument in line with the inter-institu- grand challenges into regional priorities, relatingtional partnership principle as officially recognised them to pressing local needs. They must be ablein the strategy. Territorial pacts could be conceived to downscale the rhetoric while keeping the poetry,as natural components inside the national reform facilitating cities, communities and neighbourhoodsprogrammes. They should not become new bureau- in addressing the issues that really matter to them.cratic instruments, but rather concrete mechanisms In effect, Europe needs to create and support inno-inside of the Member States’ internal policy struc- vation ecosystems which address issues at all threetures to ensure the commitment of public author- levels, without losing focus on the importance ofities at all levels to align national objectives to the enabling people to do the work themselves. ThisEurope 2020 strategy. strengthens and supports the entrepreneurial spirit Europe needs to address its grand challenges.To take one example from the Digital Agenda flag-ship, there is a list of initiatives where regional and Taking advantage of the coming cloud culture oflocal authorities can clearly deliver results, to name Internet everywhere, the EU is already openinga few: eGovernment to improve the supply of public opportunities for extensive digital collaboration atservices in education, health, social inclusion and the regional and local level. Until recently, digit alterritorial planning; increasing the interoperability Europe was characterised by ad hoc cooperationbetween central, regional and local administra- between strongly individualistic players takingtions; enhancing ICT literacy; stepping-up aware- advantage of possibilities where they could beness about stimulating the upgrade of infrastruc- developed. Now, there are promising possibilities forture; supporting the development of public-private active collaboration at all levels, and citizens, busi-partnerships involving local and regional authori- ness interests large and small, local governmentties; and supporting ICT development for SMEs in and universities — professors, researchers andthe area of public ICT services. entrepreneurial students — are much more easily able to connect and co-create new opportunities toThe challenge for Europe 2020 is what happens at address local issues and generate regional welfare.the regional and local level: Will the regions wakeup and implement the Europe 2020 strategy and expectation is that linked regional ecosystems withthe flagships, and through that accelerate their complementary change agendas will allow almostreaction speed in answering the grand societal unlimited opportunities for entrepreneurial actorschallenges and changing needs? Integrating some on a local level to interconnect, learn from eachkey elements from different flagships, we can define other, act together to address shared ambitions andthe following critical success factors. achieve mutual goals. A new mindset is required, and one can already see the transformation to this Strengthen the decision-makers’ understanding culture of collaboration taking place. of the digital economy and the huge opportun- ities available to enable the renewal through Regional ecosystems — operating as the interface the flagships. between European level, national level and the Promote citizen and customer-centeredness level of individual initiative — are ideally suited and new practices in leadership, both on a to translate ambition into action and integrate strategic and operational level. learning at all levels to improve practice, be it the Create favorable conditions to change people’s practice of people-centred policymaking, targeting attitude and mindset towards creativity, strategic objectives, and fast and effective imple- innovativeness and entrepreneurship. mentation on the ground. These ecosystems will Interconnect small-scale project and pilot be in the business of attracting, connecting, com- activities for supporting the same goal. mitting and empowering people to work together on their own pressing problems, while recognising
  • 55. 54 O P E N I N N O V A T I O N 2 0 1 2 Figure 2. Towards a culture of collaboration: transformation through opening digital opportunities the need for coordinated action with people working There is a special need to further develop models for at other levels of the system. Relevant results at public-private partnerships and, in this way, modern- the local level are a key energising force for, in this ise the triple helix concept. High-level knowledge cre- way, people remain engaged and enthusiastic about doing more. Their entrepreneurial spirit soon drives initiatives such as Regions of Knowledge, Living Labs the desire for innovation — and for innovative prod- and Smart Cities can serve as platforms for increas- ucts and services — and the ecosystem thrives. ing the knowledge base of regional decision-makers. Once local results have been achieved, joint actions This doesn’t mean participation in some seminars can be organised, focusing on scaling up through and meetings: intensive coached and mentored mirrored learning processes to link neighbourhood- leadership learning programmes are needed. These to-neighbourhood, city-to-city, and ecosystem-to- are programmes which could be compared with the best European Executive MBA programmes; however, regions in broader, European-wide contexts, creating in this case focused on creating and orchestrating a truly future-centred innovation society. regional innovation ecosystems to implement the Europe 2020 targets. When organised with a very Research results achieved through the funding high professional profile, they could attract high-level decision-makers, top civil servants from the regions competitiveness and innovation framework pro- and the Commission, as well as the best research- gramme (CIP), and other similar initiatives should ers, business managers, and civil society leaders. be much more effectively used to increase the This modern executive education programme would performance capabilities of regions. Special focus require both face-to-face participation and distance- should be on developing and implementing the learning. The participants, coming from different concepts and processes needed to take full advan- regions and backgrounds, would learn collaborative tage of digit alisation and new key enabling tech- skills through benchlearning, facilitated dialogue, nologies for modernising regional innovation policy. and coached practice. Together, they would further Policy makers should play the dual role of being develop their own real-life cases, while creating the both process owners and learners, thus invest- networks they need for diverse future activities. ing a fair amount of their time in deepening their own knowledge and understanding of how complex It has often been stated that Europe needs systems and societal innovations work. pioneering regions in order to once again become a
  • 56. 55global pioneer in creating the human-centric innova- To have the desired societal impact, it needs to betion society. This innovation society — characterised professionally orchestrated. This has been accom-by user-centred service provision, fuelled by human- plished by conceptualising a mega-endeavour (theism and a multicultural mindset, open-minded in Local Digital Agenda, LDA) consisting of diversedeveloping and testing new ideas and converting projects and wide active participation.the best of them into radical innovations — mustbe manifested first of all at the regional level. This -calls for a systemic approach to human-centricinnovation, and creating collaboration platforms to Helsinki) has started such a joint collaboration byenable demonstrations and rapid prototyping. Genu- forming the Vanguard Group to organise pioneer-ine collaboration at the regional level creates a newculture of knowledge co-creation, and promotes the operates with the CoR to pilot and disseminate thedissemination of best practices. This is one way for results of implementing CoR opinions. It has workedEurope to resume its centuries-old tradition as lead- especially well with the following two statementsdeveloper of human-centric society. [2], in which ‘the CoR identifies a particular need to:Creating local digital agendas in practice create local digital agendas to speed up theHow can local and regional authorities enable the optimal use of ICT through orchestrated local,desired radical change? How can the strategies and regional and European collaboration; andoperational programmes of the EU and its Mem- promote the digital single market as a corner-ber States be put into action at local and regional stone of the Digital Agenda for Europe and sup-levels? A promising solution can be found in local port large-scale pioneering projects drawingdigital agendas, an inspiring activity that connects on top European expertise and involving all theessential potential actors from several levels. As various stakeholders.’stated by the European Parliament [10], digitali-sation is the driver of desired change: ‘this digital LDAs could become important structuring andrevolution can no longer be thought of as an evolu- binding tools for integral regional development.tion from the industrial past but rather as a process The LDAs are not about pushing ICT: they enableof radical transformation.’ The focus needs to be on mechanisms for digital pull-strategies and valueaction, not more planning and dra ing documents. creation. Likewise, the LDAs are helpful for realisingFigure 3. Europe 2020 needs European pioneers: the Vanguard Group integrates real and virtual realities
  • 57. 56 O P E N I N N O V A T I O N 2 0 1 2 goals in different socio-economic sectors such as recognise grand societal challenges, translate them education, energy, health and social cohesion. This to regional and local priorities, and commit to the will all take place from a citizen and company point renewal — o en radical renewal — that is required. of view, to enhance a ‘fabric of local cooperation’ and collaborative creation. Generic elements will be The desired change calls for the significant devel- enforced and developed in different structures and opment of mental models, working practices and a business models. Local developments can be con- culture of partnerships, to be worked out in close nected through the LDAs and help create a thriving collaboration between the political decision-mak- context. These elements can be technical (open- ers, private and public sector stakeholders and data platform), organisational (open innovation researchers. In our mega-endeavour this happens and collaboration communities), mindset (culture, especially: behaviour) or even legal (one-contract shop). with the help of testing and implementing dem- This could all lead to a new regional design utilising onstration projects related to sustainable devel- relevant ‘common sense’ principles. These principles opment: studying, piloting, demonstrating and — for example collaboration, user-driven approaches verifying new models; and trans-sectoral innovation — are needed to cre- in collaboration with the significant businesses, ate a strong European digital single market. The universities, and research institutions of the concepts and tools are based on openness and trust region: partnerships to create working culture, rather than command and control. innovative concepts and methods to support them; This development, however, will not take place by developing the decision-making processes on its own. Strong commitment to collaborative needed to address societal challenges: using the change, together with the prioritisation of appro- best international knowledge and collaboration priate measures is needed. It is much easier to expertise, developing the required competencies write broad well-meaning programmes that look and methods to support decision-makers. good on paper, than actually focus resources to enable the development and implementation of The Helsinki Region as a forerunner innovative solutions on the ground. Local digi- The establishment of Aalto University through the tal agendas are needed for this, as well as good merger of three top-level traditional universities conceptualisation and orchestration. This includes (Helsinki University of Technology, Helsinki School a definition process to enable decision-makers to of Economics and the University of Arts and Design Figure 4. Regional innovation ecosystem in the T3 Area
  • 58. 57Helsinki) has opened new global avenues for the innovation for collaborative value creation in open - societies. Scalable concepts, work processes, meth-sinki Metropolitan Region and, at its core, the Inno- odologies, tools, and actual innovations will providevation Triangle Area, is pioneering European digital the basis for a Europe-wide ecosystem of reusableand innovation development. The process highlights solutions, which will become part of the core of athe following actions. European innovation society. Creating a concept — the regional innovation What does this mean in practice for the regional ecosystem — that crosses sectoral boundaries and local decision-making process? Based on our and leads knowledge society and digitalisation two years of piloting work at ACSI and the one- activities through common practices. It imple- year intensive planning phase of the EUE, we can ments Local Digital Agenda (LDA) and Local suggest the following success factors: Innovation Agenda (LIA) goals with sufficient authority and resources. the need to hold all sectors of management This will be interlinked with the research and accountable for implementing regionally development activities of the Energising Urban prioritised activities within their operational field; Ecosystems programme (EUE), a four-year a seamless collaboration between strategy, industry-driven research programme with a leadership and the selected spearheads must budget of EUR 30 million. be ensured; Collaboration and synergy are on the focus of a knowledge production format that can be innovation activities throughout the Region, as used for demonstrating potential change and societal innovations are of crucial importance indicating where radical change is possible; in this development. ACSI, the Aalto Camp for the importance of linking all this directly to Societal Innovation, is instrumental for creating regional policy and political decision-making. and supporting the new mental mindset needed. The increase of renewal capital by emphasisingThe activities are demonstrated in the Helsinki empowerment and focusing on societal impact isMetro politan Region, especially in Espoo’s Inno- especially important as a part of the steering systemvation Triangle Area Otaniemi-Keilaniemi-Tapiola and daily practices of the public sector. This can be(T3); this area of five square kilometers is already started by integrating all participants in a learningthe largest concentration of science, innovation and process that enhances understanding of the digitalrelated businesses in northern Europe. An aerial economy and, especially, by promoting collaborative innovation in decision-making and administration. The EUE programme will work actively to developlife demonstrations of how to modernise the trad- icebreaker, path-itional triple helix model, define relevant critical finder, and prototyper. These three roles are essen-success factors, and show how to run change pro- tial to the entrepreneurial, pioneering spirit neededcesses in practice. Political commitment integrat- to spearhead innovation culture in initiatives such as LDA, EUE and ACSI in generalpolicy guidelines is crucial. On a larger, regional Icebreaking means opening new space for energis-scale, this is planned through the Helsinki-Uusimaa ing society and enhancing regional innovation. It isRegional Council. the process of clearing a space for practical action. When the way for ward seems blocked, there is aA special target of these activities is to influ- need to break through barriers to create new pos-ence political decision-making at all levels — EU, sibilities for thinking and acting. In sticky situations,national, regional, local — by showing how to when people see more difficulties than opportuni-tackle the huge gap between research knowl- ties, icebreaking creates space for experimenting,edge and real-life processes. We want to show new thinking, and moving effective conceptualisation and new researchbased methods can produce the regional measures Pathfinding is the process of discovering and explor-required to turn research-results into innovations ing new ways forward. Innovation is o en unknownthat are created locally and can also be applied territory, and explorers and guides are needed tothroughout Europe. We also want to show how move people, projects and organisations in usefullocal and regional authorities can mobilise public- directions — towards quality-of-life improvementsprivate partnerships and encourage grass-roots’ that are attractive, practical, and scalable. Thereparticipation, the so-called user-driven open is relevant science, technology, good practice and
  • 59. 58 O P E N I N N O V A T I O N 2 0 1 2 knowledge available everywhere in the world: But students, researchers and field professionals how to access it quickly and apply it where and throughout the world as they tackle the tough when it matters? The complex world knows many issues of icebreaking, pathfinding, and prototyping difficult places and dead-ends, and pathfinders solutions with the potential to impact society. seeking new ways to stimulate societal innovation impact make the journey easier. Several of these regional ecosystem activities will be linked with the CoR and also serve the LDA. The Prototyping is the process of co-creating promising Helsinki-Uusimaa Region has been awarded to be the solutions and testing them in prac tice. It is an itera- European Entrepreneurial Region EER 2012. In the tive process of learning-through-doing, where dem- EER action plan, activities will be allocated in accord- onstrations of work-in-progress lead to a deeper ance with the Europe 2020 strategy and especially insight into what really works and what people really the Small Business Act. Maybe the most important need. New products and services, but also policy focus of EER activities will be on enabling the young and possible futures can be prototyped effectively. digital native generation to play a much stronger and It is essential to learn to accept hands-on working more entrepreneurial role in society. Learning from with new ideas, sometimes ‘failing our way forward’ others, collaborative learning and learning through and always focusing on continuous improvement. international networks are crucial. It is difficult for Prototyping is the key to innovation acceleration. individuals to develop all the skills that globalisation and the rapid development of technology require. The ACSI, the Aalto University’s Camp for Societal Inno- same is true for the skills needed to develop innova- tive products and services. That is the value of being lating global collaboration for societal innovation and part of regional innovation ecosystems character- using innovation ecosystems. ACSI is a new-genera- ised by the Venture Garage Mindset: entrepreneurial, tion innovation agenda making use of concepts, oper- self-initiating, agile and resilient. ating modes and a network for the development of a global innovation platform that is anchored at Aalto Energising urban ecosystems University. The eight-day camp at the core of the ACSI Europe needs pioneering large-scale programmes process has been piloted twice: in the summers of 2010 and 2011. More than 250 professors, research- programme [11]. We referred to it above, and here ers, students and working professionals from around we highlight a few points based on our experience the world, from a broad range of different disciplines, with the planning of EUE, and in particular being participated in the two ACSI pilots. in charge of integrating it with the implementation of the Europe 2020 strategy at the regional level. Methodologically, ACSI operates through the Know- The EUE is a four-year, EUR 30 million programme ledge Triangle, combining research, education and integrating the research capacities of 25 industrial innovation to enhance renewal and efficiency of and five academic partners in order to meet the each of these areas. The goal is to break the bound- challenges and realities of 21st century urbanisation. aries between traditional university practices and to create synergy by integrating students, teachers EUE’s approach promotes a number of interdisciplin- and researchers from various disciplines to study ary themes: mixed-use urban systems and commu- and work together with field experts and inno- nities; urban infrastructure asset management and vation practitioners, focusing on real-life issues and value development; sustainable lifestyles, work-life leading to practical results, outcomes and impacts. balance and people flows; and smart, emission-free In this way ACSI acts as: regional energy and communication systems. More- over, future urban ecosystems are seen as core plat- a contributor of innovation methodologies: for forms for mutually complementary innovation activ- learning, research and societal impact; ities and processes, which can develop both regional a content contributor: ACSI produces knowledge competitiveness and pioneering competencies in and solutions for real-life needs; product/service development for global markets. a driver of systemic change: ACSI in operational mode is a driving force for change. The EUE programme’s scientific collaboration model combines academic and industrial research pro- ACSI is itself an innovation ecosystem, providing cesses in an integral research framework. It brings methodologies and tools to effectively address the together cross-sectoral, interdisciplinary research cases it focuses on, and to power the Energising teams to study, develop, deploy and test hypoth- Urban Ecosystems programme. At the same time, eses and, in this way, accumulating knowledge for it connects and activates hundreds of innovative joint outcomes. In a sense, the EUE programme
  • 60. 59model is an example of a functional, scientific co- The EUE’s ‘Regional Innovation Ecosystem’ (RIE) workcreation process, utilising participatory research package focuses on creating an evidence-baseddesign to create industrial added value, thus and well-documented concept for globally leading,addressing EU and global strategic needs. regional innovation ecosystems. The main research will be conducted in the T3 Area, one of Europe’sThe EUE programme structure has been systemised pioneering innovation ecosystem test beds. It willinto three mutually complementing layers — Urban demonstrate how to effectively implement the keyVisions, Urban Solutions and Urban Innovations — enabling success factors of the Europe 2020 strat-and a closely interlinked ensemble of six comple- egy, and how to modernise the triple helix model bymenting work packages. The Urban Visions layer enhancing collaboration between the city, univer-examines urban ecosystems from a holistic, birds- sities, research institutes and diverse enterpriseseye perspective, providing strategic vision, an over- through the Knowledge Triangle approach.all conceptual framework and alternative architec-tures for the programme. Individual work packages In order to move from the machine model of planningcan apply them in their individual research pro- to a new 21st century social model, more extensivecesses. The Urban Solutions layer focuses on iden- -tifying the main urban planning components in the ure 5) [12]. A change of mindset and of working culturegiven programme context. These intelligent assem- is required. Aalto University, with its entrepreneurialblies could be called the ‘Smart building blocks’ (e.g. spirit and pioneering activities, is central to driving thefor living, working, mobile life, well-being, and secu- transformation through in this RIE work package.rity) of the future urban ecosystems. The UrbanInnovations layer takes this way of thinking closer The RIE work package will integrate theory and prac-to everyday practice, focusing on demonstrations tice in the creation of energising urban ecosystemsand the testing of emerging hypotheses. Research to attract talent and business. Its core activities willactivities are aimed at modelling, piloting and rap- prototype, demonstrate and implement new urbanidly prototyping the emerging building blocks (tech- design strategies and business-driven innovativenologies, components, products, solutions, etc.), solutions, as well as service concepts of the future,the innovation processes and the development taking advantage of cutting-edge knowledge andpractices in real-life contexts. technologies such as digitalisation, regional infor- mation modelling, and visualised virtual reality. RIEBased on the above description of the programme -structure, key programme-level research questions ish and international experts to organise the ser-have been defined as follows. vice infrastructure for the entire EUE programme through the orchestrated integration of real and1. What kinds of elements and processes are virtual world working environments and innovative critical in creating dynamic, sustainable, ener- working methods. In this way, RIE can be seen also getic and evolving urban ecosystems, which as the methodological engine for the entire EUE are capable of responding to the complexities programme. of urban actors and their ever-changing needs and behavioural patterns? Conclusions: How can regional policymakers2. What are the mechanisms required to increase become agents of innovation and change? the renewal capital and to maximise the poten- Effective implementation is the key to achieving the tial value of available and emerging enablers (e.g. Europe 2020 targets. Collaborative action — espe- advanced technological solutions, gradually con- cially at the regional level — and the rapid realisa- verging PPP intelligence, and accumulating design tion of promising ideas in practice is clearly what competencies) for modern urban development? Europe needs now. In this article, we have cited a number of high-level experts and relevant sourcesBy answering these challenging questions, the supporting this argument, and given some exam-EUE programme will also create concepts needed ples of pioneering regions and programmes thatthroughout the EU to achieve the targets of the are already demonstrating some of the ways for-Europe 2020 flagships. This opens new opportu- ward. There is still a long way to go, but — all overnities for EU-funded research projects to support Europe — there are people already on the move.EUE aims and objectives. Of special importance isthe synergy with Innovation Union activities such It is impossible to achieve the desired ends by work-as European partnerships, Smart Specialisation, ing alone. This is true even for pioneers and entre-Regions of Knowledge, Living Labs, and Smart preneurs. Throughout the OECD report Regions andCities. Innovation Policy [13], many arguments call for a
  • 61. 60 O P E N I N N O V A T I O N 2 0 1 2 Figure 5. Aalto T3 regional test bed Markkula, M., Pirttivaara, M. & Miikki, L., 2009. Developed from: Gharajedaghi, J., 2006. Interpendent Variables Regional System Thinking: Managing Chaos Complexity. Butterworth-Heinemann Systems Approach Innovation Test-Bed: Aalto Factories & Living Labs Nature of Inquiry ze d ali es p t u ce s s Interpendent Variables Analytical Approach e Criteria for planning: n c ro Co l t o P - Ecosystem A a - External collaboration Traditional Company - Aalto existing strengths Specific - Knowledge Triangle Business (synergy R&E&I) Plan - Working culture Machine Model Biological Model Social Model Nature of Organisation networked view of innovation. Such a view takes into that establishes complementarity with innovation account the important role of intra-regional nodes in strengths in neighbouring regions. Sound innov- wider interregional networks, including cross-border ation policy is not only about creating innovations. innovation spillovers. Crossing borders does not just It is about creating the conditions that enable inno- refer to geographic and cultural borders. Just as vation and its benefits to materialise in the form important are crossing the borders of scientific dis- of improved economic, social and environmental ciplines, the borders of business sectors and technol- outcomes for society as a whole.’ ogy clusters, and the borders of generations working together. People need to invent the new future of ‘Several key issues frame the role for regions and Europe through the work of pioneering regions and innovation policy. Among the most prominent are: by creating entrepreneurial consortia of different actors. The key question is how to do this effectively. the diversity of innovation strategies; the fact that innovation goes beyond R & D; Discovering how to mobilise different actors and the mismatch between functional regions and resources for collaborative innovation ventures administrative borders; and must become a key governance concern for all pol- the generally shared governance for innovation icymakers focusing on the future and concerned policy across levels of government.’ with providing quality of life for the areas for which they are responsible. We want to conclude this ‘Advice for policymakers encourages regions to be article by quoting the summary of the OECD report. agents of change that develop a clear vision and strategic framework for innovation-driven regional development. To do so, regions should design a strategic development goals is the task for policy. smart policy mix that builds on regional assets and To this end, regions need to develop a sound, realis- brings together a portfolio from different policy tic vision of their economic future and formulate a areas. To implement this vision, more flexible gov- broader, more integrated, more efficient policy mix. ernance mechanisms are required, supported by It will require combining instruments from various policy learning, better metrics and evidence-based policy areas and levels of government, support- experimentations.’ ing knowledge generation, diffusion and exploita- A clear view of innovation is essential. Technological innovation capacity needs to be built in a way breakthroughs may be one-off occurrences, but
  • 62. 61 [2] CdR 72/2011 fin, CoR Opinion The Role of Localsocietal innovation should be ongoing, sustainable and Regional Authorities in achieving the objectives ofand repeatable. Reusable solutions that can be Europe 2020 strategy.handed from city to city and sector to sector are [3] ibid.required. Innovative regions, resonating through-out Europe, will help create a common innovation [4] Letter from President Barroso to President Bresso (2011) ( There has been much written about the Documents/Barroso%20to%20Bresso%20April%20knowledge society, but it is up to Europe to cre- 2011%20-%20Territorial%20pacts%20on%20a%20ate an innovation society alongside it. This inno- voluntary%20basis.pdf).vation society recognises that knowledge is the raw [5] The Lisbon Council report, An Action Plan for Europematerial for renewal, and that people are essential 2020: Strategic Advice for the Post-Crisis World (2011)for converting knowledge into innovation and value. ( an-action-plan-for-europe-2020-strategic-advice-for-The Aho report has already told us, in 2006, that the-post-crisis-world.html).for Europe to become an innovation society, its cul- [6] Creating an Innovative Europe — Report of theture has to change. This will require ‘a cultural shi Independent Expert Group on R & D and innovationwhich celebrates innovation’, a mindset in which appointed following the Hampton Court Summit (the Aho report), 2006 (citizens are encouraged and eager to embrace inno- ).vative goods and services. But more is required. Itwill require unlocking the great creative potential of [7] CoR, Europe 2020 Brief, March 2011 (http://portal., the risk-taking potential of entrepreneurs, Europe%202020%20Brief%20March%202011.pdf).and the pioneering potential of regions. It requiresboth the imagination to see what is possible, and [8] European Ambassadors for Creativity and Innovation, Manifesto ( courageous choices needed to pursue it. Itrequires thinking beyond, moving faster, and allow- [9] Buchel, P. (2011), the passion for improvement to motivate our [10] The European Parliament resolution on the Digitalcommon practice. Agenda for Europe, 5 May 2010. [11] RYM Oy (2011), Energizing Urban Ecosystems,All this is possible. The vision is already there, in Research plan, 2 December 2011.Europe 2020 and the seven flagships. All it requires [12] Markkula, M., Pirttivaara, M. and Miikki, is the will to do it, and the doing. In this way, (2009), developed from Gharajedaghi, J. (2006),Europe’s innovation society can unite its diverse Systems Thinking, Managing Chaos and Complexity,pioneering regions and innovation ecosystems to Butterworth-Heinemann.forge the true republics of tomorrow. [13] OECD (2011), Regions and Innovation Policy, OECD Reviews of Regional Innovation.ContactsMarkku MarkkulaAalto UniversityAdvisor to the Aalto PresidentsCommittee of the Regions, Member, Chairmarkku.markkula@aalto.fiHank KuneEducoreDirector, Innovation & Enterprisehankkune@educore.nlReferences[1] Communication from the Commission to theEuropean Parliament, the Council, the EuropeanEconomic and Social Committee and the Committee ofthe Regions, A Digital Agenda for Europe (COM(2010)245 final/2), Brussels, 26 August 2010 ( ).
  • 63. 62 O P E N I N N O V A T I O N 2 0 1 2 1.8 New governance models towards a open Internet ecosystem for smart connected European cities and regions Introduction: driving innovation in users’ creativity by allowing them to create their Europe through bottom-up open own applications and contents by building on previ- Internet ecosystems ous innovations, following the open source develop- The current economic and financial crisis is an ment model [7]. However, more and more o en, the opportunity to propose a new model for Europe to so-called social models are, on the contrary, based create wealth and societal innovation. Innovation on closed and proprietary standards that tend to is the battleground for global competitiveness in exploit the network effects by locking in custom- the 21st century and is the means for Europe to ers, without giving them the choice to manage their successfully tackle major societal challenges, such communication devices and link social data across as climate change, energy and resource scarcity, platforms. The most successful business models in health, ageing, mobility and employment which the ‘freemium economy’ are based on personalisa- are becoming increasingly urgent. This is why the tion [8] that consists on exploiting users’ interest European Union has set itself, in the context of the graphs through collective filtering algorithms to Europe 2020 strategy, the objective to increase deliver targeted advertising and recommendations spending on R & D to reach 3 % of GDP by 2020 [1]. for services and products subsidised by the adver- Innovative solutions that challenge traditional ways tising industry. This model certainly poses threats of doing things are required to respond to citizens’ to the current privacy and data protection legisla- present and future needs, such as moving from tion in Europe [9]. Moreover, it doesn’t seem to be closed innovation models to open and collaborative sustainable to harness free information and activi- innovation models that can unleash the power of ties from users at a moment of serious economic social production and collective intelligence. Inno- and unemployment crises throughout Europe. If we vation is no longer seen as a linear step-by-step want to bet on innovation as a possible way out of process in which R & D activities carried out inside the current crisis, we need to bet on creating jobs the closed boundaries of the firm automatically for future generations and economic opportuni- lead to the commercialisation of new products and ties for European SMEs in the digital economy, thus services, but as a complex, dynamic, and interde- contributing to solving Europe’s current and future pendent process involving organisations and stake- societal challenges. holders [2]. Companies are confronted with rapid change and the challenge is to determine how they Europe today is facing a great challenge in rebuild- will transform their Intellectual Property (IP) poli- ing a competitive, sustainable, and smart system cies to engage in open innovation and crowdsourc- based on investments in advanced digital technol- ing, thereby innovating their ideas by dynamically ogy, research, and education to maintain mate- exchanging their knowledge and facilitating the rial and immaterial infrastructures and improve active role of external users in the innovation pro- citizens’ lives. In today’s knowledge-based and cess [3]. Tapscott and Williams in their book Wiki- services-led economy, cities have emerged as nomics outline the main principles behind what they the nerves of economic development. Cities are name the ‘economy of mass collaboration’ [4]. They increasingly viewed as the catalysts of innovation, analyse how ‘peer production’, the participation of enhancing not only their surrounding regions, but people in the innovation process, is shaping the eco- their nations as a whole. Due to the impact of the nomic and social environment, and becoming the key force driving competitiveness in the 21st cen- regions should be fully involved in the process of tury. Companies that don’t tap into external knowl- governance related to the deployment of future edge production for the development of new prod- Internet infrastructures and Internet-enabled ser- ucts and services will find it very hard to compete vices, especially public services. They represent a [5]. The Internet today represents at least 2.1 % of critical mass, able to scale up and reuse new appli- the US GDP and the success of Web 2.0 is based on cations and services developed across Europe. Yet, the capacity to attract masses of users who cre- to date, open innovation methodologies have been ate a world of social relations underpinned by the successfully applied mostly in the private sector. innovation platforms made available by companies. However, betting on open innovation and the use Web 2.0 is a winning model for investors, since it of social networking platforms to improve public harnesses, incorporates, and valorises the social services can be a key strategy for the public sector and technological activities of users [6]. New digital at a moment of budget constraints and financial ecosystems are able to harness developers’ and crisis. Cities can thus become orchestrators of
  • 64. 63innovation by engaging and mobilising citizens’ Smart Cities and Smart Regions should provide acreativity and business talents, and thus produc- wide range of opportunities for ICT businesses (ining digital commons for Europe. The proposed particular SMEs), technology suppliers, user indus-vision is to facilitate the creation of a bottom-up tries, and end-users to compete at the Europeanopen innovation ecosystem that can exploit the level and build cross-European partnerships thatEuropean added value in the digital economy. The can emerge globally. The challenge for Europe isinnovation ecosystems should be ‘digital’, mean- thus to determine the particularly European addeding that any data must exist in binary form and in value that can stimulate actual innovation andstandardised and open formats so that it can be fair competition and so, in the long run, overtakeaggregated and analysed in real time by the pub- monopolistic innovation models, while, at the samelic. Digital ecosystem innovation focuses mainly time, addressing societal challenges. The Europeanon the data ‘mash-up’ process, which synthesises Commission together with local and national gov-new information by connecting, reusing, combin- ernments should put forward a holistic future Inter-ing, and semantically aggregating and elaborating net strategy that addresses together the technical,disjointed information extracted from a plethora social, regulatory, and business aspects as well asof sources, in particular information generated investigating the impact that cloud computing willby users (e.g. through social networks), accessible have on the management of critical informationpublic data, or captured from sensors (Internet of infrastructure and citizens’ data. European distrib-Things). ‘Open’ means that interoperable, custom- uted innovation should be the basis for a sustain-ised, and modular services and applications can be able economic model underpinned by open archi-built in a dynamic and flexible way, plugging into tectures and open standards for Internet-connectedexisting and future Internet infrastructures, thus environments that allow interoperability, governedfavouring entrepreneurship and civic innovation. An privacy, data portability and social ownership of the‘Ecosystem’ means that there is an interdepend- digital commons. This will, in turn, foster entrepre-ent and dynamic constellation of living organisms neurship, enabling the creation of smart, interoper-acting within a global socio-economic environment. able services and applications by many potentiallyThe ecosystem metaphor emphasises the need unforeseen European actors, including the tremen-for a holistic and multi-stakeholder approach that dous potential value in sectors currently ignoredEurope should have towards innovation. The chal- by the US model, such as the public sector, SMEs,lenge for Europe is in creating a new framework and civic innovation. This strategy could create jobsfor collective action and awareness, going beyond and opportunities for the new generation of digitaltasks that IT is already good at doing such as dataaggregation, sensing, measuring to the more com- -plex aspects of social and collective intelligence. tecture of smart services and Smart Cities thatThe question is how to engage key constituen- will be built on it, carries important political conse- -the non-technology elements, such as social rela- ance carried forward by the UN (WSIS), all Inter-tionships, governance models, social and juridical net stakeholders must be involved in the definitionnorms into the proposed strategy in order to effect and evolution of a future Internet architecturethe necessary societal change. underpinning Smart Cities and Regions.Acting smart is indeed a complex process that THE FRAMEWORK: current and futureneeds the engagement of all actors in the inno- Internetvation chain and that demands the integration of The Internet is a critical infrastructure that per-multiple elements: a coordinated economic devel- vades all aspects of people’s lives, a nervous sys-opment strategy at local, regional and national tem for society. The Internet is a catalyst for crea-level in order to achieve inclusive, sustainable tivity, innovation, and collaboration, enabling peopleand smart growth; multidisciplinary research and to interact from everywhere and access terabytesinnovation systems; open internet ecosystems that of data with a simple click. Soon there will be moreallow the integration of interoperable customised than 50 billion devices connected with a diverse setservices; and strategic urban design integrating of services and this kind of usage takes the Internetthe know-how of urban planners, designers and well beyond the design point for the original techni-architects. Within the European 2020 strategy for cal architecture. It is therefore time to undertakesmart, sustainable, and inclusive growth cultural a fundamental redesign of this infrastructure anddiversity, the variety of European political sys- a portfolio of EC-funded projects and activities intems, greater cooperation and lifestyle changesof citizens in Europe can be a driver for innovation. examine the underlying technical, business, and
  • 65. 64 O P E N I N N O V A T I O N 2 0 1 2 regulatory frameworks, since these frameworks to be able to make strategic decisions will consist of could become barriers to innovation. But also there a detailed analysis on the fast changing economic is a need to maintain the Internet as an open, uni- value network, which is cutting vertically across versal, neutral, and interoperable technological all the outlined layers and that in the last 5 to 10 platform. I will propose here a synthetic model that years has been moving up to the second and third can help us understand the evolution of the Inter- layer (data-driven applications supported by the advertising industry and managed in proprietary productive conversation on possible models and cloud platforms) where the value added reside and strategies for Europe to exploit the technological where new dynamic and innovative companies are and commercial opportunities in the digital econ- emerging [10]. omy, while fostering societal innovation. I will briefly describe the presented framework, suggesting that So far innovation and the growth of the Internet - have been fuelled by network neutrality and fair ies and Regions is needed, which involves an inte- access ensured by open and transparent proto- grated view of what the European Commission cols. Internet principles, such as network neutrality, - equitable service, and peer-to-peer architecture, vice infrastructures, such as that encompassing all were crucial in building a universal, open and dis- the technological components and layers outlined tributed infrastructure that fostered innovation and widespread economic growth. The evolution as following a holistic approach addressing not only of the Internet over the past few years has fos- the technological requirements, but also regula- tered the growth of a handful of new innovative tory, social and business issues. Clear requirements, technologies and applications that emphasise user such as the governance structure advocated in this creation of content and wide participation. In recent paper, should be required. Surely, the central aspect years, popular social network sites (SNS) such as Figure 1. "/%)*4*+-%,4-) =/>-%(%,- 677.4,(*4/%8$9(*($:(%(5-2;$(%0$6%(.<*4,) 5&$67-!!!! 847%- !"#$%&#%$ !"#$%&!#( ./0-+$+# (!)*+#,- 9%:%70;)7- 1#2!31-*40 "./+0$1.(*&/2$(%0$!%*-%-*$/&$#34%5) !"#$!%&()*+,*+- !!!!!!!!!!"#$%&!()*!+%,&--!$,#(*$()*!-.-/0-1!232!4531!6789:*;()<*1!
  • 66. 65 extract and ‘mine’ targeted market information forand micro-blogging services are multiplying the interactive marketing. This model exploits users’number of users, applications, services and the personal information to deliver targeted advertis-amount of Internet traffic generated, giving rise to ing, service and social recommendations throughthe phenomena named Web 2.0, which describes collective filtering and semantic data analysis. Thisthe way in which companies use the Web as a plat- trend is very clear in location-based services andform to harness collective intelligence. Today, digital in lifestyle apps where the geospatial informationbusiness innovation focuses mainly on the devel- of users and sensitive information about users’opment of data-driven services, web and mobile and their social networks’ tastes and interests areapplications. The core business model of the most analysed and aggregated to create personalisedcompetitive digital ecosystems is based on firms’ offers. If such collective filtering is not efficient andability to extract value from social data and user- transparent ‘no crowd will be wiser than a herd ofgenerated content through data mash-up processes sheep’, resulting in a ‘filter bubble’ [13]. Certainlyand collective filtering algorithms. Companies cre- users of these ecosystems don’t own their data, butated goal-oriented and personalised applicationsthat mash-up information and knowledge in order free social networking services. And there are otherto provide customised services to customers. In this dimensions, such as the digital tracks that usersway, they were able to identify innovative business leave around the Internet with their searches, pur-models to create differentiation, capture value and chases, uploaded content, and conversations. Thisincrease profits from user-generated content. This data exhaust is the personal data companies collectprocess (that tightly integrates innovation in busi- about what products their customers buy and howness and technology) was mastered by a very small they use digital services. In this way, businesses are acting as brokers of personal and sensitive dataApple, Amazon, EBay), which, in turn, changed the that are manipulated through privacy infringementtopology of the network and of the intangible value -creation by fostering the rise of natural monopolies book’s ‘frictionless sharing’ and the various cloudand dominant positions. Since the global economy services, people are showing growing concernsis increasingly based on the management of knowl- about these commercial practices, urging authori-edge-intensive services underpinned by digit al net- ties to update privacy and trust regulations. Lockingworks, we risk that knowledge and information is in users’ social data is creating a new ‘data enclo-locked-in by dominant players within walled gar- sure’ that consists of capturing users’ co-createddens and proprietary ecosystems. Currently, we value through network or device lock-in, segment-are viewing various ‘ecosystem battles’ amongst a ing the network in other areas and overruling thefew companies that fight to control market shares network regulations by imposing their governanceespecially with the expanding influence of mobiles models. This segmentation poses threats to theand apps. Such players are able to seize external- future of the Internet, hindering the free, open, andities resulting from economies of scale and network neutral Internet that allowed disruptive innovationeffects that generate increasing returns associated to emerge bottom-up.with lock-in [11]. There are increasing risks that thedistributed, scalable and open architecture of the Moreover, the business models described aboveInternet will evolve towards a conceptually-cen- don’t seem to be sustainable for the European eco-tralised data infrastructure based on closed and nomic system that consists of 99.6 % of SMEs andproprietary standards [12], unaccountable govern- has a very different equity and venture capital mar-ance and revenue models in which big US compa- ket compared to the US. There are major differencesnies are capturing monopolistic rents due to large between European and US economic structures,network externalities. The latest trend, indeed, especially regarding the absence of big firms thatpoints towards concentration of actors, vendors innovate at the data layer and the structure of ven-and data lock-in, even sometimes illegally selling ture capital network to fund technology start-ups.users personal data to third parties, putting the This situation will make it quite difficult for Europe toonus on users to opt out, rather than asking them catch up with US innovation, especially if the Euro- -ness models in the Internet ecosystems based on European telecom operators are having a hard time‘personalisation’ are supported by the advertising to entering and innovating in this market, trying withindustry, incorporating the users in the market- little success to become competitive in the dataing process. Personal social data is the new prof- and application layer where business opportunitiesitable market. Users’ ‘social graphs’ and ‘interest reside. In Europe, there are other actors that shouldgraphs’ are harnessed and sold to advertisers to be supported in order to drive innovation. In the first
  • 67. 66 O P E N I N N O V A T I O N 2 0 1 2 place, cities and regions are closer to citizens and harvested and opened up, allowing developers and SMEs and they can more easily engage them in the the public at large to turn data into useful infor- innovation process, applying methodologies, incen- mation and applications available to everyone to tives and policies to facilitate their involvement. actively engage with their environment and manage This will certainly maximise the societal impact of collective issues. innovation and it would make sure that services deployed answer concrete local needs and demand. THE RULES OF THE GAME: new societal This process will create local capacity, exploiting the agreements, and open standards for the creativity of European cities and regions and build- Future Internet ing digital literacy, skills and development. Due to architecture of smart services and smart cities on the life of citizens, cities and regions should that will be built on it, carries an important politi- therefore be fully involved in the process of govern- cal meaning, since we are talking about critical ance related to the deployment of digital infrastruc- future infrastructures managed and used by mul- tures and Internet-enabled services. They represent tiple stakeholders. The Digital Agenda emphasises a critical mass, able to scale up and reuse the new the need to adopt open standards and interoper- applications and services developed. Currently, open able solutions to fully exploit the development of innovation methodologies have been successfully existing and emerging technologies. In the Digital applied mostly in the private sector. However, bet- Agenda are outlined specific actions that are cru- ting on open innovation and the use of social net- cial to ensure that common open standards, data working platforms applied to the use of public infor- protection, and security requirements are met. mation and public services can be a key strategy for These open standards should be at the core of the the public sector at a moment of budget constraints technical infrastructure. Open standards should and financial crisis. The European added value in have an adequate legal and governance back- the digital economy can be exploited if innovative mechanisms are in place to facilitate co-creation of the W3C [14]. Open standards are essential and fair redistribution of the fruits of collective to deploy interoperability between data, devices, intelligence rewarding creators and talent, since services, and networks. Data accessibility and innovators and citizens need to be offered some- common standards enable the automation of the thing of equal worth to what they are giving away. environment since at the heart of the new Internet Public authorities can thus become orchestrators of of Things paradigm is the principle of connecting innovation by adopting open innovation methodolo- environments, a shi in focus so that sensor data gies that mobilise public resources, citizens’ creativ- is accessible to European citizens because people ity, and entrepreneurial talent. Open, interoperable aren’t passive consumers of the data, but actively platforms and ecosystems are necessary for innov- engaged in producing it. These open standards should not be an option, but at the core of the a strategic opportunity for Europe to foster inno- technical infrastructure. In detail, as also speci- vation and entrepreneurship by giving companies fied by the W3C [15], these open standards should of all sizes the opportunity to affordably access enable the following: data and computational resources so that they can create disruptive business models, empower users, Open accessibility: Users of the Internet eco- and speed up ICT innovation across the entire EU. system include the independent application and Real-time data can then be used to unleash and service providers who have the right to using redistribute new sources of economic value, provide new insights and make better decisions to improve a raw and processed form, as well as access human behaviours and policies. to computing resources) and applicable data thereon should be guaranteed. Any privileged In the following session, I will focus on what I per- access provided to the owner/managers of the ceive to be a crucial missing building block in the infrastructure would alter free competition. All digital ecosystems, which is building a new govern- functionality must be exposed by way of REST APIs (REpresentational State Transfer Applica- set up the rules of the game and negotiating the tion Programming Interfaces) that expose data process that allows open innovation to happen - of access, user data and metadata should be net. As a constructive answer to the growing public represented in open formats such as XML and concerns, public authorities need to explore how collectively produced resources and data can be end points) [16].
  • 68. 67Data portability and interoperability: By using data by its creators. Ensuring data security andopen standardised formats for both private data ownership and protecting users’ privacy is crucial in the described context. This is whydata portability and prevents lock-in, there- the Digital Agenda sets the need to rewrite thefore allowing for innovation in the wider EU data protection regulatory framework to ensure privacy, trust and protection of personal data.must be able to come (no barriers to entry) and This should prevent any unauthorised collection,go (no barriers to exit) regardless of who they processing and tracking of personal informationare (no discrimination) and what systems they and profiling, including consumers’ preferences, medical and health records, etc. European citi-only open standards but standardised identity zens will in this way be empowered to interactmanagement. Innovation depends on interoper- with data and use it to actively engage withability, meaning that devices and services pro- their environment. In order to achieve theseduced and delivered by different companies can objectives ‘do not track’ technologies should becommunicate with one another. The Internet implemented in order to give users more controlis the best example of the power of interoper- over their social data and sensitive information,ability. Its open architecture has given billions to make it easier for businesses to innovate onof people around the world access to informa- top of the infrastructure. This will boost thetion, devices and modular applications that opportunities for developers, designers, appli-talk to one another. Today, mobile devices with cation creators and device makers to comealways-on Internet connectivity are becoming up with innovation models of recording andwidespread. In this new context, interoperabil- analysing user preferences that respect users’ity is especially important. User data is moving -more and more into the ‘cloud’ and people are ards are crucial in social networking to avoidgetting their music, videos, and applications the hijack of users’ accounts as exemplified bydigitally. Common standards are therefore veryimportant in Internet ecosystems for digital Technically, encouraging the use of TLS (HTPS),contents and products. Standards will enable the use of virtual private networks, fixing thenew business models for cooperation between certificate authority system, as well as provid-multiple stakeholders such as companies, pub- ing encryption to end-users should all be on thelic authorities and citizens to develop meaning- -ful technologies, since standards in the future tecture should include privacy and security inInternet scenarios are there to mediate social the proposed technical infrastructure by design.relationships between people. Therefore, citi- This should involve both using policy-awarezen-authored standards such as Open Street frameworks that prevent private data fromMap (OSM) should also be supported, since em- being illegally accessed. Also, work that makespowering citizens can lead to greater innovation privacy implications understood by citizens,[17]. Cooperation amongst different standards such as Privacy Icons by Mozilla [19], shouldsetting bodies will be fostered by the European be deployed as to avoid user backlash over pri-Commission through Innovation partnerships, vacy issues. In order to prevent ‘leaks’, adequateas outlined in the Innovation Union flagship. cryptographic public-key-based infrastructureProper licensing: Public data should be made and strong authentication technologies shouldavailable under an open knowledge licence orplaced into the public domain, so that inno- towards work like Google’s Nigori Protocol forvators can build data mash-ups on top of a storing data privately and securely in the Clouddistributed data infrastructure (technological [20].neutrality) without fear of licensing issues. Sup-porting vendors must therefore cooperate on Another crucial aspect is the governance of thestandards implementing those that exist and Cloud and of the Future Internet that are recognisedcollaborating via an open process to develop to be a priority at all levels by policy and industrynew legally-binding open standards. Private but there are no concrete activities at this stage todata should also have its privacy and policydimensions encoded using open standards and Internet will suffer from a lack of trust over issuesthe correct licensing, as well as clear require- of privacy and security caused by users’ and busi-ments for ‘how-to’ access this data and deter- nesses’ concerns about the security and privacymine its ownership, both by vendors and end- of data and applications moved into the Cloud.users This should include the right to remove These concerns are motivated by factors like the
  • 69. 68 O P E N I N N O V A T I O N 2 0 1 2 vast amount of personal data being processed, the co-production at European level, fostering entre- need for guaranteed levels for security, privacy preneurship, creativity and innovation. Cities are and accountability (which are, compounded by the the backbone of the European economy and have inherent lack of clarity on jurisdiction and political a strategic function in the knowledge-based global frameworks), and the need for an enabling infra- economy characterised by global information structure for wide EU innovation. Unless govern- networks but also by the renewed importance of ance is holistically addressed, the increased level of the spatial dimension in defining the new produc- vulnerability will affect both consumers and public tion processes, and the material and immaterial and private organisations, with a damaging effect infrastructures that make global economy possi- on the generation, take-up, and diffusion of new ble. Urbanisation is growing at a very fast speed. Internet services, risking putting the EU behind in Half of the global population already lives in cit- innovation. If governance is imposed only by the US ies. By 2050, that number will rise to 70 %. The companies that dominate the Cloud services mar- most competitive global cities have a GDP up to five times higher than their share of national population Internet Cloud, there are risks of cutting off poten- and the top 100 cities in the world today account tial new entrepreneurs by locking them out through for over 30 % of global GDP [21]. Well-being and a combination of IP and lack of standardised access good living conditions are very important factors - influencing people’s decisions to live in cities and cial innovation that will allow Europe to compete cities build their core capabilities around the need in cloud computing with the US. By providing an to attract and retain people and talent. The rapid - development of ICT contributed to the attraction ated by a public-private partnership but available of knowledge workers, skilled labour forces and to all citizens and entrepreneurs across Europe, entrepreneurs in cities that have stronger techno- Europe can develop its own path to innovation and logical capabilities, advanced network infrastruc- independence from US-based Cloud companies. To tures and access to ICT. At the same, time these avoid vendor lock-in, industries should provide clear global transformations created a new geography open royalty-free standard to import and export of centrality and marginality, which is resulting data as well as open interfaces to cloud services, in growing divides existing both in advanced and since standardisation activities are currently not emerging economies [22]. The unequal distribu- properly specified given sufficient importance in tion of resources and strategic activities between the global cities at the centre of financial and formats setting should be negotiated with author- international business and the rest of the world is growing. This means that the rapid growth of the financial industry and knowledge-intensive services W3C, in order to negotiate a standardisation strat- generates new qualified and specialised jobs in the egy with worldwide cloud computing communities field of management, finance and knowledge pro- (e.g. research institutes, forums, academia), while duction but also generic low wage jobs, widespread carefully listening to the use cases and require- exploitation and unemployment. This situation ments of EU actors such as SMEs, governments, gives rise to new economic and social imbalances and end-users. These standards should be deployed at a global level, including within global cities and with the goal of enabling wide innovation through regions that need to be overcome. infrastructures. such as resource constraints, pollution, traffic con- THE KEY CONSTITUENCIES: producing urban gestion, energy over-consumption, infrastructure digital commons to unleash European talent maintenance, public service delivery, etc. Every A network of connected cities and regions is essen- citizen in Europe relies on the availability of com- tial to establish a model for European sustain- mon resources and utilities such as water, waste able economic development. In fact, the diffusion removal, or electricity as well as transportation of Smart City interoperable services in a regional in order to carry out their daily activities. Digi- context helps: reducing the digital divide in Europe tal technologies are stimulating new theoretical increasing the availability/use of open source and investigations into the future of services with open access solutions and the development of real-time aggregation of urban actionable data. open standards, legal and regulatory frameworks, The urbanisation of technologies are a clear trend, the sharing of knowledge and modular applica- since over three billion people live in cities and four tions amongst European cities and regions, the billion people use mobile devices, creating a per- creation of collaboration processes and services vasive global network of wireless sensors. Some
  • 70. 6930 billion radio frequencies identification tags are constructing technologies responsive and accessi-produced globally. The proposed dominant vision ble to the people whose lives they affect. The valueshows us the physical world itself transforming of networked technology is in access to one anotherinto an information and knowledge system form- and deepening social relationships, not just accessing a huge ecosystem of devices. The Internet will to data or information. Meaningful social life is theconnect 10 billion things/objects that are becoming value of the system. Smart Cities should be openembedded with sensors and having the ability to and flexible systems that adapt to social changescommunicate with other objects (The Internet of and institutional innovations. Smart Cities shouldThings, IoT). The major application fields for the IoT apply human-centred design approaches to theare the creation of smart environments/cities and specific problems of the urban environment. Manyself-aware things for climate, food, energy, mobil- initiatives are focusing towards developing meth-ity, and health applications. The proposed vision of odologies to involve users in the design process ofa smart city can be reimagined as a platform to the next generation of public infrastructures anddeploy tracking and sensing devices, for real-time services, therefore building common ecosystemsmonitor and control. People, places, and objects for interoperable Internet-based services and look-in the city will be instrumented with sensors that ing at the city as an open-source civic innovationstream and measure data about real-world activ- platform. ‘Connected Cities’ will help people andity. These data streams can be location reports organisations to harness the potential of emerg-from objects, people, and cars, and environmental ing technologies in order to develop innovative sys-measurements from sensors embedded in build- tems and services that will improve people’s life. Atings or in the streets and other sorts of feeds. a technological level, most of the existing ‘smart’Urban activity will be then embedded in so ware, technologies, such as automatic meter readingcreating new ‘black box’ control systems [23]. Theunderlying hypothesis of this model is that people actuators, are used in isolation or restricted to par-will change their behaviours based on personal ticular applications. A common framework to facili-analytics visualisations and everyday objects will tate and provide services across the whole EU andbecome social connected tools. However, we know in different domains should be specified, advancingthat the process for changing behaviours is much -more complex, and the decision regarding which cessing urban information in real time and makingdata to collect and how to classify it, is already a it publicly accessible can enable a transformation inhighly political choice. Data generated by the city the use of public resources, together with improv-are interpreted by so ware algorithms and actu- ing public services such as mobility, transports,ation devices through normative processes, where and health systems, therefore addressing societalsubjective values, legal regulations and power challenges.relations are inscribed in the code [24]. SmartCities present novel challenges to our social, cul- Mobilising the common wealth of software andtural, economic, and legal understandings of the telecom infrastructures (Code for EU, Bottom-public space; we need to build new societal con-ventions and juridical standards to account for increased public investments will increase the com-their implications and to collectively exploit their petitiveness of European cities and regions [26].benefits [25]. Local and regional authorities can thus be cata- lysts for innovation, coordinating urban innovationMajor criticisms have been raised concerning some strategies and funding scalable pilots in real-lifeof the most advertised Smart Cities projects such as contexts bringing together European developers,Masdar City in the United Arab Emirates, PlanIT Val- designers, entrepreneurs, and end-users. Thereley in Portugal and the IBM Command and Control are many European initiatives going in this direc-Centre in Rio de Janeiro. Those are cities built from tion such as the EuroCity network, which unites thescratch, ‘greenfield sites’ conceived as perfectly local governments of more than 140 large citiesfunctioning cities built with a top-down approach, in over 30 European countries [27], the Europeanbut designed without understanding people and network of Living Labs facilitating users’ involve-social life. These projects could lead to proprietary ment in the innovation process [28], the EIT ICTurban operating systems that result in a concen- Labs, an instrument for promoting stakeholders’tration of actors and citizens’ lock-in, together with collaboration in research and innovation [29], andpervasive targeting of consumers through sensing the Smart Cities initiatives funded by the Europeantechnologies, thus building a panopticon of insti- Commission [30] [31]. It is therefore clear that alltutional control and surveillance. The challenge stakeholders’ have to be involved and profit fromfor Smart Cities is to answer these criticisms by Smart Cities innovations (citizens, utility and service
  • 71. 70 O P E N I N N O V A T I O N 2 0 1 2 providers, city and regional authorities and society interoperable services and applications by many as a whole). Even if, at a later development stage, potentially unforeseen European actors, includ- smart social platforms in cities and regions become ing the tremendous potential value in sectors a self-organising and self-sustaining system, at currently ignored by the US model such as public the beginning, its implementation will need a clear services, SMEs, and end-users. The architecture of systemic approach and public investment. In such a framework, Smart Cities and Regions can play a services and Smart Cities that will be built on it, key role in favouring interactive learning and knowl- carries important political consequences, influenc- edge-sharing, improving the regional potential in ing the future of the European economic competi- terms of the creation of new knowledge and skills, and, ultimately, in terms of economic development, governance carried forward by the UN (WSIS), all well-being, and job creation. Internet stakeholders must be involved in the defi- nition and evolution of a future Internet architec- Conclusion ture. Unless governance is holistically addressed, To sum up, future Internet service infrastruc- the increased level of vulnerability will affect both tures on which future Smart Cities and Regions consumers and public and private organisations, will be built must be conceived following a holis- with a damaging effect on the generation, take- tic approach addressing not only technological up, and diffusion of new Internet services, risking requirements, but also regulatory, social and busi- putting the EU behind in innovation. By providing ness issues. The challenge for Europe is thus to an innovative and ambitious strategy for the EU determine the particularly European added value - that can stimulate actual innovation and fair ship but available to all citizens and entrepreneurs competition and so, in the long run, overtake the across Europe, Europe can develop its own global monopolistic US model based on the concentra- path to innovation. tion of resources in the hand of few large com- panies while, at the same time, addressing the Contact economic needs of SMEs and societal challenges in Europe (see in the picture, the third layer spe- Francesca Bria cific domain — smart services in health, environ- PhD Researcher ment, education, transport). National governments Imperial College London and the European Commission should put forward a holistic future Internet strategy that addresses together the technical, social, regulatory, and busi- ness aspects as well as investigating the impact References that cloud computing will have in the management of critical information infrastructure and citizens’ [1] Innovation Union, Europe 2020 strategy (http:// data. The European political, cultural and economic ). model is based on diversity, subsidiarity, collabora- [2] Edquist, C. (2005), ‘Systems of Innovation: tion, and pervasive creativity across all of society. perspective and Challenges’, in Nelson, R. R., Mowery, Therefore, European distributed innovation should The Oxford handbook of Innovation, Oxford University Press, Oxford. be the basis for a new smart and sustainable eco- nomic model underpinned by open architectures [3] Howe, J. (2006), ‘The Rise of Crowdsourcing’, Wired, 14. and standards for Internet-connected environ- [4] Tapscott, D. and Williams, A. D. (2006, 2008), ments that allow interoperability, governed pri- Wikinomics: How Mass Collaboration Changes Everything, vacy, and data portability. In order to reach these Penguin Group, New York. goals, Europe needs the first and second layers of [5] Chesbrough, H. (2003), Open Innovation, Harvard Business School Press, Boston. be structurally coupled with the technology and [6] Marazzi, C. (2010), The violence of financial business infrastructure layer and the application capitalism, Semiotext(e), The MIT Press. layer. In order to foster entrepreneurial innovation [7] Weber, S. (2004), The Success of Open Source, on smart services and the IoT, Europe needs to Harvard University Press. have a technological infrastructure with common [8] Pariser, E. (2011), The Filter Bubble: What the Internet open specifications and reference implementa- is hiding from you, Penguin Books, London. tions around technical standards, trust, privacy and security and business regulatory frameworks. [9] European Commission sets out strategy to strengthen EU data protection rules ( This will in turn foster social entrepreneurship and rapid/ civic innovation, enabling the creation of smart, mat=HTML&aged=0&language=EN&guiLanguage=en).
  • 72. 71[10] Hamilton Consultants Inc (2009), Economic value ofthe advertising-supported Internet Ecosystem, InternetAdvertising Bureau (IAB), New York.[11] Shapiro, C. and Varian, H. R. (1998), InformationRules: A Strategic Guide to the Network Economy,Harvard Business School Press.[12] Berners-Lee, T. (2010), ‘Long Live the Web: ACall for Continued Open Standards and Neutrality’,Scientific American Magazine, December 2010([13] Pariser, E. (2011), The Filter Bubble: What theInternet is hiding from you, Penguin Books, London.[14] Halpin, H. and Tuffield, M. (2010), A Standards-based, Open and Privacy-aware Social Web, W3CIncubator Group Report, 6 December 2010.[15][16][17][18][19][20][21] McKinsey Global Institute (2011), Urban world:mapping the economic power of Cities ( ).[22] Sassen, S. (2001), The Global City, PrincetonUniversity Press.[23] Shepard, M. (ed.) (2011), Sentient City: UbiquitousComputing, Architecture, and the Future of Urban Space,MIT Press.[24] Greenfield, A. and Shepard, M. (2011), Urbancomputing and its discontents, Lulu, New York.[25] Greenfield, A. (2006), Everyware: the downing ageof ubiquitous computing, New Riders, Berkeley, CA.[26][27][28][29][30][31]
  • 73. 72 O P E N I N N O V A T I O N 2 0 1 2CHAPTER IITrends and country reports 2.1 Innovative cross-border eSolutions and eServices development in the Danube eRegion Countries in Central Europe positioning meeting was the first in a series of the business and themselves as a cross-border eRegion government executive meetings on cross-border The first idea about the cross-border ICT-based eCommerce development taking place in Slovenia eCommerce in Central Europe was presented by the in June and November for several years. Slovenia Delegation of the Information Society Tech- nologies (IST) Committee of the European Commis- On 4 March 2002, a workshop, ‘Building A Mega sion, Directorate-General for the Information Soci- ety and Media in Brussels on 20 September 2000. held in Ljubljana. It was sponsored by the Electronic It was proposed that regional development exploit- Commerce Center of the University of Maribor, ing eTechnologies may be relevant to the countries - preparing for European Union membership. A er ment Centre for Informatics, Republic of Slovenia. that, the Department for International Cooperation, There were over 40 participants, representatives of Ministry of Education, Science, and Sport, Republic business, government and educational community of Slovenia sponsored a meeting based on that idea in the neighbouring countries. Involved were the in Ljubljana on 15 November 2000. A decision was researchers of the University of Rijeka, Croatia; Uni- made to conduct a survey on issues in cross-bor- versity of Graz, Austria; University of Trieste, Italy, der eCommerce as perceived by the executives of and the University of Maribor, Slovenia, all shar- selected organisations in Slovenia [1]. ing interest in a cross-border regional eCommerce development. This workshop triggered the creation Triggered by the meeting, two workshops were of ALADIN — ALpe ADria INitiative Universities’ organised the following year on organisational Network. ALADIN was created by the signing of a prototypes of cross-border business-to-business letter of intent by the rectors/vice-rectors of four and business-to-government eCommerce in Cen- universities in the region on 23 November 2002 [3]. tral Europe. The goal was to prepare for potential development projects in the region and related calls The term ‘eRegion’ was coded in Central Europe at a for research projects. The first workshop was spon- meeting of the diplomats sponsored by the Univer- sored by the Hungarian Research and Development Division, Ministry of Education in Budapest, 27 and Republic of Slovenia on 9 March 2004. The Ministry 28 March 2001. The second was sponsored by the Slovene companies Intereuropa and ATNET in Koper with the economic counsellors of the embassies of on 31 May 2001. central and south-eastern European countries, the USA, China and the delegation of the European Com- The workshops led to an executive sellers and mission to Slovenia [4]. The purpose of the meeting buyers meeting on regional cooperation in eCom- was to present the initiative to develop an eRegion merce development taking place at the Bled eCon- in the area of central and south-eastern Europe and ference on 25 June 2001 [2]. The purpose of the to promote the 17th International eCommerce Con- meeting was to bring together business and gov- ference, ‘eGlobal — A Network for the Development ernment executives involved in cross-border trans- of an eRegion’, to be held in Bled, Slovenia, from 21 actions, business process facilitation and simpli- to 23 June 2004. Representatives from the Univer- fication, and ICT providers. The objectives of the meeting were to encourage top executives to con- and those from the Slovenian economy who offer duct business electronically; to motivate the use of systems for cross-border connections, acquainted the latest eTechnologies, and to prepare propos- the economic counsellors with Slovenian initiatives als for the joint cross-border eCommerce projects in the area of eCommerce [5]. In this context, they in the region of the neighbouring countries. The outlined the ‘eRegion’ initiative, which connects the
  • 74. 73ALADIN group of universities (eCommerce ALADIN cross-border eRegions: Baltic, Central Europe,— ALpe ADria INitiative). Leading Slovenian insti- Mediterranean, Nordic, South-East Europe [13]tutions and companies, such as the Port of Koper, Cross-border disaster relief eManagement inSlovenian Railways, the Institute of Health Insurance the eRegion [14]of Slovenia, the Slovenian Geodetic Institute and eInvoicing in the eRegion: Meetings, Panels,the Insurance Association outlined their respective Workshops [15]views on the significance of developing an eRegion. Bled eConferences [16] International workshops on the Living Labs inMembers of ALADIN shared ideas on eRegion devel- the innovative cross-border eRegion [17]opment and collected information on similar cross- The Merkur Day, undergraduate and graduateborder activities elsewhere in the EU. A triggering students’ eConference [18]source of information was the conference on ICT-based cross-border region development sponsored In 2009, the meaning of ALADIN evolved into ALpeby the European Commission, Directorate-General Adria Danube universities INitiative. The universi-for the Information Society and Media and the ties involved are trying to contribute to the effortsDirectorate-General for Regional Policy, in Goth- of the European Union in supporting the Danubeenburg in November 2005 [6]. Ten new EU Mem- Region to accelerate its development [19]. Currently,ber States have been invited to exploit the experi- in ALADIN there are 17 universities in 12 countries:ence of, and cooperate with the Nordic countries. Graz, Austria; Medical Graz, Austria; Mostar, Bos-The Slovenia’s delegation to the conference was nia and Herzegovina; Sofia State L&IT, Bulgaria;chaired by the Minister for Local Self-Government Dubrovnik, Croatia; Rijeka, Croatia; BU Prague,and Regional Policy [7]. In the delegation, there Czech Republic; BW München, Germany; Trento,were 15 representatives of the government, busi- Italy; Trieste, Italy; Corvinus Budapest, Hungary;ness and academia who have received first-hand Politehnika Bucharest Romania; Novi Sad, Serbia;information on the successes and challenges of the TU Košice, Slovakia; Maribor, Slovenia; Primorska,cross-border collaboration of the Nordic countries. Slovenia; St. Gallen, Switzerland. ALADIN’s activitiesThe messages were extremely well received. directly related to the EU Strategy for the Danube Region are presented in list No 2.To organisations in Slovenia, the eRegion conceptbecame very obvious and realistic. Encouraging List No 2was information on the preparations of the EU ALADIN’s activities related to the EUstrategy for the Baltic Sea Region development strategy for the Danube Region[8]. The meeting with the President of the Com- Meeting of ALADIN at the Corvinus University ofmittee of the Regions and members of the Bureau Budapest in March 2010 [20]of the Committee of the Regions was organised in Position Paper of ALADIN on the EU strategy forMarch 2008 [9]. During Slovenia’s presidency of the the Danube Region in April 2010 [21]European Council, a ‘Slovenia Living Lab Event’ was Two meetings of the European Initiative ‘Dan-organised in Brussels in April 2008 by the Govern- ube Region on the eSilk & eAmber Roads’ in thement of Slovenia in cooperation with the European European Parliament in 2010 [22]Commission and the European Network of Living Danube eRegion Conference — DeRC inLabs — EnoLL [10]. In October of that year, Slo- Ljubljana in September 2011 [23]venia presented a cross-border eRegion conceptat the open days of the European Commission, The author has published on general aspectsDirectorate-General for Regional Policy [11]. It was of eRegion development in 2007 [24] and onfollowed by the Nordic-Slovene meeting on innova- a relevance of a cross-border e-regions to a competitiveness of the nations in 2009 [25].2009 [12]. Based on the activities described, the followingIn recent years, ALADIN has been very much lessons can be shared.involved in various eRegion development activitiesas presented in list No 1. It took 10 years from an academic initiative on a need for an accelerated cross-border collab-List No 1 oration to an eRegion concept as a definedActivities of ALpe Adria universities territory and visible research and developmentINitiative — ALADIN in recent years topic. Business, government , municipality and Cross-border eCollaboration is more difficult diplomacy executive meetings on the innovative and time-consuming than anticipated.
  • 75. 74 O P E N I N N O V A T I O N 2 0 1 2 Numerous actors have to play an active role List No 3 in the effort: national and local governments, Inter-Municipality Initiative: Cross-border businesses, ICT providers, universities. eCollaboration in the Danube eRegion Cross-border eCollaboration is a complex task The Slovene organisations involved were: since many entities are involved, there are town municipalities (Ljubljana, Maribor, Murska many interactions among the entities, and Sobota, Novo mesto, Ptuj); several relations are inter depended. neighbouring municipalities (Kočevje; Mirna, eServices are of growing interest to the organi- Mokronog-Trebelno & Šentrupert); sations in the region and ICT is more and more tourist organisations (Bled Tourist Board, Cave considered a trigger of a faster economic and Postojnska jama, Grand Hotel Union Ljubljana, social development. Slovenian Tourist Board, Tourist Board Kranj); Membership of the eLiving Lab — a first wave Regional Chambers of Commerce (Koper, Krško, Living Lab [26] in the European Network of Liv- Ljubljana, Maribor, Murska Sobota, Novo mesto, ing Labs, EnoLL [27] — was an important trig- TRC Koroška); ger of, and contributor to, numerous activities in Regional Chambers of Cra and Small Business the country and in the region. of Slovenia (Maribor); Membership of the Open Innovation Strategy Development Centres (Kočevje-Ribnica, Novo and Policy Group — OISPG [28] has contributed mesto, University Development Center and much to learning about open innovation and University Incubator of Primorska Ltd., Koper); best practices in Europe. companies (Intereuropa d.d. Koper, Gorenje d.d. European Union Strategy for the Danube region Velenje); is a major opportunity and a challenge for the organisers of major international events (Mari- countries in the region to eCollaborate in order bor 2012 Public Institute — European Capital of to increase their competitiveness and contribute to a higher quality of life. IT providers (Bankart, Panteon Group Kranj, Postal Services of Slovenia, Realis Ljubljana, Inter-Municipality Initiative: Cross-border SAP Ljubljana, SRC Ljubljana, Telekom Slovenija); eCollaboration in the Danube eRegion supporters — national administrations (Min- In June 2007, Slovenia’s initiative ‘Innovation for istry of the Environment and Spatial Planning; Life Quality — Slovenia Living Lab’ was created - with the following objectives [29]. tion, Science and Technology; Ministry of Public Administration); National Assembly Deputies; projects of the highest relevance to the country. institutes (Geodetic Institute of Slovenia, Lju- Gaining practically useful high added-value bljana Urban Planning Institute, Urban Planning solutions by pilots implementation. Institute of the Republic of Slovenia); Providing for interoperability of the existing universities (Maribor, Primorska, Dolenjska technology platforms. Academic Initiative). Improving a long-term-oriented collaboration with the most developed countries. Prototype development was accepted as a major Obtaining political support for the initia- methodology component of the initiative. The tive accomplishment where, and when the objectives of eSolutions and eServices developed government support is needed. as prototypes are the following: innovativeness, user-centricity, simplicity, low-cost accessibility, Based on the spirit of the Slovenia Living Lab as a web sites connectivity, multilingual eSolutions countrywide concept, a more specific initiative was and eServices, support to major cultural and sport - events, support to cross-border eBusiness of SMEs, ipality Initiative: Cross-border eCollaboration in the openness to the organisations in Slovenia and Danube eRegion [30]. Organisations in the initiative other countries, experimenting in the Living Lab (see List No 3) are preparing for the expected calls environment. Prototypes as the results of the ini- for project proposals by developing prototypes in tiative developed in the period from April to Octo- a coordinated action. A natural entity of the effort ber 2011 were presented at the Danube Region is a municipality with an executive mayor’s level involvement. In an eMunicipality, special focus is Economic Chamber in Vienna on 3 November 2011 devoted to SMEs. Experimenting is an important [31]. component of the effort for which the universities are a convenient neutral environment.
  • 76. 75Prototype as a component of open operational savings and contributes to the increaseinnovation of competitiveness of enterprises.A prototype is an early sample or model built to testa concept or process or to act as a thing to be rep- Currently, the Chamber of Commerce of Dolenjskalicated or learned from (Wikipedia). A prototype is and Bela Krajina sends eInvoices to some 20 mem-a basis for the development of a pilot. A starting bers, and is a recipient of eInvoices. We together,point of a prototype development is a problem in the participants already involved in the eInvoic-which the stakeholders have an interest in solving. ing scheme, are the best promoters of eInvoicingLiving Labs as components of open innovation are and can help new users with our knowledge andconsidered operational vehicles for encouragement experience. The intention of our prototype projectof cross-organisational, cross-disciplines and cross- is to promote eInvoicing between SMEs and budgetborders cooperation. users both nationally and between other countries. Our prototype group is composed by partners fromA technology prototype is a new operational eSolu- four countries: Austria, Bosnia and Herzegovina, Croatia and planning, developed by an architect andtechnology provider as described below. It is distin- By stimulating the application of modern tech-guished from an organisational prototype by which niques and technology with this and similar pro-we mean a new operational eSolution or eService jects, we contribute to the improvement and prom- - ise of continuous development in the quality of life,ning implemented in a municipality. Or it may economy and tourism in the an already proven eSolution or eService, likeexchanging invoices in an electronic format, in a 3D planning information prototypein a cross-border environment as described below. By Iztok Kovačič, Municipality of ŠentrupertThree of the prototypes presented in the Danube 3D planning information is a prototype project that has to do with space and architecture. It answersfollowing text prepared by the prototype develop- one simple question: What can someone build on a certain plot of the land? The answer to that ques-relevance of the prototypes to the Danube Region tion is usually a text document called planningdevelopment is presented by the chair of the 2011 information. It provides information on the permis- sible types of buildings appropriate for the selected plot of land. In addition to identifying protected andCross-border eInvoicing prototype restricted areas, it also gives information about the spatial plan and the eligible use of land, together with permitted types of activities and works, as wellof Dolenjska and Bela Krajina as acceptable types of construction. The main goal of the prototype project is to convert all that textThe Chamber’s activities are aimed at stimulating into visual information that we named 3D planningfaster development of the information society with information.the goal of catching up with the technologicallymore developed regions. Therefore, we are always 3D planning information would be supplementedwilling to participate in initiatives such as Inter- by multimedia material employing hypertext,Municipality Initiative: Cross-border eCollaboration 2D hypermaps, aerial photographs as well as 3Din the Danube eRegion. static and dynamic displays of terrain and build- ings. The next step would include displaying exam-As our experience shows, everyone knows what ples of similar buildings that have already beenan electronic invoice is, but, to date, the eInvoice constructed by interested developers.adoption level remains relatively low. Accordingly,the European Commission wants to see eInvoic- The benefits of the prototype project would be toing become the predominant method of invoic- provide users (municipalities, local administra-ing by 2020 in Europe. We think that particular tive units, citizens, planners,) with a simpler andattention should be given to facilitating business more comprehensive visual display of planningtransactions, especially for SMEs. eInvoicing information through a publicly accessible webenables improvements in efficiency and creates application.
  • 77. 76 O P E N I N N O V A T I O N 2 0 1 2 Figure 1. 3D Planning information prototype The Municipality of Šentrupert has developed this which brings new business standards B2B, B2C to prototype together with the collaboration of Rea- tourist destinations, museums, events, festivals, lis d.o.o. and Geodetic Institute of Slovenia. Neigh- culture institutions, sport clubs. bouring municipalities of Mokronog-Trebelno, Mirna and Novo Mesto Urban Municipality together with The ICT platform should be a multifunctional (pro- the Chamber of Commerce of Dolenjska and Bela motion, marketing, booking, ticketing, accounting, Krajina, SAP Slovenia d.o.o, Urbi d.o.o. US-Upravno data exchange, reporting, analysing, data mining), svetovanje also joined this partnership and there multichannel ticketing service (box office walk-up, are some optimistic projections that a few munici- mobile phone, automated kiosks, real-time Internet palities from Croatia and Bosnia and Herzegovina kiosk, ticketing agents, partner organisations, gas will follow. We also believe that this is one small stations, etc), integrated with internal and external step towards innovative collaboration of the dif- information environment, fast, safe, capable, dura- ferent organisations that are dealing with urban ble, flexible, reliable, open system, easy to use and planning and architecture. As we know, the growth user-friendly, use vouchers as well as print-at-home of the human population is inevitable as we just tickets, integrate with automated tickets valida- recently reached the magic number of seven billion tion and access control and analytics tools with people. Therefore, it is very important how we man- end-user-defined reporting, no time or geographi- age the space that is le for the future generations. cal limits, real-time 24/7, with CRM (custom relation Based on cross-border collaboration, we could man- management) and measurable results of promotion. age to properly and effectively plan the environment Added values for costumer are discounts on ticket around us using this kind of prototype solutions. packages, buy more — save more, user-friendly presentation in one place, prompt information about Prototype cross-border eTourism — daily/weekly/monthly offers, easy and safe ways for invitation to Danube and Alpe Adria online booking and buying tickets from home, fully Tourist Champions League safe, discretion and maximum comfort, better prep- aration for attraction visit brings higher satisfaction. By Igor Blažina, Assistant CEO, Cave Postojnska Added values for partners are producing, promoting jama and selling of joint tourism products with no time or geographical limits, sell more and cut expenses, Tourism produces 10 % of GDP in Europe and better competitiveness, higher level of experience of Europe is planning to stay a top world top tourist tourist attraction, more satisfied visitors, active and destination. In Danube and Alpe Adria regions are long-term communication with costumer, real-time several of the most visited world tourist destina- reporting and good analysing brings better planning, tions like Vienna, Salzburg, Budapest, Rome, Ven- B2B automatic scheme of selling between partners. ice, Dubrovnik, Plitvice, Lipica, Bled and Postojna Cave. To overcome economic crises, it is necessary Postojna Cave in Slovenia already use such an ICT to cooperate and to use innovative and modern platform and started cross-border cooperation with technologies. We need a modern ICT platform with Minimundus (Austria) and Plitvice (Croatia) in 2011 innovative e-ticketing solution for online and 24/7 and a er promoting the prototype in Vienna on the real-time tickets, packages and merchandise sales
  • 78. 77Figure 2. Prototype cross-border eTourismPostojna Cave with its partners invites all top countries. Organising informative conferences fortourist destinations of the Danube and Alpe Adria their members is one of the basic tasks of Cham-Region to join the Danube and Alpe Adria Tourist bers. Thus, it was a logical step taken by the Aus-Champions League.Prototyping methodology for eSolutions and in accordance with the European Commission,eServices development Directorate-General for Regional Policy. - lent cooperation with Slovenia and ALADIN, it wasRegion Strategy a perfect opportunity to include the Digital Agenda in the programme of the Danube Region BusinessPrototyping methodology can be considered as avery straight link to companies. SMEs especially and eServices. Thus, the intended direct contactscould profit from prototypes presented by univer- between universities and research institutions, onsities and research institutions. In most cases, the one hand, and companies as well as provincialSMEs don’t have comparable possibilities for their authorities and mayors of the Region, interested inown research. They have a more urgent need to cross-border activities on the other hand, could becooperate with others in any research.On the other hand, SMEs are much more flexible exceptionally positive. The presentation of the widein implementing new ideas. Especially in eSolutions range of prototypes in eSolutions and eServicesand eServices, flexibility is of utmost importance. met with great interest and, as a consequence,Large companies may dispose of huge laboratories the participants of companies and institutions ator testing machinery with numerous employees. the event clearly stated that the Danube RegionHowever, they tend to lack in flexibility. the limited size of the countries along the Danube,One of the aims of the European Commission, Dir- cross-border solutions are of the utmost impor-ectorate-General for Regional Policy, concerning tance and should be a benefit to the whole regionthe EU Danube Strategy is to encourage more com- making it more dynamic.panies and institutions in the region to cooperatecross-border. will continue to organise the next Danube Region -nomic Chamber and other Chambers in the Danube to universities and research institutions with specialRegion. Many or most companies are members of attention to prototypes for possible cross-borderChambers of Industry and Trade in their respective activities and cross-border solutions.
  • 79. 78 O P E N I N N O V A T I O N 2 0 1 2 [5] Meeting of the Commercial Counsellors on Cross- Contacts Affairs, Republic of Slovenia and The University of Jože Gričar Maribor, Ljubljana, 9 March 2004 (http://www.elivinglab. Professor Emeritus, University of Maribor org/safe/CommercialCounsellors.doc). Contact person, eLiving Lab and Programme [6] Towards a Knowledge Society — The Nordic Coordinator, Inter-Municipality Initiative: Cross- Experience, Gothenburg, 14 and 15 November 2005 border eCollaboration in the Danube eRegion ( gothenburg/index.cfm). [7] ICT-Powered eRegion, November 2005 (http:// Franci Bratkovič ). Director [8] Malmström, C. (2007), ‘An EU strategy for the Chamber of Commerce of Baltic Sea region’, Speech: European Parliament, Dolenjska and Bela krajina Strasbourg, 12 December 2007. ( sb/d/3211/a/94598). [9] ‘Open Innovation in the Living Labs for the Cross- Igor Blažina border eRegions Development’, meeting with the President of the Committee of the Regions and Members Assistant CEO Cave Postojnska jama of Organizational Sciences, Kranj, University of Maribor, 3 March 2008 ( [10] Demand and User-driven Open Innovation Iztok Kovačič and Experimentation Driving the Renewed Lisbon Environment and Spatial Planning Strategy, European Network of Living Labs Promotes Municipality of Šentrupert European Innovation Strategy and Policy, Brussels, 8 April 2008 ( d355051/2008-04-08%20-%20Slovenia%20LLs%20 Event%20-%20Programme.pdf). Georg Krauchenberg [11] Slovenia as Living Lab, on Open Days 2008, Brussels, 6–8 October 2008 (http://ecom.fov.uni-mb. si/ecomENG/Events/ OpenDays2008/Slovenia Danube Region Strategy LivingLabInitiative.pdf). [12] Nordic-Slovene Meeting on Innovative Cross-Border Appreciation is expressed to Maruša Babnik, 2009 ( - ). ences, University of Maribor for her very responsive [13] Business, Government, Municipality and Diplomacy website administration. Executive Meeting on the Innovative Cross-border eRegions: Baltic, Central Europe, Mediterranean, Nordic, References South East Europe ( Arhiv-Executive.htm). rganizational [14] Cross-border Disaster Relief eManagement prototype of cross border business-to-business and in the eRegion: Meetings, Panels, Workshops in business-to-government electronic commerce, Kranj: the period 2002–08 ( DisasterReliefEvents.htm). Commerce, 2001, 72 pp. (COBISS.SI-ID 3292435). [15] eInvoicing in eRegion: Meetings, Panels, Workshops [2] Executive Vendors and Customers Meeting ‘Regional in the period 2003–06 ( Cooperation in e-Commerce Development’. Proceedings RelatedActivities.htm). of ‘e-Everything: e-Commerce, e-Government, [16] Bled eConference ( e-Household, e-Democracy’, 14th Bled Electronic Commerce Conference, Bled, Slovenia, 25 and 26 June [17] The International Workshop on the Living Labs in 2001 ( the Innovative Cross-border eRegion ( Herakovic.pdf). [18] The Merkur Day, Undergraduate and Graduate [3] ALADIN (ALpe ADria INitiative Universities’ Network), Students eConference ( Letter of Intent, Ljubljana, 23 November 2002 (http:// MerkurDay2008/history.htm). [19] EU Strategy for the Danube Region (http:// ). ). tank ( [20] Meeting of the ALADIN group at the Corvinus article/3247/9166/). University of Budapest on 23 March 2010 (http://
  • 80.[21] EU Strategy for the Danube Region: PositionPaper of the ALpe ADria Danube universitiesINitiative — ALADIN, April 2010 ([22] European Initiative ‘Danube Region on the eSilk &eAmber Roads’, meetings in the European Parliament on1 June and 30 September 2010 ([23] Danube eRegion Conference — DeRC, Inter-Municipality Initiative: Cross-border eCollaboration in theDanube eRegion, Ljubljana, 20 September 2011 ([24] Gričar, J. (2007), ‘Innovative Cross-border eRegionDevelopment: Possible Directions and Impact. eRegionDevelopment’, Thematic Issue of the Journal Organizacija40(2007)2, pp. 87–96 ( ).[25] Gričar, J. (2009), ‘Innovative Cross-border eRegion Service InnovationYearbook 2009–10, Open Innovation Strategy andPolicy Group (OISPG), pp. 67–68 ([26] eLiving Lab ([27] European Network of Living Labs (ENoLL) ([28] Open Innovation Strategy and Policy Group (OISPG)([29] Innovation for Life Quality, Slovenia Living Lab([30] Inter-Municipality Initiative: Cross-bordereCollaboration in the Danube eRegion ( Chamber, Vienna, 3 and 4 November 2011( ).
  • 81. 80 O P E N I N N O V A T I O N 2 0 1 2 2.2 From service innovation to service engineering — results from the Service Innovation and ICT programme The importance of services in expertise in product development. Business cases, modern society user studies, design alternatives and actual devel- Europe and the US are becoming service economies. opment are not really linked, and information and Service sectors are responsible for about 70 % of knowledge is lost en route. Especially in the case GDP in Europe [1]. In the Netherlands, the com- of ICT-based services, initial requirements are plete growth of employment over the last 10 years underspecified, leading to change requests in the comes from services, especially in healthcare [2]. As process, with higher costs, longer times to mar- the Europe 2020 strategy [3] makes clear, Europe’s ket, and increased risks of even not meeting the future wealth and citizens’ well-being depend on requirements. how effectively its businesses innovate and respond to changing markets, technologies and consumer Whereas developing an individual service is already preferences. We therefore need a better under- complex, understanding service networks adds a standing of how innovation is changing and how level of complexity to that. The interdependencies the traditional divide between manufacturing and between various actors and stakeholders, the distri- services is blurring. bution of task or services in the network brings an additional dimension to the problem area. Our goal, To sustain our welfare level, economic growth is therefore, is to work towards a rigorous, model- needed. US productivity is higher than European, based, service development methodology, or service one, and has recently overtaken leading coun- engineering approach for ICT-supported services: tries in Europe [1]. Moreover, European productiv- a design methodology that is problem-oriented, ity growth is much lower than the US. The service encourages inventive and cognitive skills, generates sector is the main reason: industry has a growth systematic solutions that are transferable, and is comparable to the US. In the public sector, produc- teachable and learnable [7]. tivity growth is even less. In the Netherlands, only healthcare productivity has grown, whereas costs in the public sector have grown drastically. All this economic challenges sketched above, we move to implies that we are in need of a better approach of the challenges organisations face in this context. service innovation, both in the public sector and the We then elaborate on the concept of service orien- private sector. tation in organisation before giving three main innovation areas in services. Product-oriented companies are now adopting new service-focused business models. At the same time, This work briefly summarises a large part of the service firms increasingly exploit new devices, tech- research part of the Service Innovation and ICT nologies and infrastructures, such as smartphones, programme, carried out in 2010 and 2011 in the tablets, or interactive televisions, to improve their Netherlands. Many people contributed to this work customers’ experiences. Innovation is no longer the through the Agile Service Development, ArchiValue preserve of research and development laboratories and Business Model Roadmapping projects. These but has become more of a distributed, cultural phe- projects ran under the umbrella of the Service nomenon, where the processes for developing new Innovation and ICT programme in the Netherlands, goods and services, channels to market and revenue partly supported by the Dutch Ministry of Economic models are evolving in response to new technologi- Affairs, Agriculture and Innovation. The work was cal opportunities, increased customer engagement done from March 2010 through December 2011. in innovation, and changing organisational struc- tures [4] [5]. Information and communication tech- We list the participants in this work in alphabet- nology is generally recognised as a driving force of ical order: the authors would like to acknowledge innovation [3]. The impact of ICT reaches far beyond their direct or indirect contributions over the last the ICT sector itself. In a recent survey among 300 two years. This type of research leverages the innovative companies in the Netherlands, 80 % of knowledge, investments, insights and inspiration of people pointed to ICT as a driving force of innovation many, and could not have happened without true as well as cost reduction [6]. networked innovation. Despite its importance, the level of professionalism in developing services cannot match the level of CRP Henri Tudor, Luxembourg, Del University of
  • 82. 81Technology, Dutch Tax Department, Everest, IBM, with a budget cut of EUR 500 million, forcing itNovay, O&i, Océ, PGGM, PwC, Radboud University, towards completely digital customer interaction.Rotterdam School of Management, TNO, Universityof Applied Sciences Utrecht, University of Twente,Utrecht University, Voogd & Voogd, Windesheim, a price: reduced intrinsic innovation capabili- ties. An organisation needs to be able to inno- vate constantly and therefore needs skills to col-Innovation challenges for organisations laborate with external partners [9] [10] as well asWe sketched a number of societal challenges combine operational excellence with new productrelated to service innovation. The consequences development [11]. The latter requires a so-calledof these for individual organisations are indirect ambidextrous organisation [12]. This means thatat best. Companies as well as public organisations an organisation should take care to invest in theface different challenges. Confronted with a highly right portfolio of projects, serving a combina-dynamic customer base, especially in the B2C tion of short-term goals and longer-term objec-market, being able to adapt to changing customer tives, leading to a mixed set of competences in theneeds is crucial. This holds for both the channels organisation.through which customers are found and served aswell as the personalisation of services. Think of the The service-oriented organisationrole of new devices and apps for shopping, and the IT management encompasses different aspects,full digitisation of tax-related services. ranging from determining the strategic orientation of the IT organisation to management and controlAgility towards the customer has consequences -for operational agility. The interdependencies of mation systems landscape itself, especially of large,products, services, systems, processes and IT can information-intensive organisations, has become aseverely constrain the ability of organisational complex field that combines all kinds of concepts,change. Every organisation needs to think strategic- paradigms, building blocks, and instruments. Thinkally about where it needs agility as a core com- of paradigms like process management, rule-basedpetence, and develop its enterprise architecture organisation, service orientation, event-based,accordingly. Only then can the time to market of or SaaS and cloud. How can we get a grip on thisnew or changing services match the demands of multifaceted landscape?customers. Sambamurthy et al. [8] show the con-nection between the IT competence of an organisa- It is impossible to manage all these different elem-tion, the digital options this creates, the customer, ents individually. Some of these are too fine-partnering and operational agility resulting from grained, such as business rules or events; some arethese options, and the competitive actions the too IT-centric, such as business objects or compo-organisation can take. And all of these crucially nents; some are too large and serve too many pur-depend on what they call entrepreneurial alertness: poses to manage them as a single functional elem-strategic and systemic foresight. ent, such as complete business applications like ERP systems; and some of these, such as businessLess offensive, but as important for most organisa- processes, are too business-specific to provide ations is cost reduction. Price pressure is substantial management handle on more generic IT function-for many companies like insurance companies and ality. We need a concept that is in between thesebanks as well as telecom operators. This especially other notions and captures the essence of what anholds for public service organisations which have organisation does or means for its surroundings:been confronted with the largest budget cuts in service.decades. Next to reorganising the organisation,such severe cuts need rethinking of the business Using the notion of service as the core concept inmodel of the organisation. guiding the development of organisations, both for business and for IT design, has several advantages.Cost reduction is everywhere: despite a net profitof EUR 1 285 billion in the third quarter of 2011, ‘what’ and ‘how’. A service provides a clear inter-ING Group will lower its cost and create a faster and face to its functionality, without disclosing how thismore effective service, dismissing 2 700 full-time functionality is realised internally. As such, a ser-employees. We have seen similar announcements vice is self-contained and has a clear purpose andfrom ABN and RBS. Cisco Systems announced 5 000 function from the perspective of its environment.redundancies in July 2011 to increase profitability. Its internal behaviour represents what is requiredThe Dutch unemployment agency UWV was faced
  • 83. 82 O P E N I N N O V A T I O N 2 0 1 2 users of a service, the internal behaviour of a sys- a mechanism of instantiating and commercially tem or organisation is usually irrelevant: they are exploiting the lower-level services in a collective only interested in the functionality and quality that offering to the outside world. In this view, the most will be provided. valuable assets are the capabilities to execute the lower-level services, and the business processes are This also points to the second advantage of the merely a means of exploitation. service notion: a service is independently useful and therefore has a manageable level of granular- By concentrating on agile development of busi- ity. Since it delivers a concrete business contribu- ness and so ware services, we focus on the value tion, it is the subject of service-level agreements, that organisations provide to their environment. Of its performance can be monitored separately, it can course, these services are realised by all kinds of be combined with other services to provide new business processes, so ware applications and techni- functionality, and it can be bought from and sold to cal infrastructures. However, these are subordinate to other organisations. the services they deliver. Traditionally, agile methods are strongly focused on so ware development; here, we take a much broader scope, applying agile princi- and IT vocabulary. In business terms, ‘service’ signi- ples and practices to more than just so ware. fies what the organisation does for its customers; more recently, IT has started to use ‘service’ for The service-oriented organisation paradigm pro- concrete, independent units of business functional- vides a basis to meet these challenges. In this ity delivered via a so ware interface. Both uses of report, we identified three major areas where organ- the word are based on the concrete contribution to isations can build on service orientation to tackle the environment and the relatively self-contained the challenges in a systematic way: robust service character of a service. model design, creating an agile organisation, and investing in innovation. These three areas will be This, of course, is not really new. At the edges of touched on in the next three paragraphs, indicating organisations, we have long been thinking in terms the issues involved, typical examples of organisa- of the services provided to customers, and internal tion that have tackled the problem, and pinpointing business processes were designed to provide these instruments that can help in finding a way out. services. So ware engineers think in terms of func- tional interfaces, information hiding and encapsula- Being able to develop robust business models tion. Service thinking, however, can also be applied The introduction of new services and service pro- to, for example, internal business processes and cesses in the continuously changing business so ware applications, rendering them into ‘service landscape requires careful and informed business networks’: services become the core building block planning that takes into account the relevant devel- of the entire information ecosystem. opments in the market, society and technology. The true value of innovative concepts and technologies These services can be provided at a distance, over is largely determined by the business models in the Internet. Some years ago, subscribing to so - which they are embedded. Choices are complex as ware in this way was labelled as ‘Application Ser- cooperation with others in value networks is o en vice Provisioning’ (ASP). This never made it big, at necessary and multiple business model options are least partly because it was based on a direct link available. Companies therefore have a need for a between application and customer: the ASP pro- long-term vision on potential business models, their vider in fact merely hosted and maintained the own position within these models and the road that application for each customer separately. Many of may lead them to this position, including an ana- these applications were not developed for multi- lysis of the robustness of the business model with tenant use, delivery across the Internet, or pay- respect to different context influences. per-use billing models. Newer delivery models, col- lectively called ‘So ware as a Service’ (SaaS) and - cloud computing, have overcome these limitations. mapping’, that is a description of the chain of inter mediate steps and critical choices to arrive at Service orientation also stimulates new ways of a desired business model. This creates a longitudi- thinking. Traditionally, applications are considered nal insight into the opportunities for business inno- as supporting a specific business process, which, vation and related business planning. To validate in turn, realises a specific business service. Service the robustness of business models and roadmaps, orientation allows us also to adopt a bottom-up scenario analysis can be used: validating the strong strategy, where the business processes are just and weak parts of business models and roadmaps
  • 84. 83by applying scenario analysis methodologies. As A famous scenario planning example was set bya result, the ‘fit’ of a business model with a future the oil company Shell, which anticipated the 1973business environment can be determined or the oil crisis by including one alternative scenario on a‘robustness’ of a business model with regard to a shortage of the oil supply due to political tensionscollection of future environments. This methodology in the Middle East and the subsequent rise in oilis called ‘business model stress testing’. prices [18] [19]. Scenario planning was typically adopted by the military, and implemented by, forBusiness model stress testing builds on ingredients instance, the Rand Corporation. While this Anglo-in business modelling [13], business model genera- Saxon scenario approaches focused on improv-tion [14], and scenario analysis. The main concepts ing strategic decision-making and planning pro-and results in the approach are given in Table 1following. a scenario approach for institution and companies to deal with long-term planning. Their ‘norma-Over the past few years, the field of business models tive scenarios’ could serve as a guiding vision tohas developed from defining business models, via policy and decision-makers. Over the years, sce-exploring business model components and classifying nario thinking has become a common approach inbusiness models into categories, towards developing many industry domains, ranging from energy anddescriptive models (for an overview, see [15]). telecommunications to global economics. - Making your service organisation agileness model is. We agree to a large extent with the The agile movement in so ware development hasdefinition presented by Chesbrough and Roosen- received much attention over the last two decades.bloom [16], that a business model is a blueprint These lightweight, iterative methods have grad-for the way a business creates and captures value ually taken over much of the so ware developmentfrom new services or products. As such, a business community because, on the one hand, they providemodel describes how a company or network of better results in many types of projects and, on thecompanies aims to make money and create con- other hand, they provide a more stimulating worksumer value for a specific service offering [17]. Cen- environment for developers. Starting in the 1980s,tral to the business model definition is that a viable with methods like James Martin’s Rapid Applicationbusiness model should create both customer value Development [20], the focus in so ware develop-and network value. ment started to shift from linear, waterfall-like methods to iterative and interactive approaches. InScenario analysis or scenario thinking, has a long the 1990s, the three most important agile methodstradition as first studies originate from the 1960s. arose: Extreme Programming [21], DSDM [22] andTable 1. Key concepts in the business model analysisProcesses ResultsBusiness model design Business modelProcess of describing an existing or (re)designing a new Description of how a company or network of companiesbusiness model. Essential: the business model design aims to make money and create consumer value for ashould allow for a network perspective. specific service offering [3].Scenario analysis ScenarioProcess of developing one or more scenarios based on an Expectations regarding possible futures that provideanalysis of trends, certainties and uncertainties. Essential: insight into the way the future may develop based onthe scenarios and uncertainties should be relevant for the clearly defined assumptions concerning the relationship(future of) the business model. between relevant developments.Business model stress testing Business model strengths and weaknessesProcess that critically evaluates if a business model is Overview of those elements in the business model that fitviable and feasible in a scenario. Essential: There should be with a certain alignment between the scenarios analysis and businessmodel design in order to be able to compare them.Business model roadmapping Business model roadmapProcess of developing a business model roadmap as a Description or a plan that describes what intermediateplan with intermediate steps achieve a desired business steps and critical decisions have to be taken to achieve amodel B starting from a business model A. Essential: The desired business models A and B should be described in the samebusiness model language.
  • 85. 84 O P E N I N N O V A T I O N 2 0 1 2 Scrum [23]. In 2001, representatives from these services to serve agile is not yet available. A new and other agile methods joined forces and wrote perspective on service design processes is needed, the Manifesto for Agile Development [24] that providing development teams with the means to describes the common ground of these methods in tailor their way of working to specific circumstances a simple set of statements and principles. and deal with multiple stakeholder perspectives, bottom-up innovation and co-evolution of different Experience has been mounting that these agile service aspects. We advocate that agile develop- ways of working, using short iterations and close ment processes are much better suited to accom- customer contact, have a higher success rate than modate these needs than classical linear, top-down traditional methods for so ware development, at design processes, in which individual aspects are least for many types of so ware projects. The rig- o en developed separately and sequentially. The our and volume of research into the effects of agile iterative character of agile processes, with a focus methods still needs to be improved [25], but recent on people and interactions, close contact with cus- studies provide theoretical and empirical evidence tomers and cross-functional teams that tackle for the effectiveness of agile methods: see, for different aspects of development at the same example, the extensive overview and research by time, is a much better fit with the complex and Lee and Xia [26]. multidimensional nature of service development. Agile approaches have also gained the attention of Development processes should also be explicitly the academic community, who have investigated focused on observing changes in their environment its foundations and effects from a scientific point and acting on these. The speed of change that of view. A useful definition of agility consistent with organisations have to deal with keeps increasing, the above is given by Qumer & Henderson-Sellers and processes must be responsive and even predict- [27]: ‘Agility is a persistent behaviour or ability of ive in character to accommodate these changes. an entity that exhibits flexibility to accommodate These properties should be designed into the devel- expected or unexpected changes rapidly, follows the opment process. Moreover, it should be self-aware, shortest time span, and uses economical, simple, that is use mechanisms and practices to observe and quality instruments in a dynamic environment.’ its own performance and, if necessary, change its operation accordingly. This use of reflection is a We need to address agility at three different levels common characteristic of agile methods. Scrum, within enterprises: for example, uses the ‘sprint retrospective’ meeting in which a er each iteration, the way of working of agile enterprises, which strategically use change the team is evaluated and adapted. to their advantage, outmanoeuvring competi- tors with shorter time-to-market, smarter part- This adaptive character of development processes nering strategies, lower development costs and does not mean that change knows no bounds. The higher customer satisfaction; complex nature of service design necessitates the agile practices for design and development, use of sound engineering principles and techniques. focused on people, rapid value delivery and External dependencies, technological complexity, responsiveness to change; regulatory compliance, risk management and other agile systems (both organisational and tech- factors all require an approach of bounded or con- nical) that are easy to reconfigure, adapt and trolled variation. Architecture is a core discipline extend when the need arises. to provide such managed variation. It specifies the high-level, strategic or otherwise important prin- These different types of agility reinforce each ciples and decisions that together span the design other: if an organisation’s infrastructure or busi- space, like a vector space in algebra. ness processes are more flexible, an iterative and incremental development process can more quickly Another important use of architecture is to expli- and easily add value, and the organisation’s strat- citly design mechanisms in the operational sys- egy execution is enhanced. The core of this is that tems and processes that support change. Not only uncertainty is given an explicit and prominent place. should development processes be agile and adap- Whereas traditional methods and architectures tive, but the results they create should also be plan for fixed goals and situations, agile methods flexible and amenable to change. Various kinds of and systems are aware of the uncertainties of their design models, ranging from domain, requirements environment and know that they are aiming at a and architecture models to detailed artefacts moving and o en ill-defined target. An integrated describing the inner workings of business processes approach for the agile development of agile and IT systems, play an important role in both
  • 86. 85Figure 1. Waterfall v agile processescontrolling complexity and fostering change. Such increase over time. Maintenance, in fact, is a mis-models make business knowledge visible across the leading term: bits and bytes do not rust and doenterprise, promoting coherence and consistency. not need to be painted or oiled. Most maintenance consists of adding functionality, either to accom-Moreover, a flexible infrastructure that can be con- modate new business requirements or to integratefigured with such models, instead of laboriously with other systems. This additional functionalitywriting so ware code, may greatly enhance the also needs to be maintained, thereby increasingagility of the organisation and its systems. Models maintenance costs even further.can be changed more easily than code, and theeffects of changes may be evaluated at the model Moreover, the complexity of a system increaseslevel before processes and systems are changed, with its size; more complex systems are harderthus avoiding costly errors and re-implementations. to change, so each new business requirement becomes more difficult and costly to accommo-In agile development, the role of these models is date than the previous one. This can also be shownnot the same as in traditional design processes,however, where specialists each work on their own shows a graph depicting that the productivityaspect models and then hand them over to the next per additional function point goes down with theperson in the design chain. Rather, different models system size, and thus maintenance costs go up.and other artefacts need to be evolved iteratively Hence, over the entire life cycle of a system, theand in parallel, while guarding their mutual coher- initial development costs are only a fraction of the total cost of ownership, and the older the system, the more dominant maintenance costs become. InInvesting in service innovation addition, failure risks of old systems increase andOrganisations with a large installed base of enter- the last remaining people with knowledge of theseprise applications o en have poor insight into the systems leave, incurring additional costs for dealingrelative quality, cost-benefit ratios and risks asso- with these risks and knowledge gaps.ciated with their application portfolio. As a result,many information systems are maintained far -beyond their original technical and business life ingly large IT portfolio, since it turns out to be veryexpectancy, as replacement risks are o en over- difficult to really switch off a system. This may lead to a situation in which the entire IT budget is spentolder systems, maintenance costs increase, relative on maintaining old systems, and no budget is lebusiness benefits decrease, and the risk of failure for innovation. In such a situation, the only way out
  • 87. 86 O P E N I N N O V A T I O N 2 0 1 2 is a significant increase of the IT budget, since reno- challenges. In this report, we identified three major vating, shutting down or replacing old systems also areas where organisations can build on service requires an upfront investment. orientation to tackle the challenges in a systematic way: robust service model design, creating an agile If this budget is not available, an organisation has organisation, and investing in innovation. pushed itself into a corner; if a new market entrant comes along that starts from a blank slate with Many different approaches to a staged design a modern system landscape, with the associated methodology exist. Most practitioners agree that lower cost level, it will outperform and outcompete waterfall models are inappropriate to handle the incumbent. Over the last years, this is what the complexity in many designs, and iterative or has happened in many markets, for example with online stockbrokers or new utility companies. Only some government organisations have such ‘luck’ In different design stages, different aspects of the that they do not have to face such competition, but service network are discussed or refined. At a high- they too come under pressure from an increasingly level of abstraction, these are: unfavourable comparison to the private sector. Creation: needs of customers, value to be cre- As a consequence, organisations need instruments ated, and opportunities in markets, technologies to assess the value of their IT as well as their IT or services; projects with respect to their contribution to both Analysis: function, restrictions from legislation strategic as well as operational targets. Such or installed based, robustness of assumptions instruments comprise a portfolio dashboard that and ideas in different scenario’s, and sustain- indicates the current and future value of applica- ability of solutions and services envisioned; tions, and the benefits, costs and risks associated Design: usability, adaptability, architecture and with replacing them. distribution of the services to be built; Realisation: compliance with legislation, reliabil- Systematic service innovation ity and performance of the services in different We illustrated that organisations face numerous situations; challenges, ranging from growth targets, matching Diffusion: acceptance monitoring, evolution of rapidly changing customer demand, to cost reduc- the proposition and coping with growth and tion and continuous innovation. We illustrated these life cycles of propositions. challenges above. The service-oriented organ- isation paradigm provides a basis to meet these In networked service innovation, different actors can be at different stages in the same service Figure 2. Stages in service engineering remote care in hospitals, the ICT solution can be in the diffusion stage for the ICT service provider, whereas for the hospital or caretaker, the service is still part of an early experimental phase. This can lead to totally different issues being at the forefront of the minds of stakeholders, leading to confusion and misinterpretation. At different stages, we thus have different perspec- tives, o en with different stakeholders. This implies that the techniques used in the different stages will be different, both in the way of working as well as thinking. At the creation stage, informal, diverging and visual techniques are o en employed, whereas in design, convergence and formalism is more im- portant. The instruments we will bring forward have been developed to do exactly so. Once different tools and methods have been linked, a coherent and complementary sets of tools and techniques can be chosen, tailored to your application domain or the competences of your
  • 88. 87organisation and its partners. At that moment, we The business and process agility capabilities usesfinally make the step from service innovation to ser- the common maturity levels known from modelsvice engineering [29], creating agile business value. the capabilities concerning system agility, we use aTools for engineering the corporation scale based on the work of Ross et al. on enterpriseUnder the Service Innovation and ICT programme, architecture as strategy, again adapted to an agileseveral methods and tools have been developed to context.tackle the three problem areas mentioned above.Without going into detail, we discuss a number of 1. Silos: System agility is unknown and possiblythem, starting from robust business models. quite low. Individual parts of the organisation are developing their own services independ- ently, with no integration of data, processes,systematic approach for stress testing a business standards, or technologies.model against future developments. Stress test- 2. Standardised Technology: System agility ising is used to identify the weak parts of the busi- addressed reactively, only at the level of indi-ness model which could consequently be improved vidual systems, and focused on IT. Standard-leading to more robust business models. Testing in ised technologies and platforms have been puta more generic setting involves defining a set of in place to communicate between silos, and toindicators against which the business model ele- integrate the data and interconnections.ments may be tested. Criteria may be future sce- 3. Optimised Core: The IT systems in the silosnarios or uncertainties, but could also be success have been analysed and broken down into re-factors or performance indicators. Business model usable component parts. Models are used forstress testing fills the gap between business mod- the design of the business and IT operations,elling and scenario planning and provides a way and at the level of enterprise goals, drivers, andto systematically analyse the quality of business requirements.models. We show how scenarios and uncertain- 4. Business Modularity: Business drivers for agil-ties can be used to address the robustness of a ity are monitored continuously. Models are usedbusiness model. The result of the stress test is a at three levels: for requirements and designheat signature that shows the stronger points and purposes; to obtain management information;vul nerabilities of a business models with respect and in suitable domains also for direct imple-to the main uncertainties in the context of a ser- mentation. Business services to the environ-vice. It is much more than a SWOT analysis, pin- ment can quickly be realised across the enter-pointing exactly in the model where and how the prise by combining and configuring internal anduncertainties touch on the service blueprint. external business services. 5. Dynamic Venturing: The organisation’s strat-To assist enterprises in determining in which aspects egy is based on its agility. Architecture is usedthey need to be agile and where their agility is cur- as a core instrument to support rapid adapta-rently lacking, we have developed a number of tion, and business and IT are regarded as aninstruments. Our first instrument is a capability integrated whole. The enterprise architecturemodel for agile service development, which helps extends beyond the borders of the individualorganisations to plot a course towards increased organisation and includes the networkedagility. A self-assessment helps you in determining enterprise level.where your organisation currently stands and whichnext steps may be useful to improve your agility. Our assessment instrument uses a set of question-This capability model combines the business, pro- naires to plot your organisation on these levels, andcess and system aspects of enterprise agility. Of provides more detailed insight in the performancecourse, changing the agility of your legacy IT land- on several specific aspects. Moreover, it outlinesscape or the culture of your organisation may take which agile practices, models or tools might beconsiderable time, whereas improving the way of used to improve your organisation’s capabilities.working within a project is o en only a matter ofmonths. Hence, your organisation may have differ- - assessment.more, the type of scale is different, since the systemagility aspect mainly addresses the agility of various Our third instrument provides more detailedstructures in the enterprise, whereas business and insights. This is an agility scan to identify: (i) theprocess agility focus on (management and design) need for agility of an enterprise, based on itsprocesses. Therefore, we use two different scales. strategy and business drivers; (ii) potential barriers
  • 89. 88 O P E N I N N O V A T I O N 2 0 1 2 Figure 3. Agile capability assessment Agility Capabilities Capability Aspects Awareness and Business Agility Communication 5,0 5,0 4,0 4,0 3,0 3,0 Tools and Automation 2,0 Individuals and Teams 2,0 1,0 1,0 0,0 0,0 System Agility Process Agility Goal Setting and Way of Working Measurement Target Capability Capability to agility; and (iii) relevant practices and patterns assessment of strategic goal realisation. Gives an that the organisation might apply in this situation. overview of projects and its relation to the several business domains. The scan consists of a set of questionnaires intended for business managers, strategists and Bedell’s method extended version: supports ana- architects. It contains questions about the organ- lysis of the value of IT and IT projects in relation isation’s strategy, business drivers from its envi- to strategic goals. Basically, it uses the enterprise ronment or context, and the barriers or limitations architecture as a starting point, extended with the it perceives in adapting to these drivers. Based on relation to business goals. All relations are quan- the answers to the questions, the agility require- tified to express the value of one attribute to the ments for the organisation can be determined. At a other. By means of aggregation, the added value of general level, the scan provides a dashboard with enterprise architecture artefacts is calculated. recommendations on both the process and system agility of the enterprise. This helps in determining Enterprise Architecture Realisation Index (EARI): general aspects of the development processes and assesses the level of realisation of the enterprise (organisational and technical) systems that might architecture in an organisation. Includes interviews be improved: the higher the bars in the graph, the and instructions to evaluate the EARI from the greater the need. interview results. Together, these instruments are ingredients of a to support (project) portfolio management: some more rigorous approach to developing services of them have been implemented in and validated and managing the service-oriented organisation. Once different tools and methods have been linked, architecture tool. a coherent and complementary sets of tools and techniques can be chosen, tailored to your appli- IT portfolio management capability assessment: a cation domain or the competences of your organ- quick scan into the opportunities for your organ- isation and its partners. At that moment, we finally isation on architecture-based IT portfolio manage- make the step from service innovation to service ment. Includes a maturity scan into IT governance, engineering, creating agile business value. enterprise architecture and portfolio management. The quick scan includes an Excel questionnaire and Postscript — service innovation policy in the analysis tool. Netherlands As mentioned at the start of the paper, this work Enterprise architecture-based project value ana- summarises some results of the Dutch innovation lysis: a method for domain architecture develop- programme Service Innovation and ICT, SI-I for ment, including the link to project and project goals short. It was an initiative of Novay, the Holland and the link to strategic goals. Supports analysis of the value of projects to strategic goals and for the creative industries in the Netherlands: an
  • 90. 89interesting collaboration between ICT companies, Henny de Vosfinancial institutions, the creative industry and aca- Senior Advisordemia. The programme started in 2010, compris- Novaying a ‘top’ research programme, directed by Novay, -tion SI-I and two open tenders. The programme Referencesencompassed EUR 25 million of research, of whichEUR 12.5 million was provided by the Dutch Gov- [1] McKinsey Global Institute (2010), Beyond austerity: Aernment. This was the first phase. A er an evalua- path to economic growth and renewal in Europe.tion in 2011, a second phase would start of about [2] Central Bureau of Statistics (2011), Employmentthe same size. The programme was a definite suc- healthcare sector show spectacular growth (http://www.cess: many companies joined the top programme, publicaties/artikelen/archief/2011/2011-3440-wm.htm).and the first tender received a lot of good propos-als. We expect to outperform on all performance [3] Communication from the Commission to theindicators of the top programme, a great result. European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A Digital Agenda for EuropeEarly in 2011, however, the Dutch innovation pol- (COM(2010) 245 final/2), Brussels, 26 August 2010icy changed drastically, away from service inno- ( ation, away from cross-sectoral collaboration, do?uri=COM:2010:0245towards supporting industry. Nine ‘top sectors’ were [4] Europe Innova, Innovation in service expert panelselected, of which only logistics and creative indus- (2011), Meeting the challenge of Europe 2020 — thetries are directly service-related. Awaiting the ideas transformational power of service innovation.coming out of these sectors, the SI-I programme [5] Communication from the Commission — Europewas terminated during its first phase, despite its 2020, A strategy for smart, sustainable and inclusivesuccess. Parts of the ideas might come back in growth (COM(2010) 2020 final), Brussels, 3 March 2010.the plans for the creative industries, but all other [6] Newcom (2009), Survey Innovation Vision on behalfcomponents have been stopped. of Novay.At the same time, the successful innovation voucher ‘Service Engineering — methodological developmentscheme was terminated due to budgetary reasons, of new service products’, International Journal ofand SME-oriented innovation support was stripped, Production Economics, 85, pp. 275–287.making it less attractive for SMEs to participate. We [8] Sambhamurthy, V., Bharadwadj, A. and Grover,conclude that in 2011, the Dutch innovation policy V. (2003), ‘Shaping Agility through Digital Options:came to a temporary standstill, and the service inno- Reconceptualizing the Role of Information Technology in MIS Quarterly, 27(2):237–263.vation policy was terminated all together. This is incontrast to European policy, as emphasised recently [9] Chesbrough, H. (2003), Open Innovation: the Newin the Horizon 2020 vision of the European commis- Imperative for Creating and Profiting from Technology, Harvard Business School Press.sion. A strange situation, in an era where Europeancollaboration is needed even more than ever. An [10] Vanhaverbeke, W. (2007), ‘The Interorganizationalincomprehensible change of direction, in my opinion. Context of Open Innovation’, in Chesbrough, H., Vanhaverbeke, W. and West, J. (eds), Open Innovation Research a New paradigm, Oxford University Press.Contacts intimacy and other value disciplines’, Harvard BusinessWil Janssen ReviewManager Networked EnterprisesNovay [12] O Reilly, C. A. (2004), The ambidextrous organization, Harvard Business Lankhorst [14] Osterwalder, A. and Pigneur, Y. (2009), BusinessPrincipal Advisor model generation.Novay [15] Pateli, A. G. and Giaglis, G. M. (2003), ‘ framework for Understanding and Analysing eBusiness Models’, 16th Bled Electronic Commerce ConferenceTimber Haaker eTransformation, Bled, Slovenia.Senior Advisor [16] Chesbrough, H. and Rosenbloom, R. S. (2002),Novay The role of the business model in capturing value innovation: evidence from Xerox corporation’s technology spinoff companies.
  • 91. 90 O P E N I N N O V A T I O N 2 0 1 2 [17] Bouwman, H., Haaker, T. and De Vos, H. (2008), Mobile service innovation and business models, Springer Verlag. [18] Kleiner, A. (1996), The Age of Heretics, Heroes, Outlaws and the Forerunners of Corporate Change, Doubleday, New York, NY. [19] Schwaber, K. and Beedle, M. (2002), Agile So ware Development with Scrum, Prentice Hall, New Jersey. [20] Martin, J. (1991), Rapid Application Development. Macmillan, New York. [21] Beck, K. (1999), Extreme Programming Explained: Embrace Change, Addison-Wesley, Boston, MA. [22] Stapleton, J. (1997), DSDM, Dynamic Systems Development Method: The Method in Practice, Addison- Wesley, Boston, MA. [23] Schwartz, P. (1991), The Art of the Long View, John Wiley & Sons, New York, NY. [24] Beck, K. et al. (2001), Manifesto for Agile So ware Development ( [25] Dybå, T. and Dingsøyr, T. (2008), ‘Empirical studies of agile so ware development: A systematic review’, Information and So ware Technology (50:9–10), pp. 833–859. [26] Lee, G. and Xia, W. (2010), ‘Toward Agile: An Integrated Analysis of Quantitative and Qualitative MISQ, 34(1):87–114. [27] Qumer, A. and Henderson-Sellers, B. (2008), ‘An Evaluation of the Degree of Agility in Six Agile Methods and its Applicability for Method Engineering’, Information and So ware Technology 50(4):280–295. [28] Verhoef, C. (2002), ‘Quantitative IT Portfolio Management’, Science of Computer Programming, 45(1):12–96. [29] Spohrer, J., Maglio, P. P., Bailey, J. and Gruhl, D. (2007), ‘Steps Toward a Science of Service Systems’, IEEE Computer, 40(1):71–77.
  • 92. 912.3 Managing innovation in the public sectorIntroduction However, organisations looking to foster innovationWe are witnessing a change in the role of govern- by developing a platform must adapt to new waysments as they look for new ways to provide for their of governing these external collaborators. In man-citizens within a new financial landscape and to aging platforms, there is a shi away from arm’s-remain competitive in an increasingly global soci- length, contractual control to network governanceety. With a significant increase in partnerships with with more informal mechanisms [5]. Depending onthe private sector as well as non-profit organisa- the business model of the core firm and its means oftions, there has been a shi from government as value capture, governance of collaborators can vary.a provider of services to a model in which the pub-lic and private sectors have co-responsibility [1]. Boudreau and Lakhani [5] provide three platformAn important feature of this dynamic is the new business models to demonstrate the degrees ofunderstanding that tasks should not be allocated control that the core firm maintains in managingbased on public versus private responsibility, but on collaboration. In the integrator model, the core firmwhich sector can answer a need most appropriately. retains the highest degree of control. The core firmThus, while the public sector remains at the helm of acts as an interface between external collabora-many initiatives, it also acts to proactively explore, tors and consumers and there is no direct interac-encourage, and engage in collaboration with the tion between them. Apple operates its iPhone plat-private sector [1]. form according to this model, situating itself between developers and consumers, shaping de-Mechanisms of innovation in the velopment and directly controlling transactionsprivate sector with the end-users. In the product model, the coreThis shi in government follows a similar trend in firm relinquishes some control, allowing collabora-the private sector. Due to the increasing pace of tors to sell directly to consumers. However, the coretechnological change, businesses are looking for firm maintains a certain degree of control over thenew ways to stay innovative and competitive. Asfirms recognise that all of the best talent is not example, Intel uses this strategy for developing itsnecessarily in their employ, they look outside of the microprocessors, leaving it to external parties toorganisation for new ideas and collaboration. Thus,many organisations have begun to embrace open the two-sided model, the core firm maintains veryinnovation as an important strategy. As defined by little control over the external collaborators as theyChesbrough [2] open innovation is the ‘use of pur- are free to interact directly with consumers. Onceposeful inflows and outflows of knowledge to accel- the platform has been established, external partieserate internal innovation, and expand the markets do not need to interact directly with the core firm,for the external use of innovation, respectively’. except to abide by the rules or regulations that areIn this effort to share knowledge and capabilities,businesses open the boundaries of the firm. ex ample, developers can design and developMany successes of open innovation have already core firm, except for the ultimate provision of thebeen realised in the private sector [2]. One strat- platform.egy that firms use for harnessing a collection ofexternal collaborators is a platform. The main Methodologyidea of a business platform is the development Our study is based on three cities working to imple-of a core component, which provides stability and ment open innovation initiatives. These three citiescontrol, along with peripheral components that (Helsinki, Amsterdam, and Barcelona) can be con-contribute variety and evolvability [3]. The role of sidered a second generation of Smart Cities, a erthe focal firm is to provide a robust set of com- the initial experiments carried out by American andmon assets, such as tools, services, or technolo- UK cities. In order to address our research ques-gies, that other firms can use to develop their own tions, we use a multiple case study methodology.offerings [4]. External collaborators are attracted We collected data from in-depth interviews of cityto the platform as a means of enhancing their officials and public intermediaries working to facili-own performance, while the central organisa- tate these open initiatives. Through these cases,tion can realise benefits such as enhanced effi- we explore how innovation is managed in the publicciency, innovation and flexibility provided by the sector, based on examples of innovative strategiescomplementors [3]. set by private firms.
  • 93. 92 O P E N I N N O V A T I O N 2 0 1 2 Mechanisms of innovation in the applications, improved technologies, and new eco- public sector nomic ventures to operate around the core of open In the same way that businesses are opening the data, fostering overarching innovation strategies. boundaries of their firms to foster collaboration, governments have been increasing their partner- Amsterdam offers an example of a platform strategy ships with outside organisations [1]. The public in the public sector. Amsterdam is a city focused on sector views the adoption of these ‘open’ strat- innovation and has fostered an open data initiative egies as a means to becoming more collaborative, to see it realised. Raw data is provided by the city, as participatory, and innovative (, smart-cities. the core component of the platform. Initial data sets eu). Instead of being constrained by the ability of made available were in the areas of environment, its own resources, governments are able to supple- demographics, and policy and subsequent planned ment their own capabilities with those of a network data sets will provide data on business/economics, of collaborators [1]. Collaboration with external elections, and tourism. Through the engagement parties is still initiated by the public agency, but of the triple helix of business, universities, and the it includes non-state actors in decision-making public sector in the open data project, Amsterdam process [6]. By acting as the core organisation in hopes to encourage cross collaboration among establishing these partnerships, the public sector experts. The city has also organised an ‘Apps for looks to external organisations to bring innovative solutions to projects, just as in the case of open to further encourage external collaboration. The city innovation in the private sector. sees open data as platform for the development of new technologies and a mechanism for fostering Helsinki is a city focused on encouraging collab- innovation. oration among innovative strategies, recognising that cooperation among different organisations In order to effectively serve as the core partner in will foster greater returns. A core initiative includes these open initiatives, governments must develop reinforcing knowledge-based clusters and creating new organisational abilities [1]. Instead of optimis- common development platforms. Instead of simply ing management with a strong internal component, facilitating new projects, the city hopes to lever- as in the case of a more integrated organisation, age existing clusters of innovation for information management of collaborative platforms must have sharing and collective development between mul- an external focus. Cities must encourage common tiple partners. Helsinki is a city with high standards objectives to strengthen the network and mobilise in education, a strong foundation in science and resources within the network of collaborators. technology, and a proven history of collaboration Outcomes are no longer dependent on the size of between the public and private sectors. This initia- the public sector, but on the quality and size of its tive hopes to encourage synergy and interaction network of collaborators [1]. between expertise clusters, furthering development by combining projects into dynamic packages and promoting best practices. It hopes to transform determine the extent to which they will control the Helsinki Region into an international innovation the design, management, and operation of the environment by leveraging not only initiatives in platform. Ideally, cities would aim to attract part- the metropolitan area, but the region as a whole. A ners that share motivation and involvement in the focus of the strategy is collaboration among numer- project, despite their differing contributions [9]. ous Living Labs in the Helsinki Region. Collaboration Because the public sector is not looking for value between those already in existence and planned Liv- capture, a more horizontal structure to the network ing Labs and pilot communities will be important for of collaborators can emerge. Collaboration is fos- the development of Helsinki’s innovation strategy. tered in the way that partners share equal foot- Helsinki’s focus on collaboration aims to introduce ing, with relationships based on reciprocity, shared innovation into public services and foster increasing interests, and interdependence [9]. support for innovative activities across all sectors. Barcelona offers an example of a city that uses col- In order to attract external partners, governments laborative governance to manage private firms and are looking to establish platforms for collaboration, universities in a Smart City initiative. Barcelona has just as in the private sector. Many cities embrac- transformed 200 hectares of an old industrial area ing open innovation view open data as the core into an innovation district to promote the collabo- component of the platform from which periph- ration within, and international projection of, the com- eral initiatives can be developed [7] [8]. The public panies and institutions present. By partnering with sector hopes to encourage the creation of web private business, academic institutions, and other
  • 94. 93organisations the city hopes the district will become Esteve Almirallan engine of a new productive centre of Barcelona. Associate Professor of the DepartmentCollaboration is fostered in shared spaces for the of Information Systems Managementexhibition and cross-fertilisation of ideas and support ESADE Business Schoolservices for entrepreneurs, alliances for networking, esteve.almirall@esade.eduand access to venture capital and funding resources. Jonathan Wareham Professor of the Department ofas a network organisation lacking the strict gov- Information Systems Managementernance that plagues traditional public procure- Vice-Dean of Research at the Business Schoolment. While municipal organisations head each of ESADE Business Schoolthe knowledge clusters of media, information and jonathan.wareham@esade.educommunication technologies, medical technologies,energy and design, the city seeks to maintain a flat Referencesgovernance structure and simply takes a lead tofacilitate collaboration. The public sector looks to [1] Mendoza, X. and Vernis, A. (2008), ‘The changing roleguide and assist private companies to ensure that of governments and the emergence of the relationalproposed projects meet the aims of the district, state’, Corporate Governance, Vol. 8(4): 389–396.while leaving much of the control in the hands of [2] Chesbrough, H. (2003), Open innovation: the newthe collaborators. The overarching aim of the city imperative for creating and profiting from technology, Boston, MA, Harvard Business School Press.council is to create an environment that fostersinnovation, improving the health of the businesses [3] Gawer, A. (2010), ‘Platform dynamics and strategies:within the district and Barcelona as a whole. To from products to services’, in Gawer, A. (ed.), Platforms, Markets and Innovation, Cheltenham, United Kingdomachieve this aim, the city lets its partners operate and Northampton, MA, US, Edward independently as possible in a collaborativeframework. [4] Iansiti, M. and Levien, R. (2004), ‘Strategy as ecology’, Harvard Business Review, 82(3), 68.Conclusion [5] Boudreau, K. and Lakhani, K. R. (2009), ‘How toPrivate firms and governments alike are embrac- Manage Outside Innovation’, MIT Sloan Management Review, 50(4) 69– open innovation strategies to realise the ben-efits of collaboration. Though governments lag [6] Ansell, C. and Gash, A (2007), ‘Collaborativebehind the private sector in making this shi , we Governance in Theory and Practice’, JPART, 18: 543–571.see some of the same strategies being adopted. [7] Davies, T. (forthcoming), Open data, democracy andInitiatives encouraging collaboration, the develop- public sector reform, A look at open government datament of platforms to attract partners, and new use from of governance are necessary for these open [8] Lakhani, K. R., Austin, R. D. and Yi, Y. (2010), ‘Data.strategies to be successfully implemented. Hel- gov.’, Harvard Business School Case, 610–075.sinki, Amsterdam, and Barcelona represent threecities in the early stages of implementing innova- Private Partnerships’, International Public Managementtion strategies in the public sector. We have cited Journal, 10 (1): 35–57.some of the same mechanisms operating is thesecities that have proven successful in private innovation will be realised as fully in thepublic sector.ContactsMelissa LeePhD Candidate in Management SciencesESADE Business Schoolmelissajo.lee@alumni.esade.eduTuba BakiciPhD Candidate in Management SciencesESADE Business
  • 95. 94 O P E N I N N O V A T I O N 2 0 1 2 2.4 Innovation partnerships for next generation public services Innovation partnerships between public and private Innovation partnerships entities are at the heart of in the European ‘Inno- The most advanced innovation partnership models vation Union’ strategy. The Innovation Union high- aggregate research, development and innovation lights the need to revolutionise the way Europe’s perspectives, and engage multiplicity of actors, public and private sectors work together to create including strong European industrial stakeholders, services of societal value, notably through inno- academia and innovative SMEs. Examples of this vation partnerships between European institutions, type of partnership models, targeted especially for national and regional authorities, and business. the benefit of public sector, include the new Euro- Despite the strong focus on the partnerships, there pean Public-Private-Partnership Programmes (PPP), are still few examples of successful European level Living Labs (LL) and Pre-Commercial Procurement collaborations. Thus, the question remains: How to (PCP). The models recognise that innovations sel- best support sustainable, value adding partnership dom occur in a single dimension, but are most o en strategies in Europe? accompanied by innovation in other dimensions, and thus the impacts to prevailing networks and The current economic climate places the public structures must be carefully considered. Europe has sector in Europe under immense pressure to inno- a long tradition of services provided by the public vate high-performance public services to address sector, which means incidentally deeply rooted trad- the prevailing societal challenges. The traditional itions and structures for providing them. Changes in means of service creation and delivery have been these service creation systems require changes in disregarded as inadequate and ineffective, and new the perception of the public sector role and man- alternatives are being considered. Simultaneously, date. Thus, the first steps in the innovation part- the expectations of the public are growing exhaus- nerships typically include creating common culture, tively. Users demand services of exceptional quality language and norms. and technical expertise, delivered with great cus- tomer experience, while produced in an ecological, While the benefits of the partnerships are evident, inclusive and eco nomical manner. The increasing public sector participation and activeness remain demands accompanied with the growing demand the limiting factors. The recent studies on vari- for transparency, accountability and openness high- ous instruments for public-private innovation have light the need for experimentation with new models taught us that we need to be more specific on what for collaboration and co-creation with companies instruments to use in various contexts. This brings and citizens. us to the age-old question of what should be devel- oped nationally or regionally versus on the European This increased focus and instrumentation on inno- level. While the trend in Europe is towards increased vation partnerships has triggered a renewed inter- cross-national collaboration, the regions are simi- est in different disciplines to understand processes, larly creating specialisation strategies based on logics and incentives that can make such partner- national and regional ecosystems and assets. The ships possible between the public, private and third key success factor for partnerships is to leverage sectors, and citizens, in order to create innovative the benefits of both dimensions and intelligently combine various instruments and collaboration Union has been active in supporting the develop- models depending on the challenge at hand. ment of new partnership models to replace the traditional public-private partnerships. Numerous Experiences from European open instruments have been launched in recent years, innovation partnership models in an attempt to engage all relevant stakeholders Systematically applied research and innova- in the development, and thus ensure impact and tion methodologies and supporting tools provide sustainability of the partnerships. The European organisations with a controlled environment for research scene is becoming increasingly sophis- collecting, modelling, analysing and storing quali- ticated and ecosystem-based, which means that tative user-generated data in various contextual the best practices transfer faster to less mature settings. The European Commission is also increas- users as well. Experiences from the new European ingly instrumenting research on the development partnership models are starting to accumulate of methodologies and modes for new types of to an extent where it is possible to make a value innovation partnerships, like Living Labs, pre-com- assessment of their effectiveness and impact at mercial procurement and public-private partnership both regional and European level. programmes. The following summarises briefly the
  • 96. 95recent findings on the implementation of these assumption that the approach is well suited in suchinstruments. contexts was considered validated.Living Labs The SAVE ENERGY project also showcased a case forThe Living Lab approach has gained significant public-private innovation. In the project, the partiesmomentum in recent years, and is becoming deployed applied the Pre-Commercial Procurementa standard part of European Commission research (PCP) model. In the pilot sites, various partners andprojects. The establishment of the European Net- suppliers were used to solve a common of Living Labs has further cemented the Liv- The development was partly funded by the Euro-ing Labs position in the European and, also, increas- pean Commission, and partly by the participatingingly, the global, research scene. The approach entities. However, due to the project constraints,addresses the identified need to engage users it was not possible to implement the benchmarkmore actively in the development of novel products solution in multiple sites. Public authorities will useand services, and thus push user-driven and open the SAVE ENERGY manual as a guideline for pro-innovation. The focus is on mature technologies, curement in energy efficiency solutions in the pilotoperating close to market, thus the outputs are locations. Public authorities have expressed theirless predictable and tangible than for investing in interest in extending the implementation of theseinfrastructure and services. solutions in other buildings, which indicates that this type approach has potential to become a permanentThe approach has traditionally been proposed for practice in public sector innovation.use in all parts of the innovation cycle; however,the recent findings from the European Living Lab The risks that the Living Lab approach as a phe-projects, like APOLLON and SAVE ENERGY, sup- nomena is facing, is the lack of standardisationport the notion that the approach is probably and criteria for Living Labs. As the term can meanbest suited for cases that call for user behaviour different things in different contexts and targettransformation, crowdsourcing or business model groups, there is a risk that the approach is diluted,innovation. The behavioural changes take place at and thus the value proposition becomes impossibleindividual and group level, and thus the Living Lab to communicate. Most of the Living Labs also lackapproach, as an instrument for micro-level impact sustainable business models, since they operate oncreation, is a well-suited approach. The Living Lab project-based funding or as a part of universitiesenvironment also creates a platform for simulat- or regional development agencies. The Europeaning business models and go-to-market strate- Network of Living Labs is addressing this concerngies in a low risk, but real-life environments. The through tight criteria for Living Labs that can carryrecent Smart City cases have further indicated the ENoLL brand, as well as through establish-that the approach could also yield more value in ing thematically focused subnetworks, where theterms of competence development and redefin- added value and focus are clearly the roles and relationships between the publicand private entities than as a vehicle for service Pre-commercial procurementor solution development that is typically piloted Pre-commercial procurement has been consideredin the cases. as a new and potential instrument for renewing the way public sector innovates. Pre-commercial pro-A good example of such implementation of the Liv- curement is one of the strategic instruments foring Lab approach is the recently finished The SAVE renewal in Europe, and is expected to give a boostENERGY Project (238882-CIP-ICT-PSP-2008). The to European Member States in the demand for inno-purpose of this project was to develop and imple- vation, and at the same time promote lead marketment energy efficient solutions in public buildings. initiatives. Communication ([COM(2007) 799) fromThe intrinsic challenge was how to make the user the European Commission stated pre-commercialchange their energy-consuming behaviour when procurement to be the main instrument for drivingthey are not directly involved in the payment of innovation to ensure sustainable high-quality publicthat energy. To address this challenge, real-time services in consumption monitoring and public displayswere implemented in the pilot buildings. This made PCP can be described as a model for procuringusers more aware of their consumption behav- innovation, and thus accelerating the renewaliour and actions that can trigger energy savings. of public sector services and infrastructures.The approach was piloted in real-life environ- The process is driven by public demand, and thement in longitudinal case studies. As the project solution is attained through the utilisation offinished with actual measured 20 % savings, the knowledge available among potential suppliers.
  • 97. 96 O P E N I N N O V A T I O N 2 0 1 2 In this approach, the final solution is initially of the experiment. Thirdly, the commitment of the unknown, and therefore involves uncertainties relevant and actors with thorough knowledge of and risk. However, while PCP has been identified the field enabled continues development and value as strategic, it is still an emerging practice. Results adding dialogue. from several surveys carried out reveal that the PCP concept is still new to most public procurers, The first European Commission-funded Collabo- and its practical implementation is o en perceived ration and Support actions on PCP are nearing their as an unfamiliar procedure. Awareness and lack term, and each new framework programme call of competence still constitutes the main barrier includes increasing funding for PCP. This accumu- for the implementation of PCP. There are also sig- lating knowledge base will help overcome the iden- nificant differences in implementation among the tified challenges, and help the community to better various European countries, which indicates that define the best implementation arenas for PCP. the local context plays a factor in implementation. The European public-private Yet, there are also inspirational benchmark cases partnership programmes from the various Member States. Also the com- The recently launched European Commission pub- munity of PCP researchers and practitioners is lic-private partnerships for research purposes aim steadily growing and mobilising. The benchmark for sustainable European level impact in forms case here comes from Denmark due to its focus on of increased harmonisation and standardisation, user involvement and innovation. Danish policies on accelerated market acceptance, as well as the cre- public procurement up to 2005 concerned mainly ation of a solid evidence base for European level efficiency aspects. The relatively modest interaction policy recommendations. Impact is created through between the public sector and private companies large-scale experimentation and clear focus. While was identified as a problem to be addressed. The the PPPs cover many different forms of organisa- success in doing so is manifested in several reports, tions, the focus is on public sector infrastructures especially in the health sector. The products in the and services. It is important to distinguish between sector are o en low-tech or mature technologies, traditional PPPs in Member States and the special which need adjustment to the context of the prod- PPPs for research purposes set up at European ucts, as well as the service delivery ecosystem sur- level, since the focus is entirely different. rounding them. As such, the living lab type of user- driven approach is well suited for the purpose due The philosophy in these partnerships is that com- to the nature of the area. plementary foreground created is shared among those contributing to its development. Know l- In the Danish case of ‘The hospital bed of the edge sharing is ensured by jointly agreed rules of future’, PCP was used to develop an innovative bed engagement listed in an agreement, signed by all that would enable nurses to spend more time with parties. The objective is to accelerate European patients. The project has also other societal and level development and competitiveness, but also economic objectives; to contribute to innovation support open service innovation at local level. in the public sector, and motivate social entrepre- Thus, the PPPs provide opportunities for research- neurship regionally through cross-sectional part- based entrepreneurship, building on the developed nerships. The project was kicked off in 2009 with a concepts. The programmes support the process public call for tenders, and since then has involved through matchmaking events, services and meth- various actors in its regular interaction and learn- odologies for collaboration, as well as access to ing cycles. The final bed solution would integrate state of the art technologies and research. scales, humidity sensors, and screens for television, and computer/Internet access. Development was Latest of the launched European PPP programmes carried out with real users, and the user interaction was not only used as a way of testing developed explicit objectives beyond those of the single pro- prototypes, but also as a means to get insights at jects within the programme, and thus aims for the beginning of the project. The project is ongoing, - but the experiences to date have helped to high- opment in Europe, as well as for the implementa- light numerous success factors for PCP cases in tions of the single market and Digital Agenda for general. These involve patience and trust from the purchasers’ side, since such arrangements are Internet PPP also presents an unprecedented plat- time-consuming and laborious to develop. Secondly, form for public-private partnerships and collabo- the role of local champion, a dedicated project rative innovation. The programme builds on the owner, was a key factor contributing to the success principles of openness, transparency and sharing,
  • 98. 97which is ensured further by a collaboration agree- object ives. The partners experiment with differentment signed by all parties. The Living Lab approach collaboration models in an attempt to find the modelwill be experimented with by several projects in the most fit for their specific environment and cases.pilot phase, and societal impact is further ensured Active screening and participation in the Europeanthrough recommendations on policies and regu- programmes ensures that the developed serviceslations related to public sector information and are up to global standards, and also have potentialinfrastructures. outside home markets. Only this will ensure that the developed services will meet the requirements andThe PPPs are still in their early phases, but despite needs of the future users and customers.the broad-based partnerships, there are concernsregarding the low level of public sector participation. ContactThe collaborative service creation with numerousorganisations that have not worked together in the Dr Petra Turkamapast requires time to create common culture and Directornorms. During the first stages of the programme, Center for Knowledge andthe partners have been occupied with building the Innovation Research (CKIR)foundations for collaboration at both project and Aalto Universityprogramme level. The real content creation has also petra.turkama@aalto.fibeen kicked off, and shows enormous potential, asleast for some of the collaborators. The programme Referencespartners have also identified niches for unexpectedinnovations for the later phases of the programme.The early experiences also highlight that the col- The boundaries of participatory citizenship, in ECSCWlaboration itself has its value through learning and 2009, Proceedings of the 11th European Conference on Computer Supported Cooperative Work, 7–11 Septembernetwork-building among the partners. 2009. [2] Parker S. and Heapy, J. (2006), The Journey to theSummary Interface,Demos, United Kingdom.This analysis further highlights the complexity ofthe innovation partnerships, and gives evidence ina short synthesis on the success factors to considerwhen creating innovation partnerships. It would need to be made explicitly clear what the objectives and outcomes of the projects are. Establish the rules of engagement in order to ensure commitment and ease the move to the commercialisation phase. Public sector innovation must be made for profit! Bottom-up approaches need to be stimulated further in order to make sure that current market needs are taken into account. Users really must be placed in the driver’s seat! Concerns regarding research silos and asym- metry in implementation are justified. More multidisciplinary research and platforms for continuous cross-industry exchange are needed. Partnerships take time, and the partners must be accepted as they come. The collaboration can take years to mature, but this institutional learning also has its own value. Phasing the results is of essence. The partner- ships are built for long terms, but they must create results even in the short term in order to create spirit and keep the partners motivated.Successful partnerships build on mutual strengthsand assets, and focus on specific tasks and
  • 99. 98 O P E N I N N O V A T I O N 2 0 1 2CHAPTER IIIInteresting cases andexamples 3.1 Idea Crowdsourcing at Nokia — 12 months wiser Introduction crowdsourcing, the goal is to pool vast amounts of Nokia recently participated in the Service Inno- complementary information from a large number of vation Yearbook 2010–2011 [1] by presenting some users (e.g. OpenStreetMap, Ushahidi). On the other facts on the usage and the benefits of Nokia’s hand, for selective crowdsourcing, the goal is to iden- internal and external crowdsourcing. At that time, tify and select input from competing users. The latter Nokia’s first established external crowdsourcing might take the form of an idea contest or other type service, IdeasProject, was readying for launch. This of open competition [2]. Nokia’s approach to idea article continues from where the last one ended by crowdsourcing utilises both integrative and selective discussing the main findings from the opening of a way of executing crowdsourcing, that is especially global idea crowdsourcing service. idea crowdsourcing [4] contains both dimensions. Nokia sees idea crowdsourcing as being at the cen- Opening of the external idea tre of social media and open innovation [1]. How- crowdsourcing service ever, in their White Paper on the IdeasProject, Aita- IdeasProject [5], Nokia’s idea crowdsourcing service murto, Leiponen and Tee [2] set crowdsourcing in the for an external audience, was opened at the South wider context with different ways to practice open by Southwest festival in March 2011. By the end of November 2011, in nine months, it had gathered 7 500 ideas, 14 000 community members, 6 000 Schenk and Guittard provide an alternative typology comments and 37 million page views. Some 12 idea of crowdsourcing, they distinguish between integra- challenges around various themes were conducted in IdeasProject, including two challenges that ran in Figure 1. Crowdsourcing, Open Innovation, User Innovation and Open Source [2], modified from [3] Open Innovation Co-Creation User Innovation Crowdsourcing
  • 100. 99Nokia’s China version of IdeasProject. All completed Figure 2. Nokia’s IdeasProject identifierchallenges have been analysed with text-miningcombined with clustering and regression analysis.In addition, three challenges have been data visual-ised with the help of neuron networks. As an exam-ple of a qualitative indicator, five of the seven win-ning applications of Nokia World 2011 Hackathonoriginated from IdeasProject ideas.In comparison, Nokia’s internal idea crowdsourcingservice, Nokia Sphere, had collected approximatelythe same number of ideas in three years fromNokia’s internal crowd of 60 000 employees. Inone case, both internal and external crowdsourcinghas been used to solve the same challenge, to dis-cover new, radical ideas to solve the mobile powerand battery problems. Both challenges received they may look at first glimpse, are clearly expressedapproximately the same number of ideas. Interest- and intertwined with mobile Internet.ingly, according to the jury, the ideas by the exter-nal crowd were generally better than ideas coming When it comes to the expertise of the participants,from the Nokia crowd, experts of the field. the bar is set low: we do not wish to exclude anyone. Nowadays, there is a continuity of different types ofThree questions about setting up a identities and roles starting from the users beingsuccessful idea crowdsourcing service anything from consumers to enthusiasts, hobby-In the White Paper The Promise of Idea Crowdsourc- ists, start-uppers and developers. No-one is ‘just aing — Benefits, Contexts, Limitations with Imperial consumer’. By teaming up with the Stanford Univer-College London and Stanford University [2], the sity, the ESADE and the Lappeenranta University ofauthors raise three interesting questions. Technology, we are studying the orientation, moti- vation and background of the community members1. How to design crowdsourcing processes that in order to jointly serve their interest better. match the relevant characteristics of the firm, the problem, required expertise, and the competitive environment to calls? idea crowdsourcing requires more commitment and2. How to define the calls in a way that enhances effort than the mainstream social media services, user group targeting, user appeal/motivation, and quality or appropriateness of solutions/ ticipant must be passionate about his/her idea, needs inputs? to be skillful enough to verbally (and/or visually)3. How to integrate these processes with internal explain the idea and trust the community and the innovation systems, and with other open service provider (IdeasProject in this case) in a way innovation practices? that he/she believes it’s good for him/her and for the idea to be exposed by the influence of others.Each of the questions is discussed below fromIdeasProject’s perspective. We are in a tough competition over the share of people’s minds and time. This means, that the com-Matching the IdeasProject with Nokia munity members are a very unique group of peopleWhen it comes to the matching the ‘philosophy’ of — and from the engagement perspective — cre-idea crowdsourcing with our company, one could ating great brand stickiness. Every time a mem-clearly see a great fit between Nokia’s great heri- ber visits IdeasProject, he/she spends more thantage in the open source, industry standardisation 10 minutes on average engaging with the service,and truly ‘connecting people’ and what IdeasProject while site visits to other Nokia sites are measuredis all about. Also, the problem or a challenge that the in seconds. Competitions, or challenges, as they arecrowds are invited to solve, is described with a tone called in IdeasProject, are a way to goad the qualityof voice that resonates with the life sphere of the and quantity of ideas shared within the community.audience, in this case, the growing IdeasProject com-munity. The domain of IdeasProject service is defined The callrelatively broadly — how to ideate in the world of In their second question, Aitamurto et al. [2] raisedmobile Internet. All challenges, how heterogeneous a question of defining the call in a way that it
  • 101. 100 O P E N I N N O V A T I O N 2 0 1 2 enhances user-group targeting, user motivation, tweet thousands of times to win a Nokia N8 device and quality or appropriateness of solutions. over the summer — the winner alone made 18 000 tweets. Then again, smartphones motivated less As mentioned previously, 12 idea challenges have than 100 people to share ideas regarding sustain- been conducted in IdeasProject. Prior to each chal- ability and female-oriented apps. It has to be noted lenge, we identified relevant organisations suitable though that people interested in sustainability and as partners. Partners bring their communities, com- female-oriented apps most typically aren’t tech- munication channels and expertise to be utilised savvy and for them to imagine what applications could be used for might be more challenging. Earth Hour challenge appealed to members mainly With regards to quality or appropriateness of solu- Empower Women’ challenge brought members from tions, we’ve learned that quantity should never be the DLD Women conference. However, even if chal- rewarded or encouraged: at least not if the potential lenges are promoted mainly to currently relevant, separately-targeted people, we’ve obtained a gradu- friends. Users motivated to win are willing to put in ally growing core group of users who participate in incredible effort to collect ‘likes’ or ‘page views’ if the all the challenges, no matter what the subject, or winner is defined based on popularity. The possibility how the call is defined. These people have clearly to play the system not only leads to a risk of reward- identified themselves with IdeasProject’s community. ing an idea which is not the most innovative one, but also reduces the motivation of innovative community Generally, we’ve learned that challenge participants members to participate. The community also expects are motivated by one obvious factor above the the organisers to reward the effort in relation to rest. Regardless of what Daniel Pink says [6] about received input. All ideas must be read and carefully impact of extrinsic motivations to creativity, small evaluated. We’ve noticed that the best solution is to tangible rewards such as Nokia’s newest mobile combine the wisdom of the crowds (when simulta- devices have motivated people more than any other neously engaging users) and the wisdom of the reward. However, the reward must always match jury — when selecting a winner, the jury selects a few most promising ideas and lets the community users and enthusiasts submitted 2 500 N9-related detect the pros and the cons for each. The jury ideas to win one of 15 N9 devices given away over chooses the final winner based on the community’s a five-week period. That was two and a half times input, but not the quantity — only the quality. more ideas than in any other challenge, and this was accomplished in a considerably shorter time. challenges seem to also be motivated by various Figure 3. Nokia is looking for all kinds of innovations Biggest Pay-Off Least likely to succeed Business Suited to unstable markets Model More valuable than Innovation product innovation More likely to succeed Friendly to course-correction Process Innovation Product Innovation Source: Christian Hamilton, ILO: Speakers Series Feb 29 2008
  • 102. 101intrinsic motivations, such as feedback by the chal- hand-picked from the list of most frequent wordslenge jury, competing with other users, recognition so that they represent the issue at hand. Using vec-by IdeasProject staff and respected peer users, and tor-space model, each idea is represented by a vec-seeing their ideas becoming real [7]. tor of frequencies of the remaining terms weighed with the position of the word in the document (wordIntegration and open innovation practices position: the earlier in the text (title+description),The sixty-four thousand dollar question is how to the more weight is assigned to that word).integrate idea crowdsourcing with internal innovationsystems, and with other innovation practices [2]. Presentation/data visualisation of ideas is also cru- cial when ‘making sense out of ideas’. Ideas areIn practice, idea crowdsourcing could be used presented in a two-dimensional ‘idea map’ or ‘ideato seek many kinds of ideas as raw material for sky’. Ideas similar to one another (based on theinnovations, allowing them to be product, process analysis described previously) form ‘themes’, which can be shown with colours and different shaped markings. The country of origin is expressedIn order to justify why idea crowdsourcing makes actively in the data visualisation, so that Nokiasense, the content of activities including challenges developers can be inspired by the ideas comingand partners should be aligned with company strat- from their own geographical location and developegy, such as Nokia’s ‘Power Challenge’ (How to findthe best solution for extending battery life), ‘Cre-ate for Millions’ (apps for S40 OS markets — high Ideas are analysed for business development,growth, developing markets) or how to use open strategy, R & D and consumer analytics and insightsdata and build apps on top of that, fulfilling the purposes. Week signals and ‘evidence’ to identifyquest of strategic fit to Nokia. Some 50 % of par- the next mega trends can be found within the com-ticipants are between the ages of 18 and 29, which munity, as can wisdom of the crowds. In-houseis Nokia’s exact target group, though men are cur- jury members of the challenges (please note thatrently more represented (83 %) than women (17 %). 75 % of jury members are non-Nokia recognised thought leaders) are the greatest advocates in sell-The next step is to find ‘the needle in the hay- ing the methodology and results to senior leaders.stack’. As mentioned earlier, Nokia uses text min- Nokia’s CTO is leading certain research areas anding combined with clustering analysis. Most used cross pollination of different community membersterms in the data set are calculated and the terms all over the world from 204 countries and autono-are reduced to their basic stem applying a stem- mous regions. And, as mentioned earlier, the Nokiaming algorithm. Terms used in clustering are then developer community is a regular customer forFigure 4. Visualisation of IdeasProject ideas
  • 103. 102 O P E N I N N O V A T I O N 2 0 1 2 Contacts understanding of where the idea evolved is crucial. This indicates the maturity of the market and user Pia Erkinheimo experience preferences close to their business. Head of Idea Crowdsourcing Nokia Conclusions Idea crowdsourcing’s approach has already shown its potential at Nokia, but to be fully exploited takes Karoliina Harjanne time and needs some more research. As we con- Community Manager centrated here solely on the idea crowdsourcing, the Nokia business model and different methods have multiple potential variations like gamification, crowdfunding, microwork or prediction market place. References Gamification refers to the use of game design tech- [1] Open Innovation Strategy and Policy Group niques in non-game applications and processes (eds) (2011), Service Innovation Yearbook 2010–11, to solve problems and engage audiences [8]. With Publications Office of the European Union, Luxembourg ( some elements of gamification, such as virtual ). badges, trophies and leaderboards, we’re able to [2] Aitamurto, T., Leiponen, A. and Tee, R. (2011), White reward IdeasProject community members in a way Paper The Promise of Idea Crowdsourcing — Benefits, that is free but still more engaging. We could build Contexts, Limitations an entire game around the process of making ideas JiveServlet/previewBody/ coming to reality, in which only the best and most 8331-102-1-2113/ideasproject%20whitepaper%20 refined ideas see daylight and get rewarded. The -%20idea%20crowdsourcing.pdf). tasks of the process of implementing ideas could be [3] Schenk E. and Guittard, C. (2009), ‘Crowdsourcing: divided into simple microtasks which can be com- What can be Outsourced to the Crowd, and Why?’, Workshop on Open Source Innovation, Strasbourg, instance, anyone with an Internet connection could help us to define use cases for ideas and anyone [4] Sloane, A. (2011), A Guide to Open Innovation and with image manipulation skills could help to sketch Crowdsourcing: Advice From Leading Experts, Kogan Page Limited, London. the ideas. Even programming [10] and financing [11] of the end product can be crowdsourced. The [5] IdeasProject (2011), IdeasProject concept of prediction market place is one way to ( challenge traditional consumer research companies [6] YouTube (2011), Daniel Pink on the surprising even if one should think that none of the practices science of motivation ( - watch?v=rrkrvAUbU9Y). sourcing started to be used for translating lan- [7] Harjanne, K. (2011), Developing a New Global Idea guages and for the localisation of Internet services Creation Platform — Case Idea Marketplace. Masters and apps, state-of-the art translation companies Thesis. added language crowdsourcing to their repertoire. [8] Wikipedia (2011), Gamification ( However, even surrounded by tempting Inter- [9] Wikipedia (2011), Microwork net buzzwords and phenomena, we must keep in ( mind the fundamental reason for the existence of [10] Wikipedia (2011), TopCoder IdeasProject: the people. Ideas are nothing alone ( but people make them real, as people define which [11] Appbackr (2011), Appbackr ideas provide extra value to their lives. (
  • 104. 1033.2 How cloud computing can take service innovation to the next levelMuch of the last century was characterised by ‘virtual,’ as cloud computing obviates the need togrowing industrialisation and consumption: the store and replicate them on hard-wired machinesplanet’s population multiplied by four in that time, in each and every enterprise. By making computingwhile European economies grew by 10 times. power accessible via a network, the time requiredMeanwhile, materials use rocketed tenfold and to install a database in an enterprise drops fromfossil fuel consumption by 16. one day to approximately 12 minutes; installing an operating system falls from 24 hours to one. Mean-These trends continue today and, as a result of the while, the time taken to design and deploy entiresubsequent urbanisation, around a million people business applications tumbles from months toper week worldwide are moving into cities, many of weeks or days.them burgeoning middle classes in emerging econo-mies. Globalisation, lowered trade barriers and the The Cloud’s key benefits are rightly identified asadvent of the Internet have helped to dissolve bor- rapid delivery, efficiency and — because it is farders and other barriers to trade. Innovation itself has easier to stitch together new applications on thechanged, as firms and institutions of all sizes begin Cloud — integration. But there’s something evento operate in interconnected ecosystems where tra- more interesting at play here: the way technologyditional boundaries evaporate. No one company can is delivered has the potential to change the gamego it alone. This is the era of open innovation. in every industry.We Europeans began a transformation in our econ- Take the University of Bari in Italy as an ex-omies some decades ago: more than two thirds of ample. This venerable institution, founded in 1925,our GDP is now in services. As emerging economies is located in Puglia, southern Italy. It is organisedgrow stronger, it is clear that Europe must build on into colleges covering agricultural science, arts andthis experience in services to retain a competitive philosophy, biotechnological sciences, economics,edge. The way we employ technology is going to be educational science, foreign languages and litera-more important than ever. ture, law, mathematics, physics and natural science, medicine and surgery, pharmacy, political science,Today, there are more transistors on our planet and veterinary medicine.than grains of rice, embedded in things we mightnot even recognise as computers: phones, cars, The university has forged a Cloud solution, poweredappliances, even bridges, roads and waterways, all by an advanced IBM zSeries server running Linux,linked together in networks as parts of increasingly which is designed to help communities and smallcomplex systems. businesses in the region. It is working with a hand- ful of local industries — fishing, wine-growing andAs a result, the amount of data we are generating transport — to explore how traditional businessesis growing exponentially — tenfold between 2007 can adopt new ways of working.and 2010 alone. We see no let-up in that rate ofgrowth. High performance computers, in turn, are As a result, fishermen in the region are now able toable to mine this data for intelligence and insight. report their catch using mobile devices that link, viaSet this technology trend against the changes the Cloud, to live auctions which serve local mar-going on in the business world: only two of the kets and restaurants. Any catch is then pre-allo-world’s top 10 largest companies in 2000 remain cated, processed and packaged, while still at sea, inon that list today, as the world’s competitive land- the most appropriate way.scape reshapes. Citizens, meanwhile, have becomemore demanding in the services they require from Close by, a local logistics company is employingbusiness and government institutions alike. sensors in cargo wagons to determine temperature, humidity and even vibration in transit. This dataIn this context, I believe the emergence of cloud is made available via the Cloud to help managerscomputing stands out as one of the key techno- ensure even the most sensitive goods are deliveredlogical advances of the last 30 years — and could in first class condition.greatly reshape all service industries. Meanwhile, in vineyards that overlook the AdriaticThe benefits of working in the Cloud have become Sea, data from soil monitors is transmitted to thewell understood. Machines and applications become Cloud. Isotopic soil monitoring enables wines to
  • 105. 104 O P E N I N N O V A T I O N 2 0 1 2 be categorised by characteristics which determine require a committed, realistic and progressive view grape colour and taste. Constant measurement and of data privacy. The Cloud may transcend borders, feedback helps growers improve the quality of their yet it must not be above proper jurisdiction. The wines. The monitoring equipment also provides European Commission is working hard to provide information about the origin of the grapes for an clarity on this point. academic research project. I believe Europe fulfils all of the conditions required Security is at the core of design of the platform, to capitalise fully on cloud computing. More than allowing it to meet some of the highest levels of two thirds of our economy is already services- certification in the industry. This enables the univer- related and, as we’ve seen, cloud-based appli- sity to deploy each project in its own virtual server, cations are highly appealing to developers of knowing that it is isolated and independent from innovative, automated service offerings. the other virtual servers in the system. Knowing that sensitive data and assets are secure and pro- At the same time, more than 100 European uni- tected with leading cryptographic and encryption versities now offer degree programmes in Service technologies provides the university’s clients with Science, spawning a new generation of students to an unparalleled level of confidence. build the service systems of tomorrow. We certainly have the building blocks in place to capitalise. Now, Only now are we seeing the emergence of these is there the will? kinds of business applications which can be started - Contact puting allows the University of Bari’s students — and other developers — to concentrate on building Harry van Dorenmalen new services, rather than worry about high-cost Chairman infrastructure-related issues. User requirements lie IBM Europe at the heart of the approach. This rush of innovation is at the heart of the cloud computing revolution. The way technology is employed — and delivered — changes fundamen- tally. We are moving from a world where the big eat the small to one where the fast eat the slow. employs more than 200 researchers worldwide on cloud security and privacy. We have 11 cloud laboratories globally and six cloud data centres — including several in Europe. Last year, we man- aged more than 13 billion security events for more than 4 000 customers per day. That’s why our own SmartCloud approach is to allow clients to define their own performance requirements, based on fac- tors that include not only security and compliance with data protection rules but performance, down- time-avoidance and preferred technology platform too. There remain a couple of technical and regulatory issues to consider. The European Commission’s proposal for a new ICT standardisation policy as part of the new EU Regulation on standardisation is an important element in this context. It allows for referencing global open standards by public authorities in policies and in procurement. As much as anywhere, we need open standards in the Cloud — not any one company’s proprietary system — so that interoperability remains sacrosanct. We also
  • 106. 1053.3 SAP Research Living Labs — a perfect infrastructure to drive open innovationBASED ON THE EXAMPLE OF THE SAP Technology (2003), he describes how companiesRESEARCH FUTURE FACTORY INITIATIVE have shi ed from so-called closed innovation pro- cesses towards a more open way of innovating [2].IntroductionSAP Research is the global technology research SAP strongly relies on the open innovation approachand innovation unit of SAP, with a network of 19 and runs its global technology research unit, SAPresearch locations worldwide. By exploring emerg- Research, which is part of a worldwide collaborativeing IT trends, we significantly drive innovation for network of partners from industry and academia,SAP and its ecosystem. Activities span from col- accordingly.laborative research with academic partners to co-innovation with industry partners and customers. Considering Chesbrough’s statements, that busi-The best validated results and technologies are ness development processes and the marketing offurther developed into prototypes and potential new products within firm boundaries is limiting thebusiness opportunities. reach of innovation due to the closed environment that people are working in, we do believe that a poolThe business model of SAP Research is based on of highly educated people who have access to theco-innovation through collaborative research. We large amounts of knowledge that exist outside thecurrently have a global community of more than research laboratories and who, at the same time,800 partners from industry, academia, and gov- share their innovative thoughts and ideas withernments as well as SAP customers. Besides con- these external sources, is the only way to exploretributing to external projects (bi- and multilateral, and define new business models and finally steppublicly funded and grants), our researchers col-laborate with SAP’s development and field or-ganisation on internal projects transferring and Open Innovation is, therefore, nothing more thanimplementing the research results. the combination of internal and external ideas and paths to push the development to new technologiesSince 2001, the European Union has been support- to new a new paradigm for technological research —the Living Labs. This concept is designed to boostopen innovation by ensuring that all relevant stake- to increase our efficiency and the effectiveness ofholders, including end-users, are closely involved our innovation processes. Not just through activethroughout the research and development process searching for new technologies and ideas outsideof new products and services. of the firm, but also through cooperation with cus- tomers, partners and even competitors, in order toDriving the concept of Living Labs as col- create customer value.laboration platforms for open innovation, SAPResearch has been successful in bringing together Many aspects need to be taken into account suchcustomers, partners, SAP researchers, and devel- as public policies, the management of open inno-opers for in-depth collaboration and discussions on vation and the underlying networks, cultural diver-various current topics. The concept involves dem- sity, etc., which are described in many articles [3].onstrating technological research in real-world In the end, it is key to have a clear process that allsettings, turning prospective SAP solutions intotangible experiences [1]. From ideas to solutions — howOpen innovation — there is no other way SAP Research Living Labs speed upto go at SAP open innovationUniversities, academic institutes as well as indus- The motto ‘SAP to touch and explore’ describes besttrial companies, have been aware of the need for our efforts with our SAP Research Living Labs as‘open innovation’ for years. As many others before, collaboration platforms for open innovation. SAPthe author of this article would also like to refer Research has etablished five Living Lab locationsto Henry Chesbrough, who formed the term ‘open in Australia, Germany and Switzerland, and appliesinnovation’. Within his book, Open Innovation: The the living lab methodology to the field of emergingNew Imperative for Creating and Profiting from
  • 107. 106 O P E N I N N O V A T I O N 2 0 1 2 Figure 1. Chesbrough model of open innovation Research Development New Market Boundary of the Firm Research Current projects Market All these Living Labs have been built to foster the concepts that are brought to our Living Labs are collaboration with customers, partners, research- turned into tangible demonstrators and prototypes ers, developers and further stakeholders. Being a which make it much easier to gather and inte- research and development platform and, at the grate feedback and improvements. Thus, poten- same time, a demonstration environment for inno- tial customers and partners can directly impact vative technologies in a real-world setup, they the research and development process while it is are extremely valuable to all players. Ideas and progressing. Figure 2. SAP Research Process (© 2011 SAP AG) Discovery Invention Innovation Designing Knowledge and Channeling Co-innovative Portfolio & Technology Trends Research Roadmap Transfer Identifying, Creating Conducting Creating new evaluating and a strategic collaborative technologies monitoring research research projects and solutions emerging trends framework involving SAP’s from prototypes and ideas across based on product groups, and improving SAP Research’s identified customers and existing co-innovation and evaluated partners products network trends Relevant Trends Demonstrators Customer Pilots, Focus Topics Product Innovations & Developments & Prototypes & Spin-offs
  • 108. 107Figure 3. SAP Research Living Labs (© 2011 SAP AG) Future Factory Initiative Future Retail Center Dresden, Germany Regensdorf, Switzerland Focus: Manufacturing Focus: Retail, warehousing & supply chains Future Public Security Center Technologies for Emerging Economies Darmstadt, Germany Pretoria, South Africa Focus: Urban & emergency management Focus: Small, midsize & micro-enterprises Future Logistics Living Lab Future Emergency Center Sydney, Australia Karlsruhe, Germany Focus: Logistics network orchestration Focus: Energy managemant & E-mobilityCase study: the SAP Research Future Labs. Open Innovation will also consider strategicFactory Initiative objectives. Recently, the European Commission encouraged the launch of a project called Action-founded in 2008. Starting with a few devices that PlanT which is co-funded under the private-public -it evolved to a real-world factory setup. In themeantime many innovative companies, small and aims to establish a vision for the role of informa-medium-sized companies (SMEs) as well as large tion and communication technology (ICT) in manu-enterprises, from the automation and process facturing of the future. The ActionPlanT Vision for Manufacturing 2.0 identifies the global megatrends influencing the growth of European manufacturersAs outlined above, this diversity of stakeholders and proposes new concepts for reviving the stateensures that a business or research challenge or of the European manufacturing sector. The over-requirement will be observed from many different arching intention is to demonstrate that ICT has aangles. Of course, for the most part, the initial idea major role to play in resolving some of the mostis an individual kick off so to speak. But then many crucial pinch points in European manufacturing.people contribute with their thoughts and ideas The ActionPlanT Vision for Manufacturing 2.0 willto solutions built that consider more facets of in- pave the way for a roadmap and strategy, whichnovative enhancements as though the individual will identify, prioritise and schedule the most prom-with the initial great idea would pursue alone. ising research topics in ICT for manufacturing for the next framework programme for research and innovation — ‘Horizon 2020’, covering the periodof more than 30 different scenarios that combine 2014 to 2020 [4].such innovative thoughts and technologies. In add-ition, many publicly funded projects use the existing The identification of socio-economic megatrendsinfrastructure to build their project-specific proto- like demographics and consumption, global com- petition and innovation and all-round sustainabilitytiative core partners interact with each other but as well as technological megatrends like dynamicalso companies as consortia partners which then collaboration, enterprise mobility, real-world con-use the results for their project-related purposes. nectivity and manufacturing intelligence will have a direct bearing on European manufacturing. There-Not only projects which are directly focusing on fore, projects like ActionPlanT [4] will, of course,innovative technologies are drivers for our Living also influence the thematic orientation of our work
  • 109. 108 O P E N I N N O V A T I O N 2 0 1 2 Figure 4. References are matching the strategic objectives against oper- ational requirements that we get as an input from [1] SAP Research (2009), SAP Research Living Labs many discussions with visitors of our Living Lab. ( innovation/research/livinglabs/index.epx). Summary [2] Chesbrough, H. (2003), Open Innovation: The New Our success proves us right. Open innovation is Imperative for Creating and Profiting from Technology, Harvard Business School Press. indispensable for companies and their research and development units regardless whether they are [3] European Open Innovation Platform (2006) (http:// SMEs or large enterprises. [4] Majumdar, A. and Szigeti, H. (2011), ICT for - Manufacturing — The ActionPlanT Vision for tory in particular and with our Living Labs in gen- Manufacturing 2.0 ( eral, we can show that collaborative practical work facing the combination of hard and so ware in a very heterogeneous environment leads to bet- ter results in a shorter period of time. All parties derive a huge advantage from the intensive infor- mation exchange, knowledge transfer and network- ing — not just between the industrial and academic researchers but also with customers, potential users and field people like consultants or account managers. In our opinion, Living Labs are the best method to facilitate co-innovation and to promote and pos- ition new concepts, prototypes and demonstrators at a very early stage in their design. This includes both short-term innovation projects and strategic programmes like the above mentioned ActionPlanT project. With this setup, we are looking forward to the future challenges and the many people who will cross our way. Contact Carsten Puschke Business Development Manager, SAP Research SAP AG
  • 110. 1093.4 Promoting serendipity in research: semantic keyword analysisThe context of this study is the increasing usage of subject, when buying a book on (otherfilter mechanisms in the World Wide Web, a concept users purchased these, you might find them inter-recently popularised by Eli Pariser [1]. By applying esting) or when reading an article on newyorktimes. com (other relevant articles on the same topic appearusers are increasingly being fed back information below). Yet this goes much further as over 30 % ofspecifically tailored to them, a type of censored feed- direct traffic to comes from arti-back loop that, for some, is destroying the promise ofdiscovery that the Web was meant to offer. Though Danah Boyd, the Web’s underlying technologicalthere are necessary advantages to customising the structure (filters, social media, etc.) has created whatWeb to individual users, when applied to research, she refers to as ‘networked publics’, ‘a collection ofsuch filters can be detrimental, and artificially dis- people who share “a common understanding of thesuade a ‘natural’ serendipity that has brought about world,” a shared identity, a claim to inclusiveness, asome of the greatest innovations in history. consensus regarding the collective interest [3].’ The problem, in this case, is that these networked pub-In order to make sense of the conflict that now lics reproduce may of the biases that exist in otherexists between information overload and stringent public-social inequalities, including social stratifica-filtering methods, Hypios has conducted an ana- tion around race, gender, sexuality, and age [4].lysis of different notions of relevance used in differ-ent existing systems, to help users discover new, The current Web is ensuring that less of the infor-unknown, forgotten and yet relevant ideas. In this mation that reaches us is random, as serendipity ispaper, we present an analysis of those different ‘fla- systematically being eliminated from our online ex-vours’ of relevance focusing on the applicability of perience. Within social media, our newsfeed providesthose relevance measures in different user scen- updates from the friends we already interact witharios. We especially identify semantic notions of rele- the most. But looking to the near future, the feed-vance as promising for scenarios where discovery back loop they create could clearly undermine theand unexpectedness are crucial. As a consequence incredible promise of the Web as a tool of discovery.of our research, we have implemented a seman-tic keyword discovery system called hyProximity If for personal usage, locking oneself into a net-to help discover unexpected competence domains, worked public is a problematic question in itself; inlaterally relevant to an innovation problem. We pre- research, these filter mechanisms are detrimental tosent our system together with the evaluation of its promoting innovation. Writer Steven Johnson is notperformance in real-life open innovation scenarios the first to have taken a keen interest in the mat-with real problems on our problem-solving platform ter [5]. He believes the so-called of fields has powered the most innovative ideasIntroduction wine presses on Johannes Gutenberg, to how coralEvery day, billions of bytes of information flood our reefs inspired marine biologist Brent Constantz tobrowser, our inbox, our social newsfeeds. And bil- develop novel ways of fighting osteoporosis, thelions of dollars hang in the balance of how to best examples span centuries of innovation. Their com-filter that information. What started as simple search mon construct has always rested on the adjacentalgorithms have redefined the world of advertising. possibilities of discovery, resulting from the frictionAs companies learn more about users, they can pre- between unexpected disciplines or cultural identi-dict what they are looking for, what they are most ties; the reason why large urban centres have alwayslikely to buy, what they are most likely to ‘like’ and been centres of innovation and discovery, powered by‘dislike’. Because social media is at the heart of this the interaction between different perspectives.revolution. Users are willingly trading private infor-mation (i.e. their interests, their friend networks) for To promote this type of interaction, universities andfilters, virtual damns that let in only the trickle of research centres have long been practicing interdis-information they are interested in. The unpleasant ciplinarity and encouraged exchange. However, in thealternative, of course, is diving in the chaotic flood of private sector, R & D laboratories o en find them-information that the Web has become. selves limited by self-generated filter mechanisms — so-called silos. The Web has provided an incred-These filters are therefore necessary for our personal ibly powerful tool to collapse these silos and promoteuse. Recommendation so ware, for ex ample, has interaction between various actors. One such examplebecome extremely useful to find out more about a has to do with online problem-solving platforms like
  • 111. 110 O P E N I N N O V A T I O N 2 0 1 2 that rely on crowsdourcing to invite a friends as people we might be interested in befriend- number of relevant scientific ‘networked publics’ (biol- ing. It also shows content liked by our friends as rele- ogists, chemists, engineers) to solve specific R & D vant to us. Other systems construct user profiles and, problems. Recent research has explored the area of in the absence of any information about friendship, open problem-solving and confirmed Johnson’s thesis: deduce the information about similar people—and contrary to what would be evident, ‘the provision of use those profiles of similar people to recommend a winning solution was positively related to increas- things (in a way similar to what Amazon does). ing distance between the solver’s field of technical expertise and the focal field of the problem’ [6]. One Advantages explanation for this is that these individuals ‘are not The basic assumption of this approach is strongly bound to the current thinking in the field of the focal confirmed by the actual human practices. People problem and therefore can offer perspectives and o en like to know what their friends are inter- heuristics that are novel thus useful for generating solutions to these problems’ [7]. The silos collapse. to the development of interests and, therefore, recommendations based on this assumption are Such crowdsourcing platforms do break down some likely to be judged as desired. of the Web’s filters, by presenting, for example, prob- Known by users and easy to understand why lems to individuals from all scientific disciplines. Yet something is recommended to them. even with these tools, constraints still exist. The first is that potential solvers need to sign up to receive Disadvantages information on given problems. The second is that O en difficult to construct due to intransparency they themselves determine whether they can offer of the social graph. It is difficult to obtain social a valid solution. Therefore, the ability to broadcast graph information, and this approach is mostly (in this case, ‘narrowcast’) problems to solvers in rel- applicable only for social networks which have evant fields, bypassing the last filter mechanism (the access to such data. solver’s own ‘self-censorship’ on whether or not he/ she can provide a solution) will be key in enhancing Content relevance successful problem resolution. Yet to identify the dis- Content relevance comes out of co-occurrence ciplines and people best capable of providing novel of concepts/terms in texts. The basic assumption solutions, we must define the most relevant keywords behind this approach is that if two terms or concepts from the given problem. In this paper, we investigate appear frequently together in texts, or similar con- the different types of relevance that can be used by cepts sets, they are likely to be related and relevant web systems to support and encourage serendipity in to one another. Such an approach is used by Google research, rather than inhibit it. A better understand- AdWords to look into terms that co-occur in search ing of relevance (as explained in the next section) can queries and suggest relevant terms for advertising lead to systems that can encourage both relevance campaigns, or for Google Suggest that proposes and ‘discovery’ at the same time, guiding the user of useful additional keywords in Web searches. the World Wide Web without limiting their view. Advantages Different flavours of relevance Relatively easy to obtain a corpus on the Web, Different recommender systems use different notions which makes this method highly accessible. of relevance to find relevant concepts and provide Tools for performing it are available as open them to the user as suggestions in different scenarios source. (e.g. Web search, advertising, tagging, shopping). We Widely used and known by developers. outline three fundamentally different notions of rel- evance and the possibility to combine them in order Disadvantages to fine-tune the desired qualities of a recommenda- The quality of recommendations depends heav- tion system. The classification is purely theoretic with ily on the corpus used, and its fitness for the no guarantees of being complete. recommendation domain and scenario. Relatively easy to influence the results by pro- Different notions of relevance (Figure 1) ducing content with an intention to enforce false relevance. Content farms represent a threat Social relevance to the approach if the Web content is used Social relevance comes out of social connections unrestrictively. or similarity between people. The systems that use this notion rely on the assumption that a person is Semantic relevance likely to be interested in what the person’s friends Semantic relevance comes out of relations between concepts explicated in some semantic knowledge
  • 112. 111base/graph. Approaches using WordNet, DBpedia and However, because of the lack of semantic relationssimilar knowledge bases have been proposed, mostly between the concepts, it is not likely that the peoplein research, to establish a notion of semantic related- are connected by their domain of knowledge andness and use those knowledge bases for concept activity, but rather by other interests and affinities.suggestion. Semantic and content relevance, non-socialAdvantage Concepts that are both related by their meaning and The approach is based on the meaning and, co-occur in content are likely to represent similar therefore, likely to provide insight into more com- or interdependent things that are o en mentioned plete and less expected recommendations than together because of their functional interdependence. statistics-based approaches. Social, non-content, non-semanticDisadvantages Concepts that are relevant only in the social sense, The quality of recommendations depends heavily with no semantic relevance and that do not co-occur on the chosen knowledge base, and its fitness for in content, are likely to be interest associations — the recommendation domain and scenario. things that similar and like-minded people are inter- The availability of knowledge bases usable in ested in, but are so different that they may rarely this approach is not high and, in some cases, the be referred to in the same context. Relevance in this application of this method would have to involve sense might, for instance, result from the fact that a construction of a specific knowledge base. people interested in football o en befriend people interested in biology.Combined approachesOnce we have outlined the three basic notions of rel- Content, non-social, non-semanticevance it is interesting to look at their possible com- Concepts related only by co-occurrence in content,binations. Being grounded in different basic assump- without any semantic similarity and without a com-tions, the three basic approaches produce qualitatively munity using them together, are likely to define adifferent suggestions of related concepts. We look at vocabulary of situations and contexts that peoplethose differences and provide an overview of their who are not like-minded nor connected can face.possible combinations, by trying to predict the quali-tative nature of recommendations that the combined Semantic, non-social, non-contentapproaches would be able to provide. Concepts related only by meaning, and not used by similar/connected people, and not co-occurringSocial, content and semantic relevance in content, are likely to be related concepts that aConcepts that are considered relevant by all the common user would not think of as related butnotions of relevance, are likely to be the most highly would recognise them as such. The lack of jointrelevant concepts, almost the same as the initial use means such semantic connections o en over-input concepts. looked, possibly even by experts — as those rele- vance relations do not take part in defining theSocial and semantic relevance, non-content communities of practice.Concepts that are both related by meaning, and areused by connected and similar people, would indicate Discovering unexpected relevant keywordsthe things used by a same circle of people and that with hyProximityare related by meaning. Recommendations based on Research approaches to keywords suggestion havethis combined notion can help define communities of been around for quite some time. The need to helppractice, and especially point to the concepts that are users chose their keywords for tagging, web searchesnot o en used in the same context, but rather used and similar tasks have led to the development of aby the same and similar people in different contexts. number of ways to suggest relevant keywords. Today, with the advent of web advertising, finding relevantSocial and content relevance, non-semantic keywords has an added dimension, as suggestingConcepts that o en co-occur in content and are used keywords no longer means just helping the user navi-by people who are connected, are likely to define com- gate on the Web, but also means driving the relevantmon situations and contexts that a particular commu- visitors to your web page. An increasing number ofnity usually faces. The co-occurrence in texts indicates services [8] offer to suggest the best relevant key-that the concepts are used in the same context (the words, which cost less and can pull in more that the text is about), and the additional relev- However, there is an important dimension that theseance achieved by connected people indicates that this approaches have been missing and that significantlycontext is actually used by people who know each improve the way we discover new relevant keywords:other (or who may other wise be considered as similar). their meaning. We will now discuss how we use this
  • 113. 112 O P E N I N N O V A T I O N 2 0 1 2 Figure 1. Social Relevance Content Relevance Semantic Relevance friends a Web resource, a search in a semantic created traces graph of on the Web query, ... concepts there is a path that are relevant to is relevant to both connecting Concept A Concept B Concept A Concept B Concept A Concept B therefore Concepts A therefore Concepts A therefore Concepts A and B are related and B are related and B are related likely to be used together in the same context/situation vocabularies of common conceptual clusters of similar situations and contexts that or interdependent things like-minded people face interest associations. Things preferred by like minded related by meaning, but rarely people, but essentially different used together nor by people you and rarely used together. may know. Likely to be surprising. conceptual clusters defining communities of practice highly relevant, generally agreed upon important dimension for our keyword discovery rely on taxonomies and vocabularies. However, ODP needs at and report about the interesting is a web directory, and thus the relations between results we have had. terms are defined by Web browsing practice. There might be semantic relations between terms, which hyProximity are not commonly browsed together, and thus would The existing keyword suggestion approaches rely on not appear in ODP. Wordnet is, on the other hand, (a) co-occurrence [9] of terms in text corpora; (b) co- more oriented at finding synonyms, and remotely occurrence in search results; (c) controlled taxon- related terms fall outside of its scope. omies such as the Open Directory Project (ODP) [10], and controlled vocabularies such as Wordnet [11]. The approaches (a) and (b) both provide quite limited web-based approach, using DBPedia [12] — a se- potential for discovery of unknown keywords, as they mantic Web version of Wikipedia, to discover relevant are based on co-occurrence. In other words, they try terms. In DBPedia, terms (concepts) are grouped in to look at terms that someone else has already used categories by their meaning. As such, this source of in combination with your initial terms, and suggest encyclopedic knowledge should enable the discovery them. This approach does not allow for the discov- of the keywords that are semantically related but ery of terms that are rarely used in combination with that an average user might not even be aware of. your initial terms, but that are very close in meaning. This is important, as the language we use on the Web Our system uses the distance between two terms in is highly dependent our own community of practice/ the graph of DBPedia semantic concepts, to calcu- thought. Going beyond the terms used by people sim- late their semantic relatedness, called hyProximity. ilar to us, is very difficult if we rely solely on co-occur- The shorter the distance in the graph, the higher the rence. Approaches of type (c) have more potential as hyProximity. The more links the two concepts share, they do not use co-occurrence-based statistics, but the higher the hyProximity will be.
  • 114. 113Case study Figure 2. Case study hyProximity v AdWordsWe have used hyProximity for our own use in hyp-ios, and have obtained very interesting results. Our 12 1802standard procedure, when we have a new innovation Experts Expertsproblem on Hypios, is to take the keywords related to Direct 403 keywordsthe problem, and look for experts in our large, cross- Experts 2849 Experts hyProximity AdWordsrelevant to the problem, that do not appear in the 2061problem text is important in order to reach the rel- Expertsevant experts in most diverse domains, who might 173 Expertsbe able to bring an innovative solution. We have usedhyProximity to obtain additional keywords for expertsearch, and compared those keywords with whatwe get from AdWords’ keyword tool for the same Referencesthe keywords directly present in the problem text;2 849 experts with hyProximity keywords, and 2 061 [1] Pariser, E. (2011), The Filter Bubble: What the Internetexperts using the keywords from AdWords’ keyword is Hiding from you, Penguin Press, New York.tool. The most interesting phenomenon is that theoverlap between the experts identified by hyProxim- The Economist, 7 July 2011. [3] Boyd, D. (2010), ‘Social Network Sites as Networkedmeasured the interest expressed by the identified Publics: Affordances, Dynamics, and Implications’, inexperts (through their response to our e-mails). The Networked Self: Identity, Community,response rate obtained in the hyProximity group was and Culture on Social Network Sites, pp. 39–58.10 % greater than with the AdWords’ keywords, and [4] Hargittai, E. (2008), ‘The Digital Reproduction of19 % greater than with the keywords present directly Inequality’, in Grusky, D. (ed.), Social Stratification, the text. 936–944. Boulder, CO Westview Press. [5] Johnson, S. (2010), Where Good Ideas Come From:This result leads to the conclusion that there are The Natural History of Innovation, Riverhead Books, Newa significant number of semantically related key- York.words that fall completely out of the scope of the co- [6] Jeppesen, L. B. and Lakhani, K. R. (2009), ‘Marginalityoccurrence-based keywords suggestion approaches. and Problem Solving Effectiveness in Broadcast Search’,If you trust that the non-semantic keyword sug- Organization Science, September 2009, p. 1.gestion approaches are giving you all the relevant [7] Ibid., p. 11.keywords, you are missing a lot of relevant traffic. [8], https://adwords. google.comIn our studies [13], we have shown that these seman- [9] Co-occurrence can either mean concurrence/tically related keywords, when compared to AdWords, coincidence or, in a more specific sense, the above-are more o en judged by users as being unexpected chance frequent occurrence of two terms from ain addition to relevant. text corpus alongside each other in a certain order. Co-occurrence in this linguistic sense can be interpreted as an indicator of semantic proximity or an idiomaticContacts expression.Milan Stankovic [10] Researcher [11] [12] [13] Stankovic M., Breitfuss, W. and Laublet, P. (2011), ‘Linked-Data Based Suggestion of Relevant Topics’, inSaman Musacchio Proceedings of I-SEMANTICS conference 2011, Gratz,VP Communications Austria, 7–9 September
  • 115. 114 O P E N I N N O V A T I O N 2 0 1 2 3.5 The application of Open Innovation 2.0, engaged scholarship and design science research in the Innovation Value Institute Introduction insightful than when researchers work alone. En- The discipline of information systems (IS) has been gaged scholarship has a number of facets: a form considered to have certain failings in its effort to of inquiry where researchers involve others and le- impact on practice [1]. Additionally, Sambamurthy verage their different perspectives to learn about a problem domain; a relationship involving nego- scholarly research and the need for practitioners [2]. tiation, mutual respect, and collaboration to pro- There have been numerous research studies identi- duce a learning community; and an identity of how fying failures in IS in its attempts to achieve desired scholars view their relationships with their com- outcomes and disappointments in assessments of munities and their subject matter. In Van de Ven’s return on investment [3] [4]. The analyses in these view, you can increase the likelihood of advancing studies o en yield recommendations that operate at knowledge for science and practice by engaging a high level of abstraction and lack the detail and with practitioners and other stakeholders in four specificity to lead to action-oriented solutions. Such steps: findings, while offered in a constructive spirit of help- fulness and concern for continuous improvement, do ground problem/question in reality up close and little to advance either (i) the capability of practi- from afar; tioners to achieve their goals or (ii) the theoretical develop alternative theories to address the knowledge underpinning information system aca- question; demic research. One of the requirements for a more collect evidence to compare models of theories; helpful approach is a more systematic approach and with greater sensitivity to the contextual complexity communicate and apply findings to address the of the organisational problem-solving environment problem/question. where IS practitioners work. Van de Ven’s conceptualisation of engaged schol- - arship [8, pp.10–1] has four stages in an engaged scholarship project. The stages can happen in any [5] [6] [7] is a response to the need for a more sys- sequence. tematic, comprehensive approach to managing IT in a manner that meets the requirements of practic- 1. Problem formulation — situate, ground, diag- ing IT professionals. In this paper, an overview of nose, and infer the research problem by deter- mining who, what, where, when, why, and how in particular, some of the guiding principles for its the problem exists up close and from afar. design and development will be presented. 2. Theory building — create, elaborate, and justify a theory by abductive, deductive, and inductive This research is being undertaken by the Inno- reasoning. vation Value Institute ( applying 3. Research design — develop a variance or the principles of engaged scholarship [8] [9], Design process model for empirically examining the Science Research (DSR) [10] and Open Innovation alternative theories. 2.0 [11]. IT Management is being investigated using 4. Problem-solving — communicate, interpret, a design process with defined review stages and and apply the empirical findings on which development activities based on the DSR guidelines alternative models better answer the research advocated by Hevner et al. [10]. During the design question about the problem. process, researchers participate together with prac- titioners and subject matter experts within research Mathiessan and Nielsen [9] see engaged scholar- teams to capture the working knowledge, practices ship as an opportunity to address key challenges and views of key domain experts. within the IS discipline in a novel and constructive way. They applied the principles of engaged schol- Engaged scholarship arship to analyse Scandinavian IS research through Van de Ven describes engaged scholarship as a the lens of the Scandinavian Journal of Information participative form of research for obtaining the Systems (SJIS). A er reviewing all the research views of key stakeholders to understand a complex papers published in SJIS over the past 20 years, problem. By exploiting differences between these they advocated a role for engaged scholarship in viewpoints, he argues that engaged scholarship shaping the future of Scandinavian IS research and produces knowledge that is more penetrating and IS research and practice in general.
  • 116. 115 research. Additionally, Van Aken advocated a focusscholarship. on output which is field tested and grounded [14].1. Informed basic research is undertaken to Ilvari and Venable [15] define DSR as a research describe, explain, or predict social phenomenon. activity that invents or builds new, innovative arte-2. Collaborative basic research entails a greater facts for solving problems or achieving improve- sharing of power and activities among ments, that is DSR creates new means for achiev- researchers and stakeholders than informed ing some general (unsituated) goal, as its major research. research contributions. Such new and innovative3. Design and evaluation research is undertaken to artefacts create new reality, rather than explain- examine normative questions dealing with the ing existing reality or helping to make sense of it design and evaluation of policies, programmes, [15]. It has been argued that while design science, or models for solving practical problems of a or design theory, was discussed over 50 years ago profession in question. by Simon [16], and further developed in the mid4. Action/intervention research takes a clinical 1990s [17] and in the new millennium [18], it was intervention approach to diagnose and treat a Hevner et al.’s publication [10] that propelled design problem for a specific client. science out of its niche into the mainstream of the IS research community [19]. The central thrustIn particular, it is noteworthy that Van de Ven of Hevner’s approach was that design sciencelocates design science research within the scope of research attempts to create and evaluate IT arte-engaged scholarship [8, p. 27]. facts intended to solve identified relevant organisa- tional problems and he went on to propose a set ofThe application of design science problem-solving guidelines where the understand-research in the IT-CMF ing of a design problem and its solution are acquiredDesign science research can be considered as a type in the building and application of an artefact.of Mode 2 knowledge creation [12] where know l-edge is co-created in an area which is interdisciplin- Developing innovative artefacts is a central activityary, problem-focused and context-sensitive. This is in DSR [20]. Such artefacts can be in the form oftypically knowledge generated by practitioners deal- constructs, models, methods or instantiations [20].ing with real problems in a real context as distinctfrom knowledge which is generated from traditional activities can be differentiated: build and evalu-research (called Mode 1) which is academic and ate where building ‘is the process of construct-based within a particular discipline [13]. In develop- ing an artefact for a specific purpose’ and evalu-ments in other social science fields such as man- ation ‘is the process of determining how well theagement research, the relevance problem has been artefact performs’ [20, p. 254]. The constructionhighlighted [14]. Van Aken proposed increasing the of an artefact is a heuristic search process [20].use of Mode 2 knowledge production in management Within this process, an extensive use of theoreticalresearch to increase the relevance and utility of the contributions and research methodologies stored inFigure 1. Research Question/ Purpose To describe To design or explain or control Design science Extension Basic science with evaluation for detached stakeholder advice professional practice outside Research Engaged Perspective scholarship Intention Co-produce attached Action Research knowledge with inside for a client collaborators
  • 117. 116 O P E N I N N O V A T I O N 2 0 1 2 the knowledge base should be made [10]. On the providers, public sector IT executives, enterprise IT one hand, theoretical contributions can come from executives, analysts, IT professional organisations governance, value-based management, risk man- and academics. This form of research ecosystem agement, compliance management, etc., to build an activity is a form of Open Innovation 2.0 [11] where all the actors in an ecosystem are involved in the uses the following DSR patterns proposed in [20]. research and innovation activity. This is an exten- sion of the open innovation activity defined by Ches- Different perspectives: The research problem brough [22] which refers to capitalising on the inflows is examined from different perspectives, for and outflows of ideas to and from a company. example conceptual, strategic, organisational, technical and cultural. Mobilising an entire ecosystem using an open inno- Interdisciplinary solution extrapolation: A solution vation approach combined with engaged scholarship or solution approach (i.e. methods, instructions, and design science research resulted in the develop- guidelines, etc.) to a problem in one discipline can ment of a new set of artefacts and design patterns that are being adopted by a broad set of IT execu- Building blocks: The complex research problem tives and organisations. The increasing adoption of of IT Management is broken into 33 critical the artefacts are perhaps the strongest validation competencies that are examined in turn. of the utility and effectiveness of the approach. Combining partial solutions: The partial solu- tions from the building blocks are integrated Conclusion - This paper has described the development of the IT- cies between the building blocks are identified and highlighted. In order to rigorously demon- systematic, comprehensive approach to managing IT strate the utility of the developed artefact, dif- in a manner that meets the requirements of practic- ferent evaluation methods can be used. Amongst others, the ‘informed argument’ is suggested as was provided and, in particular, some of the guid- an appropriate evaluation method [20]. ing principles for it design and development were presented. Maturity models in design-oriented research are regarded as being located between models and The Innovation Value Institute (http:/ is methods in the form of state descriptions (e.g. the applying and extending the principles of engaged maturity levels) and guidelines [20]. In this sense, scholarship [8] [9], Design Science Research (DSR) [14] maturity models contain two aspects, one capturing and Open Innovation 2.0 [11] to create a new research the assessment of the current status and another ecosystem involving members from six different com- guiding organisations towards higher maturity munities — technology providers, public sector IT levels. In the context of design science research the executives, enterprise IT executives, analysts, IT pro- first aspect can be described as a model perspective fessional organisations and academics. The validation describing various maturity levels (states) of organi- of the utility and effectiveness of the approach can be sations whereas the second aspect describes guide- lines to improve the current situation of organisa- tions in form of method components [21]. In order to Contacts transform organisations from one maturity level to another, usually the method component is described Prof. Martin Curley by ‘maturity curves’ or ‘maturity profiles’. Director, Intel Labs Europe Intel Corporation Open Innovation 2.0 Industrial Director, Innovation Value Institute National University of Ireland, Maynooth enable a structural change in the way companies and organisations get value from IT. A key assumption in Prof. Brian Donnellan the issue and knowledge/practices used in contempo- Professor of Information Systems Innovation rary IT management practice was necessary. Accord- Logic Annex, South Campus ingly, a research community which transcended aca- National University of Ireland Maynooth demic research and even the concept of engaged Maynooth, Co. Kildare, Ireland scholarship was established and nurtured to provide Academic Director, Innovation Value Institute comprehensive views, knowledge and practices. Thus National University of Ireland, Maynooth a new research ecosystem was established involving Innovation Value Institute members from six different communities: technology
  • 118. 117 Knowledge Processes’, MIS Quarterly, Vol. 26, No 3,References 179–212. [19] Indulska, M. and Recker, J. C. (2008), ‘Design[1] Kawalek, J. P. (2008), Rethinking Information Systems Science in IS Research: A Literature Analysis’, in Gregor,in Organizations: integrating organizational problem S. and Ho, S. (eds), Proceedings of the fourth Biennialsolving, Routledge, New York, NY. ANU Workshop on Information Systems Foundations, Canberra, Australia.Commentary: The Organizing Logic for an Enterprise’s [20] Vaishnavi, V. and Kuechler, W., Design Research inIT activities in the Digital Era — A Prognosis of Practice Information Systems, 20 January 2004.and a call for Research’, Information Systems Research,Vol. 11, No 2, June 2000. [21] Mettler T. and Rohner, P. (2009), Situational Maturity Models as Instrumental Artifacts for[3] Lam, W. and Chua, A. (2005), ‘Knowledge Organizational Design, DESRIST’09, Malvern, PA,Management Project Abandonment: An Exploratory 7 and 8 May 2009.Examination of Root Causes’, Communications of the AIS,16(23), 723–43, (2005). [22] Chesbrough, H. W. (2003), Open innovation: the new imperative for creating and profiting from technology,[4] Pan, G. (2005), ‘Information System Project Harvard Business School, Boston.Abandonment: A Stakeholder Analysis’, InternationalJournal of Information Management, 25(2), 173–184.[5] Curley, M. (2004), Managing Information Technologyfor Business Value, Intel Press.[6] Curley, M. (2007), ‘Introducing the IT CapabilityEnterprise Information Systems, Portugal.[7] Curley, M. and Kenneally, J. (2009, 2010), TheIT Capability Maturity Framework, Innovation ValueInstitute.[8] Van de Ven, A. H. (2007), Engaged Scholarship: AGuide for Organizational and Social Research, OxfordUniversity Press.[9] Mathiassen, L. and Nielsen, P. A. (2008), ‘EngagedScholarship in IS Research’, Scandinavian Journal ofInformation Systems, Vol. 20: Issue 2, Article 1.[10] Hevner, A. R., March, S. T., Park, J. and Ram,S. (2004), ‘Design Science in Information SystemsResearch’, MIS Quarterly, Vol. 28, No. 1, 2004, 75–105.Service Innovation Yearbook 2010–11, Publications Officeof the European Union, Luxembourg.[12] Gibbons, M., Limoges, C., Nowotny, H.,Schwartzman, S., Scott, P. and Trow, M. (1994), The newproduction of knowledge: the dynamics of science andresearch in contemporary societies, London, in progress, The Road to relevance 15 years on —Are we there yet?’, EDiNEB Conference Paper, Malaga.[14] Van Aken, J. E. (2005), ‘Management Research asa Design Science: Articulating the Research Products ofMode 2 Knowledge Production in Management’, BritishJournal of Management, Vol. 16, No 1, p. 19–36, March([15] Livari, J. and Venable, J. (2009), Action Researchand Design Science Research — Seemingly Similar ButDecisively Dissimilar, ECIS 2009.[16] Simon, H. A. (1969), The Sciences of the Artificial,Cambridge, MA, MIT Press.[17] March, S. T. and Smith, G. G. (1995), ‘Design andNatural Science Research on Information Technology’,Decision Support Systems, Vol. 15, No 4, 1995, 251–266.[18] Markus, M. L., Majchrzak, A. and Gasser, L. (2002),‘A Design Theory for Systems that Support Emergent
  • 119. 118 O P E N I N N O V A T I O N 2 0 1 2 3.6 Navigating intellectual capital of nations for service Innovation in the European Union … the Occupy Wall Street protests that began in Poland Portugal New York, tens of thousands of people around the Spain Sweden world took to the streets … to reiterate their anger United Kingdom at the global financial system, corporate greed and government cutbacks. Rallies were held in more National intellectual capital ranking of the than 900 cities in Europe, Africa and Asia, as well 17 EU countries as in the United States, with some of the largest occurring in Europe. ranking orders of human capital, market capital, process capital, renewal capital, financial capi- Karla Adam, Washington Post, 16 October 2011 tal and overall intellectual capital for the 17 EU countries of our data. Based on investigations of empirical data from 800 years of financial crises, two economists Ken- neth Rogoff of Harvard, and Carmen Reinhart of its own set of strengths and weaknesses. This then Princeton University, said in their book This Time leaves space for collaboration with other member is Different that the a ermath of a financial cri- countries to learn from each other and strengthen sis brings slow and halting growth, sustained high their weakness. unemployment, and rocketing public debt — ‘with the overhang of public and private debt being the In our 2011 book National Intellectual Capital: A most important impediment to a normal recovery Comparison of 40 Countries [1], we have identified from recession.’ Although policymakers in some that human capital and renewal capital are long- countries are relieved and hoping that their finan- term-oriented and need time to develop, yet mar- cial temporary healing might have worked, some ket capital and process capital require less time to EU economies are still facing an outlook with develop and achieve. severe financial capital challenges and its societal implications. Using this time distinction, we then created scat- ter plots of the long-term and short-term capitals. Since the intangible is increasingly acknowledged - as a key driving force for future development, espe- cially the service sectors, examining relevant stat- renewal capital, it can be seen that the 17 coun- istics from the perspective of national intellectual tries are spread out into three distinctive clusters. capital (NIC) may provide some clues as to how EU On the other hand, the short-term market v process governments can work things out together. capital, the country positions exhibit a belt-shaped development continuum. Interpreted separately, In this article, we propose a Dynamic IC Triangle approach that governments can take when facing over the long-term IC gap to the next cluster. Yet, national economic problems. This new approach is derived from our research findings a er analysing development can be anticipated with investment 10 years’ data (2001–10) of the 17 EU countries into time and resources. in our data set. The Dynamic IC Triangle model is based on the idea of leveraging each country’s However, the real insight comes from our combined previous national development experiences. In the interpretation of the two scatter plots. Taken as a context of the European Union, policymakers could forge ‘intellectual capital alliances’ with other nations to strengthen their areas of weaknesses. shows the path by which they may achieve that The 17 countries are: goal: in other words, a clustering of nations as well as opportunity spaces/paths for the future! Austria Belgium Czech Republic Denmark Strategic IC alliances Yet, how to achieve the goal of enhancing intellec- Germany Greece tual capital (IC) for future national development? Hungary Ireland Interdependence, co-creation and synergy are Italy Netherlands the keywords. The whole purpose of the EU is to
  • 120. 119Table 1. National Intellectual Capital Scores and Ranking of 17 EU Countries (by descending ranking order) Years Human capital Market capital Process capital Renewal capital Financial Overall IC 2001–10 capital Country Score Ranking Score Ranking Score Ranking Score Ranking Score Ranking Score Ranking 8.731 2 7.771 7 8.645 3 7.188 3 9.594 17 41.930 2 Sweden 8.571 3 7.771 8 8.565 5 7.268 2 9.663 13 41.838 3 Denmark 8.571 4 7.805 6 8.835 1 6.494 6 9.671 12 41.375 4 Netherlands 8.059 15 7.927 4 8.459 7 5.809 13 9.733 6 39.987 7 Austria 8.003 17 7.705 9 8.426 9 5.817 12 9.703 9 39.655 11 Ireland 8.148 12 7.836 5 7.961 18 5.189 19 9.772 4 38.907 13 Germany 7.808 19 7.190 14 8.182 14 5.875 11 9.612 16 38.666 16 Belgium 8.198 11 7.423 12 8.015 16 5.355 17 9.638 14 38.628 17 United 7.634 24 6.963 17 7.985 17 5.266 18 9.626 15 37.474 19 Kingdom 8.052 16 6.740 19 7.935 20 5.087 20 9.593 18 37.406 20 Spain 7.635 23 6.719 20 7.386 25 3.724 27 9.487 21 34.951 24 Czech 7.529 26 6.597 22 7.096 28 3.774 25 9.218 28 34.215 25 Republic Portugal 7.414 27 6.489 24 7.474 23 3.425 32 9.241 27 34.043 26 Italy 7.327 30 6.202 28 7.259 26 3.487 30 9.508 20 33.783 27 Hungary 7.594 25 6.152 29 7.094 29 3.748 26 9.016 29 33.603 28 Greece 7.339 29 5.973 30 6.947 30 3.339 33 9.414 23 33.013 31 Poland 7.362 28 5.418 36 6.320 34 2.957 41 8.878 30 30.935 32NB: Ranking order is the ranking number of total 48 countries.realise the synergy of its Member States, which is national intellectual capital to maximise EU syn-the IC multiplier effect rather than just the addi- ergy. At the simplest level, countries with a lowertion effect. A Dynamic IC Triangle model as elab- rating of a certain aspect of intellectual capital canorated here under is a simple and easy to follow partner with other countries excelling in that area.measure. Based on the capital scores and rankingsin Table 1, the interdependent relationship amongthe Member States can be set up for co-creating in market capital, process capital, and renewalFigure 1. Human capital v renewal capital for 17 EU Figure 2. Market capital v process capital for 17 EUcountries (10-year mean score) countries (10-year mean score) 8.5 Finland 7.5 Denmark Netherlands Sweden Ireland Sweden 7.0 Finland Denmark 8.0 Austria France market capital 6.5 Belgiumhuman capital Belgium Germany Ireland Austria United Kingdom 7.5 Netherlands 6.0 Czech Republic Hungary Germany Spain 5.5 France Spain United Kingdom Hungary Portugal 7.0 Portugal Czech Republic Italy Italy 5.0 Greece Poland Greece Poland 6.5 4.5 2 3 4 5 6 7 5 6 7 8 9 renewal capital process capital
  • 121. 120 O P E N I N N O V A T I O N 2 0 1 2 unemployment is a process capital issue, there- to enhance its renewal capital, can learn from Ire- 9. Unemployment may be caused by issues relat- land or the Netherlands to enhance its market capi- ing to human capital, market capital, and renewal capital: the solution to unemployment may rely on its process capital. Of course, the rule of common its interaction with human capital, market capital, sense is that these international collabor ations and renewal capital. should be mutually beneficial: that is, countries receiving assistance should always give something - ing Sweden’s assistance in building renewal capital, Figure 3. such as inviting Swedish teams to join the public alliances in three types of intellectual capital sector renewal projects like the Louvre Museum renovation (examples only). target Germany or the Netherlands for assistance in enhancing its renewal capital, can learn from Austria or Belgium to enhance its market capital, and can model Ireland or the United Kingdom to Sweden/ Finland enhance its process capital. Again, for example, in exchange for Germany’s assistance in building renewal capital, Poland needs to open up more RC opportunities for German companies. The main France point is that each country finds appropriate intellec- MC PC tual capital alliances and securely hooks on to the next level of IC-development, rather than jumps to an unrealistic politically phrased goal and then fails Ireland/ Denmark and loses societal confidence, as the intangibles Netherlands /Finland need time to develop. Dynamic IC interdependences Another application of the Dynamic IC Triangle is shows the GDP predicting power of human capital, market capital, process capital, and renewal cap- Figure 4. Poland needs assistance from external IC ital. The thickness of the yellow arrow represents alliances in three types of intellectual capital the degree of predicting power. That is, in these 17 EU countries, market capital contributes to GDP per capita (ppp) the most and human capital the least. effect. It shows that when human capital interacts with market capital, process capital, and renewal capital, not only is the main effect of human capital enhanced but also every interaction effect is sig- Germany/ Netherlands nificant at a very high level of .001. This is further evidence of the power of interdependence as shown RC Poland An additional example is the serious unemploy- MC PC ment rate in Poland. Across the board, high un- displays the general unemployment rate and youth Austria/ Ireland/ unemployment of the 17 EU countries. The Nether- Belgium UK lands has the lowest rate and Poland the highest. In our National Intellectual Capital (NIC) model,
  • 122. 121Figure 5. The degree of GDP predicting power of Figure 6. The interaction effect of human capitalthe four capitals in 17 EU countries with other capitals in predicting GDP *** ** ** *** *** *** Main effect *** - signifiant at .001 level ** - signifiant at .01 levelThe simple rule for using the Dynamic the IC Tri- Figure 7. The influence of human capital on GDP isangle model is to put the issue in the centre, and energised through other capitalsfinding three sources of assistance or three majorchannels to address the challenges. Three is agood number, as more than three might dilute thegovernment’s attention and less than three mayprovide insufficient view points.Dynamic IC map RenewalLeveraging Member States’ experiences and capitalresources to achieve national welfare and well-being10 maps the relative position of national intellectualcapital v GDP per capita (adjusted by purchasing Humanpower parity) of the 17 EU countries in year 2010. capitalThe colour is the degree of renewal capital. Market ProcessBased on the table and graphs presented in this capital capitalarticle, each country may try to sort out the rootof the IC challenges and the sources of potentialFigure 8. Average unemployment rate of 17 EU countries 2001–10 40 30 Unemployment Youth 20 unemployment 10 0 ria Re m De blic Fi rk d G e n ce Gr y H u ce I re y nd th taly Po s Po nd al Sw i n ng n m nd an ar d ede an ug a iu do a ee st la la Sp nm ng a pu rm la I nl lg Au rt Fr er Be Ki h Ne ec i te Cz Un
  • 123. 122 O P E N I N N O V A T I O N 2 0 1 2 solutions through utilising a simple Dynamic IC 7. How do you plan to in-source or make IC alli- Triangle model. Through the interdependent rela- ances with others to upgrade quicker? tionship with selected Member States on selected 8. What is the opportunity cost of not addressing issues to co-create the synergy, the route to your NIC agenda? recovery may become a lot easier. 9. How sustainable is your present NIC position? 10. What are the implications of the major liabil- Having a national IC map as above will assist in ities to citizens, to other countries, and to future navigating the future welfare and avoid the trap of generation? IC navigation, we might ask policymakers to Figure 9. Sources of the problems and solutions contemplate the following 10 critical NIC questions. of unemployment may lie on various directions of interdependence 1. What is your starting point? 2. What is your relative position (colour) among 40+ others? 3. What is the distance of your NIC to other countries? Renewal capital 4. What is your evolutionary path during the recent 10 years? Unemployment 5. What is the tentative trend for the next five years? Market Process 6. What is the speed or path of your renewal or capital capital the core of your IC renewal policy? Figure 10. Overall national intellectual capital v GDP per capita (ppp) of 17 EU countries in 2010 GPD per capita in USD France, 2010 United Kingdom, 2010 Ireland, 2010 Netherlands, 2010 Sweden, 2010 50 000 Belgium/Lux, 2010 Spain, 2010 40 000 Italy, 2010 30 000 Greece, 2010 Poland, 2010 20 000 Austria, 2010 Finland, 2010 10 000 Germany, 2010 Hungary, 2010 Portugal, 2010 Czech Republic, 2010 Denmark, 2010 20 22 24 26 28 30 32 34 36 38 40 Contacts Reference Dr Carol Yeh-Yun Lin [1] National Chengchi University Taipei, Taiwan Prof. Leif Edvinsson Universal Networking Intellectual Capital Norrtalje, Sweden
  • 124. 1233.7 Mapping the intellectual capital of post-Soviet statesIntroduction intend to suggest international, interdisciplinaryEach era poses its own challenges not only for indi- projects, which, the the longer term, aim to pro-vidual countries but also for mankind as a whole. It vide different transnational tools for the science-is undeniable that the main challenge of the 21st innovation policy and future harmonisation of thecentury is the creation of a knowledge-based soci- regions. As a first and most important step towardsety that ensures a country’s position, its prosperity the long-term goal, there is a need to create theand status in the rapidly changing global landscape. logistical and technical frame as well as the much needed political platform. Diverse projects carriedUnarguably, modern development trends are basic- out between the scientific communities of bothally affected by overall integration. Among one these sides, clearly demonstrate the path towardsof the most affected and the targeted aspect of the achievement of the above mentioned goal.integration still remains science. Science, technol-ogy and innovation become key components in The appraisal of intellectual capitalassuring sustainable socio-economic development Traditionally, economists consider physical and humanof the state, which, in turn, encourages social inte- capital as key resources for facilitating productive andgration, enhances international cooperation and economic activity. However, knowledge, too, has beenfacilitates the dissemination of information. Inte- reorganised as a valuable resource. Alfred Marshallgration not only challenges the economy, tech- suggested that ‘capital consists in a great part ofnology and research, it also affects countries and knowledge and organisation … knowledge is our mostregions deeply to their core. Together with industry powerful engine of production’ [3]. Elaborating on thisand economy, social structures are also changing point, another economist, Quinn, mentioned that ‘theand renewing, raising new needs in society. In this economic and producing power of the firm mainly liescontext, the science sector need to adopt new roles in its intellectual and service capabilities than its hardand importance. Nowadays, the most important assets’ [4]. Although the role of knowledge has beenresource for economic development is well-edu- acknowledged long ago, its investment into everydaycated, creative human capital, and the only way to life processes came to existence later, particularly insecure this capital is by investing in human capital, some regions and states.which has become an imperative. Eventually, IC becomes a key component of mod-Assessing the huge work carried out by Prof. Leif ern development. It is now widely used to produceEdvinsson and Dr Carol Yeh-Yun Lin [1], we intend to wealth, multiply output of physical assets, gaincover a gap in their study, which, because of some competitive advantage, as well as enhance valueobjective reasons, did not cover the post-Soviet of other types of capital [5]. Investments in humanarea. Whereas, the mere numbers of some basic resources are tantamount to investments in phys-factors reveal the huge importance and potential ical assets. Although in professional literature, ICof the region. Twelve republics of the former Soviet includes different forms of capital (customer cap-Union 1 occupy more than 16 % of world territory. ital, intellectual property, structural capital) theTheir total population is nearly 300 million people, main focus of this paper will be on the humanwhich is nearly 5 % of the total world population. capital part of IC.Assessing the scientific human capital of thesestates, it is worth mentioning the following: the According to the World Intellectual Property Organi-number of people engaged in science is 583 000, sation, Intellectual Property (IP) refers to creationsof which 34 000 are doctors and 107 000 are of the mind: inventions, literary and artistic works,candidates of science [2]. and symbols, names, images, and designs used in commerce. In appraising a country’s IP, the latterThe post-Soviet countries form, in some respects, is divided into two categories: industrial property,a cultural shed between much deviating science which includes inventions (patents), trademarks,policy concepts, which either stand in the Rus- industrial designs, and geographic indications ofsian or western tradition. This divide is deepened source; and copyright, which includes literary andby language barriers. To overcome these problems artistic works such as novels, poems and plays,hampering both educational and scientific systems, films, musical works, artistic works such as draw-the post-Soviet countries and its European part ners ings, paintings, photographs and sculptures, and architectural designs [6]. Table 1 demonstrates the1 Baltic States are not included in this survey. IP of post-Soviet states (WIPO Statistics Database).
  • 125. 124 O P E N I N N O V A T I O N 2 0 1 2 Table 1. Intellectual Property (IP) of post-Soviet countries (2010) State Patent Trademark Industrial design GDP (million USD) Russian Federation 28 843 42 744 2 962 1 230.72 Belarus 3 228 4.82 277 49.04 Ukraine 2 868 17 868 1 607 117.40 Kazakhstan* 351 2 478 119 109.16 Azerbaijan* 320 1 178 25 43.02 Georgia 261 784 56 10.74 Uzbekistan 239 1 488 57 32.97 Kyrgyzstan 220 244 7 4.58 Moldova 160 1 527 171 5.40 Armenia 160 1 224 54 8.54 Tajikistan 29 206 263.89 Turkmenistan* 0 0.01 0.01 17.36 * Data provided for these states are for the previous year due to absence of current information. Viewing the process of knowledge creation, the role social knowledge. Deep integration and IT provides and importance of integration and innovation is real opportunity for exchange and development [7]. more than evident. The knowledge is being created through two generic processes, namely, combin- ation and exchange: combination as a process collaboration of post-Soviet states 1996–2010 [8]. for gathering materials and forces; and exchange combines the efforts and resources held by differ- The current state of science in the ent parties as a prerequisite for development. The post-Soviet area first condition for the above mentioned to become In Soviet times, the education and science sector reality is accessibility to the collective forms of was regulated by a centralised governing body, as Figure 1. International scientific collaboration of the post-Soviet countries (1996–2010) 120 Percentage of documents with more than one country co-authorship 100 Tajikistan Turkmenistan 80 Georgia Russian Federation Moldova Belarus 60 Armenia Azerbaijan Kazakhstan Kyrgyzstan 40 Uzbekistan Ukraine Russian Federation 20 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
  • 126. 125institutes, education and science systems of the While operating in open markets, local industriesSoviet Republics were dependent parts of the whole were faced with a necessity to compete withSoviet educational and science system. The strategy global companies. The new market rules in turnand operation of the system were strictly planned lead to new requirements by local companies inand monitored as was every other facet of institu- the education, knowledge and skills of the labourtional society. The science sector was not regulated force. Local companies o en suffer from theby free market forces: the demand-supply balance brain-drain phenomenon, given the heightenedwas more or less defined by central regulation only. international mobility of workforce [11]. IT revolution and innovations: In the era of inte-Meanwhile, the collapse of the Soviet Union did gration, the flow of information is very muchnot match a breakthrough in the R & D sector. All accelerated. It is estimated that each year theeconomic and social sectors of the newly formed existing volume of global information doubles.republics were faced with a deep crisis and chal- As a result of unveiling the past ideologicallenged by sharply decreasing state financing curtain and the information revolution, the post-[9] [10] (see Table 2). Soviet republics have gained access to global information. Alternative sources and channelsTo face the impending challenges, newly estab- of information began not only better inform thelished post-Soviet republics entered a stage of population about external opportunities, butsharp reforms and imperative developments. The their presence as information channels posesreforms and strategically important initiatives the first serious questioning of the hegemony ofwere developed in nearly all spheres. However, the Soviet (and via inertia, post-Soviet) instruction.reforms towards the reanimation of intellectual The emergence of new platforms of knowledgecapital began to be implemented only a er sig- content delivery creates demand for a new gen-nificant delay. Moreover, they were far from con- eration of specialists for both the gathering andformity with economic needs. One of the past heri- consumption of advanced technologies [11].tages still remained: a significant gap between whatindustries need and the quality of human resources. The World Bank Institute developed a Knowledge Index 2 (Table 3) to measure a country’s ability toInitiatives were launched to abolish the disconnec- generate, adopt and diffuse knowledge, represent-tion and establish linkages between knowledge and ing the overall level of development of a country ormarket. The key drivers of change in the science region concerning the knowledge economy. It dem-sector and the key trends in the sector were onstrates whether the environment is conducive forconnected to the following factors. 2 Methodologically, the KI performs the simple average of Economic integration: Economic integration has the normalised performance scores of a country or region on the key variables in three knowledge economy pillars — had several implications for former Soviet repub- education and human resources, the innovation system and lics’ labour force markets and science sectors. information and communication technology (ICT).Table 2. The dynamics of changes in the expenditure on science in CIS Republics (% of GDP)CIS Republics 1990 1995 2000 2003 2004 2005 2006 2007 2008 2009 Azerbaijan 1.00 0.30 0.30 0.30 0.20 0.20 0.20 0.20 0.20 0.20 Armenia 2.50 0.10 0.30 0.30 0.30 0.30 0.20 0.20 0.20 0.20 Belarus 2.30 1.00 0.80 0.70 0.70 1.20 0.70 0.70 0.60 0.70 Georgia 1.20 0.10 0.20 0.10 0.10 0.10 — — — — Kazakhstan 0.70 0.30 0.20 0.30 0.30 0.30 0.30 0.20 0.30 0.20 Kyrgyzstan 0.70 0.30 0.10 0.20 0.20 0.20 0.20 0.30 0.20 0.10 Moldova 1.60 0.80 0.60 0.40 0.40 0.40 0.40 0.60 0.50 0.50 Russian 3.00 0.80 1.20 1.30 1.90 1.20 1.20 1.30 1.20 1.70 Federation Tajikistan 0.70 0.10 0.10 0.06 0.06 0.10 0.10 0.10 0.10 0.10 Ukraine 2.30 1.30 1.10 1.20 1.20 1.10 1.00 0.90 0.90 0.90 CIS 1.60 0.51 0.49 0.39 0.54 0.51 0.48 0.50 0.52 0.51
  • 127. 126 O P E N I N N O V A T I O N 2 0 1 2 Table 3. The Knowledge Economy Index (KEI) of post-Soviet countries Economic Incentive and Institutional KEI Regime Innovation Education ICT Country recent 1995 recent 1995 recent 1995 recent 1995 recent 1995 Ukraine 6.00 5.97 4.27 3.18 5.83 6.10 8.15 8.26 5.77 6.32 Armenia 5.65 5.35 6.48 3.69 6.25 5.76 6.36 6.14 3.52 5.83 Russian Federation 5.55 5.73 1.76 2.55 6.88 5.64 7.19 8.12 6.38 6.60 Georgia 5.21 5.63 5.36 3.20 5.22 5.38 6.46 7.47 3.78 6.45 Moldova 5.07 5.11 4.38 3.47 4.79 4.43 6.05 7.00 5.08 5.55 Kazakhstan 5.05 5.08 4.70 2.18 3.68 4.03 7.07 7.63 4.76 6.48 Belarus 4.93 5.80 1.15 2.37 5.79 5.42 8.02 8.37 4.74 7.03 Kyrgyz Rep. 4.29 4.44 4.49 2.42 2.93 3.41 6.35 5.77 3.40 6.17 Azerbaijan 3.83 4.85 3.18 2.25 3.64 4.97 5.01 6.02 3.49 6.17 Uzbekistan 3.25 4.46 1.13 0.76 3.35 4.24 6.15 6.90 2.35 5.93 Tajikistan 3.22 4.05 2.88 0.14 2.01 3.59 5.53 6.77 2.46 5.72 knowledge to be used effectively for the economic Economic incentive and institutional regime development of the particular state [12]. provide incentives for the efficient use of exist- ing and new knowledge and the development of The knowledge economy is based on the four pil- entrepreneurship. lars, which clearly demonstrate the potential of the An efficient innovation system of firms, research particular state. centres, universities and other organisations is Figure 2. Scatter plot of citation index for 1991–2010 v million of population in CIS countries 3000 2500 2000 Citation per 1mln of population 1500 Web of Science SCOPUS 1000 500 0 ia n s e va n an an n n n ru in io ija ta ta ta en do st st la ra at zs is is ba kh ki m en Be ik ol Uk er gy be Ar er j za M d Ta km r Az Fe Ky Uz Ka r n Tu ia ss Ru Source: SCImago (2007) ( (retrieved 31 October 2011)
  • 128. 127 Figure 3. Scatter plot of citation index for 1991–2010 v thousands of researchers in CIS countries 1800 1600 1400 Citation per 1thousand people in science 1200 1000 800 Web of Science SCOPUS 600 400 200 0 ia va n e s an n an n an an ru in io ta ija en do st st ist ist ra la at zs ba ki kh m en Be ik ol Uk er gy be Ar er j za M d Ta km r Az Fe Ky Uz Ka r n Tu ia ss Ru making it possible to tap into the growing stock The current state of affairs in the science sector of of global knowledge, assimilating and adapting post-Soviet republics is demonstrated in Table 4 the latter to local needs, as well as creating new technology. An educated and skilled population can properly Meanwhile, the attempts to enact long-term policies and efficiently create, share, and use knowledge. and initiatives were soon challenged by a new reces- Information and communication technology sion, this time triggered by global financial crisis. The facilitate the effective creation, dissemination, government again diverted resources into anti-crisis and processing of information. programmes without, however, abandoning the long- term fundamental programmes aimed at increasingOnce the macroeconomic stabilisation was achieved the competitiveness of the republics’ economies.(with the support of international financial insti-tutions), structural reform programmes became The establishment of the Commonwealth of Inde-the next policy focus area. Promising GDP growth pendent States in 1991 constituted a new forumprepared the ground for a new social context for for cooperation and development for the post-the country’s development policy [13]. Structural Soviet states, which share a common past, com-reforms spread into the science sector as well. The mon threats and common needs [15]. However,prioritisation given to the science sector and the the overall integration processes demand not onlyhigh level of state intervention were supported by regional cooperation. The European Union and thesignificant budget allocations for education and sci- integration of some post-Soviet states into the EUence. Some of the positive effects on the educational greatly affected the R & D sector of the mentionedsector and the overall economy were highlighted by: states. These alterations have demonstrated the necessity, along with the economic and political boosting innovation and technological progress; unity, to implement the tasks, aiming to unify the linking education and the learning process with social, scientific and educational systems as well. science; To these ends, initiatives and reforms have been linking science with industry; undertaken to harmonise different sectors to that the opportunity for internationalisation. of the EU [16] [17].
  • 129. 128 O P E N I N N O V A T I O N 2 0 1 2 Table 4. Post-Soviet countries ranking by the publication activities (1996–2010) Country Documents Citable Citations Self- Citations per H documents citations dvocument index 479 095 474 317 2 288 869 693 521 4.87 274 Ukraine 88 612 87 669 320 194 92 231 3.71 118 Belarus 20 414 20 257 85 425 18 429 4.26 86 Armenia 6 990 6 865 45 442 8 353 7.03 83 Georgia 6 056 5 894 36 333 4 875 7.16 67 Moldova 3 642 3 605 18 448 3 854 5.29 47 Uzbekistan 6 037 5 943 20 037 4 039 3.50 46 Kazakhstan 4 088 4 028 13 388 2 067 3.61 41 Azerbaijan 5 252 5 189 10 686 2 764 2.55 35 Kyrgyzstan 733 727 3 337 320 5.12 27 Tajikistan 673 666 1 616 254 2.55 20 Turkmenistan 123 121 833 34 6.19 12 Funding is largely connected with funding. Using modern The role of funding is undeniable for the further societal innovations, this problem can be solved development of science, research and innovation. by also attracting private capital in the develop- The fundraising processes are in a very poor pos- ment of science, particularly private contributions ition in the mentioned states, which were further and launching different social initiatives, aiming at challenged by the overall world economic situation. combining possible resources towards the revival of A er the collapse of the Soviet Union, there was the science sector. a sharp decrease in the financing of science. The global economic crisis revealed that post-Soviet However, despite multiple challenges, IC in some republics’ economies are more vulnerable to exter- republics holds promise, particularly from the per- nal events. Still, the wealth of the nations is highly spective of economic competitiveness. Bearing in dependent on technology innovation, which devel- mind past experiences and mental threats, there is ops with high speed. In line with new imperatives, a possibility to adopt new societal innovations and there is a constant need for societal progress, which make a breakthrough. Figure 4. Post-Soviet countries ranking by H-factor (1996–2010) 300 250 200 H-factor 150 100 50 0 a n e s ia va an an n n an an ru gi in io ija ta en do st st ist ist or la ra at zs ba ki kh m Be en ik ol Uk Ge er gy be er Ar j za M d Ta km r Az Fe Ky Uz Ka r Tu n ia ss Ru
  • 130. 129Figure 5. Post-Soviet countries ranking by per document citation (1996–2010) 8 7 6 5Citation per document 4 3 2 1 0 Georgia Armenia Turkmenistan Moldova Kyrgyzstan Russian Belarus Ukraine Kazakhstan Uzbekistan Azerbaijan Tajikistan Federation [8] SCImago (2007), (http://www.scimagojr. com)Contacts (retrieved 31 October 2011). [9] 20 years of CIS: (2004) N18, p. 69; (2006) N18,Dr Naira Ayvazyan p. 61; (2007) N18, p. 86; (2008) N18, p. 65; (2009)Head of the Center for Scientific Information N19, p. 8; (2011), CIS Statistical Bulletin, Special Issue,Analysis and Monitoring Interstate Statistical Committee of the CommonwealthYerevan, Armenia of Independent States ( [10] ‘Science of Russia in numbers, Statistical collection’ (2004), CISN, p. 194, Moscow.Edita Gzoyan [11] Egorov G. N. (2000), Economic Transformation,Researcher in the Center for Scientific Information Industrial potential and current status of IntegrationAnalysis and Monitoring of the CIS countries: the role of Science and HighYerevan, Armenia Technology, UN Industrial Development Organization, Vienna ( [12] 2010,2011), The Competitiveness Reports 2005–2006,[1] Edvinsson, L. and Yeh-Yun Lin, C. (2011), ‘Mapping 2006–2007, 2007–2008, 2008–2009, 2009–2010,the intellectual capital of nations’, in Service Innovation 2010–2011 ( 2010–11, pp. 134–137, Publications Office of [14] http://www.scimagojr.comthe European Union, Luxembourg. [15] Official website of the Commonwealth of[2] Novojilov, E. (2011), ‘CIS: 20 years together on the Independent States ( of creation’, Journal of Science and Innovation,Special issue, p. 3. [16] Budaghyan, A. S. and Sargsyan, Y. L. (2007), Towards European Higher Education Area (EHEA)[3] Marshal, A. (1965), The agents of Production. Land, through Bologna Process — Current State, Developmentlabor, capital and organization, Book IV, p. 115. Trends and Problems of the Bologna Process in EHEA and Armenia, National Center for Strategic Research in‘Leveraging Intellect’, Journal of the Academy of Higher Education, Yerevan.Management Executive (1993–2005), Vol. 10, No 3, [17] Higher Education Governance (2005), Report Npp. 7–27 ( 1538520 of the World Bank (http://www-wds.worldbank.[5] org).[6] World Intellectual Property Organization([7] Nahapiet, J., Ghoshal, S. (1998), ‘Social Capital,Intellectual Capital, and the organizational Advantage’,Journal of the Academy of Management Review, Vol. 23,No 2, pp. 242–266 (http://
  • 131. 130 O P E N I N N O V A T I O N 2 0 1 2 3.8 Dialogues Incubator: open service innovation in the financial sector Logica and Dialogues Incubator (Corporate Venture issues. The DI team is dedicated to capturing the of ABN AMRO bank) are successful partners in essence of the transient economic and social environ- open service innovation, value creation and valori- ment and does so with a fresh perspective, commit- sation of intellectual capital. This article illustrates ment and entrepreneurial spirit. The goal is to utilise a case study of Dialogues Incubator (DI) as an open potential at hand to launch a multitude of new com- service innovation enabler in the financial sector. It panies that will help a different sort of economy to describes some of the representative DI partner- grow: one that is genuinely sustainable — socially, ship projects which were selected for the EU study environmentally and economically. Development at OSI: Socio-Economic Impact of Open Service Inno- Dialogues Incubator is a collaborative, action-learn- vation supporting the Digital Agenda for Europe ing approach that maximises value for people, prof- led by Logica Business Consulting [1]. This paper itability and environment. Example ventures include also introduces the challenges that actors face in ARTSTART (trading art and education art buyers) [4], open innovation processes, the lessons learnt and Associates (freelancers’ platform) [5], Dialogues Tech- observations for future considerations. nology (agile ICT development) [6] and BrightboxHR (best practice HR solutions for corporates) [7]. Facilitating innovation and entrepreneurship in financial services Dialogues Incubator operates in the field of open Since August 2007, part of the ABN AMRO Bank [2], services innovation (OSI). To successfully imple- the Dialogues Incubator [3], has been conceived to ment OSI, Dialogues Incubator: (i) leverages its own create value in a rapidly moving society, with the 21st and partners’ intellectual to create a competitive century edge that it requires. The core of Dialogues advantage; (ii) calculates results in financial and Incubator constitutes of research and development non-financial metrics; and (iii) facilitates its people in for ABN AMRO Bank. DI is a combination of corporate real innovation by having a climate in which failures venturing with open innovation research in the field are okay, if they happen despite best intentions (so- of financial services. ‘Dialogues’ stands for business called combinatoric innovation [8]). cooperation, innovation and sustainable responsi- bility. DI matches real ABN AMRO expertise, human In 2010–11, ‘Dialogues Incubator’ was selected as and intellectual capital and actual market needs to an innovative, successful and representative case provide solutions to real people, business and social study for the EU study OSI: Socio-Economic Impact Figure 1. ABN AMRO Dialogues house: Open innovation environment [9]
  • 132. 131of Open Service Innovation led by Logica BusinessConsulting supported and assigned by the European on its knowledge and financial valorisation jointCommission’s Directorate-General for the Informa- venture initiatives iDexpress and Seeds.tion Society and Media in support to the Europe 2020agenda and the Digital Agenda for Europe [1]. iDexpress puts inventions of inventors, research- ers and corporate product development groups onThis case focuses on the broad field of crowdfund- the market by actively bringing these parties intoing and knowledge valorisation. Two projects are contact with investors and companies (matchmak-active in this area: iDexpress [10] and Seeds [11]. ing). iDexpress can also put research questions toiDexpress started in 2010; Seeds is to be launched its own inventors’ network for the benefit of organi-in the first quarter of 2012. sations that do not have a solution for their busi- ness challenges. iDexpress has been active on theBoth projects are in a beta phase: open to public, market since Q1 2010.but dynamic in their growth and strategy. Partnersmay join or stop, depending on the results for the Seeds will be launched as online crowdfundingcoming period. platform where new ventures with funding needs between EUR 35 000 and EUR 150 000 are intro-The case is an example of the difficulties and chal- duced to a large group of informal investors. Theselenges companies have to overcome in creating joint informal investors have the possibility to participatebusiness value. The aim for both projects is the gen- in one of these ventures, by making an investmenteration of business and social value for all parties of a minimum of EUR 20.involved. The innovation methodology used duringthis project is Dialogues Scrum [12], along with sce- The productivity growth of Dialogues Incubatornario analysis and business model generation. achieved with open service innovation is estimatedTable 1. ParticipantsParticipants ABN AMRO Bank ABN AMRO is a large bank, headquartered in Amsterdam, the Netherlands. ABN AMRO has large commercial and consumer operations in several countries. Role as network partner Dialogues Incubator Dialogues Incubator is a subsidiary of ABN AMRO Bank, focused on open innovation. Role as facilitator, physical location for team, business development knowledge, connection to crowdfunding, ICT related issues NOVU NOVU is the Dutch organisation of inventors, product developers and researchers and based in Utrecht in the centre of the Netherlands. The organisation looks a er the inter- ests of its members in the widest possible sense. Members include company employees as well as individual inventors whose main activity is inventing. At the moment there are over 1.000 members. Partner in iDexpress. One of the objectives of NOVU is networking among the individual members. Role: adding network and specific knowledge on patents and inventions Dutch Dutch is part of the Dutch group, which includes the joint activities of consultancy firm Dutch, the scientific part Decide and D-W&S Interim management. Dutch provides advice and implements it. Approach is characterised by close collaboration, equality and a commitment to results. Services are focused on the most important business issues of today: value creation, risk management and/or cost optimisation. Partner in iDexpress. Province of Utrecht Provinces do the work too small for the State and too big for the municipalities. The Province of Utrecht consists of 29 municipalities. Provinces solve regional problems and create jobs and value for her inhabitants. Partner in iDexpress. Role: financial aid to the project, connections to other partiesSeeds Dialogues Incubator Dialogues Incubator is a subsidiary of ABN AMRO Bank, focused on open innovation. Role as facilitator, physical location for team, business development knowledge, connection to crowdfunding, ICT related issues Several partners SMEs to be crowdfunded, Dutch Government, several legal branches, Investment Angel networks, cannot be disclosed yet
  • 133. 132 O P E N I N N O V A T I O N 2 0 1 2 at 5–10 % year-on-year. The open service innova- have established a trust relation (e.g. TCS, Hol- tion efforts are contributing to the variety of ser- vices and new forms of revenues. Open service IIP Create, University of Amsterdam, Logica and innovation creates new markets. Within the firm, Mediaguild). knowledge is explored through knowledge exchange and leveraging intellectual capital. Within the firm, The main collaboration drivers needed to partici- there is no full understanding of the need to inno- pate in open innovation are dialogues. To under- vate breakthrough manner. Skill development stand technological trends and societal changes, within the organisation is aligned with business and DI follows an action-driven approach, in which agile development. Innovation is organised via the changes are monitored and the strongest signals incubator, open innovation lab and corporate ven- transformed into business cases and prototypes. turing group. The team consists of 40 people. Dia- If case and prototype both survive several litmus logues Incubator focuses in the people/employees tests, a new company will be formed. Crowdfunding in the broader perspective: highly analytical, but was one of those trends in which DI decided to use an action research-driven approach. Crowdfund- ing and facilitating the valorisation process gave Dialogues Incubator‘s innovation network con- Dialogues Incubator a lot of insight. Clients who sists of more than 50 national and international know the DI projects (Crowdfunding, Time Bank- organisations, 40 % of them are knowledge insti- ing, Incubation Services, etc.) view ABN AMRO as tutes, 40 % medium to large corporates and 20 % more entrepreneurial. The users are involved at all SMEs. Some 80 % of the companies are outside of the stages of innovation from process design, ser- the financial/banking sector. In the last five years, vice offering to the usability of the platform. Users/ approximately 60 % growth in the organisations of customers generally do not know that ABN AMRO DI’s innovation network can be noted. DI develops is such an innovative company. ABN AMRO is very long-term relations with innovation partners, and reluctant to open up its innovation projects to the also selects partners from the internal innovation public. This is a paradox. However, this is slowly network on a case basis. With some partners, DI’s changing. Figure 2. Dialogues Incubator typical teamwork
  • 134. 133The innovation process happens in the following If you want to succeed in services innovation,way. There is a R & D department annex to the probably the best way is either to create a per-corporate venturing group within Dialogues House, fect client experience or to go into markets nowhich is the main implementator/organiser of open one has entered before. This increases the fail-service innovation process for DI. Users are involved ure rate, but will be one of the most interestingat all the stages of the innovation process and they times of your a very important role. Innovation process as Starting up takes time and money and, most ofindicated above goes from creation to implemen- the time, more than expected and appreciated.tation involving all relevant stakeholders inside Overcoming this needs a strong vision, sup-and outside of the organisation. There is, however, ported by managing boards and strong personala barrier to the innovation process, which is that it skills of all individuals involved,is a traditional company, so innovation mostly falls IPR can be a challenge for the creative mind,under the ‘not invented here’ scenarios. so it’s better to be regulated appropriately from the start.Services innovationServices developed within Dialogues Incubator are Lessons learntmostly new to the market and always new to the Innovation is combinatoric [8]. Innovation iscompany. DI focuses on services innovation. Open based on new combinations of knowledge, ideasinnovation led to a more flexible service offer- and people with diverse backgrounds. The pro-ing: agile development is now more and more the cess can successfully be stimulated by creatingstandard. ‘The delivery speed, what a client gets is connections between people and organisations,what he has requested’ is the dominant improve- which will start a dialogue based on serendipity.ment strategy in service delivery. Equal partnershipis the strategy of the innovation partnership. The this gives the opportunity to rethink the busi-aim of any partnership is to create common values, ness model and improve your service. Think big,generate and share knowledge and joint venture. start small and accelerate fast. Make money scarce and not the goal of yourDI creates and implements the innovation. It is not project. Scarcity will let you focus and differentinterested only in creating, but also practicing what (also non-financial) goals will give your projectit preaches and also learning from implementation. team an opportunity to explore different meansThe main incentives for innovation for at Dialogues to generate results.Incubator are venturing, worthwhile research and Investigate areas of taboos and unwrittengenerating a better world. Main innovation drivers rules in your organisation: failing can be one,are finding new markets and revenues and exploring also dependence of metrics and strategy innew business models to understand new economic firms provide a vast area of opportunities formodels. However, corporate dynamics and changing innovation and breaking out of the ordinary.strategy prevent open innovation flourishing at DI. ObservationsChallenges As both projects have recently been started/ Open innovation is challenging because it launched (in less than 18 months), it is difficult involves many actors in the openness. This to measure concrete financial and non-financial means having to deal with corporate politics results. Due to different stakeholders, financial and changing strategy during the project. This information and some partner information cannot may also include different roles in the project be disclosed yet. Last but not least, the financial as insights evolve also during the project, not sector has been going through a very turbulent time. just beforehand. A good SWOT and stakeholder Corporate dynamics and (un)desired connection to analysis can solve part of the puzzle, although strategy have been more intrusive than the normal part of it is emergent. The solution to this is to changes in the environment would have been. create flexibility in the process. The last solution is to think of networked innovation. We expect that this case study has advanced the A service is difficult to protect and easy to copy. quest for successful service innovation by adding The combination of the actors and intellectual serendipity, daring to be different (and possibly fail) capital create lasting value. It takes time to fig- and focusing on bringing intellectual capital to the ure out what combination and people work best chessboard. together. Agile development and trust in each other can overcome this barrier.
  • 135. 134 O P E N I N N O V A T I O N 2 0 1 2 Contacts Dr Gohar Sargsyan, MBA Senior Business Consultant Logica Netherlands Jaspar Roos Chief Inspiration Officer Dialogues Incubator, Corporate Venturing of ABN AMRO bank Netherlands References [1] Europe’s Information Society Thematic Portal, Newsroom (2011), OSI: Socio-Eonomic Impact of Open Service Innovation, (SMART 2009-0077) ( ). [2] ABN AMRO Bank ( [3] Dialogues Incubator — Research and development for ABN AMRO Bank ( [4] ARTSTART (2009), Trading art and education art buyers ( ( [6] Dialogues Technology (2009), Agile ICT development ( [7] BrightboxHR: best practice HR solutions for corporates ( [8] Iske, P. (2010), Combinatoric Innovation — Environments for creation and mobilization of intellectual capital, Inaugural speech, Maastricht University, the Netherlands. [9] Kritsilis, D. (2009), ABN AMRO Dialogues House: Open innovation environment. [10] iDexpress (2010) ( [11] Seeds (2010) ( [12] Sutherland, J., Dialogues Scrum based on Scrum methodology (
  • 136. 135ANNEXOpen Innovation Strategyand Policy Group (OISPG)
  • 137. 136 O P E N I N N O V A T I O N 2 0 1 2
  • 138. European CommissionOpen Innovation 2012Luxembourg: Publications Office of the European Union2012 — 136 pp. — 21.0 x 29.7 cmISBN 978-92-79-21461-5doi:10.2759/67300
  • 139. HOW TO OBTAIN EU PUBLICATIONSFree publications:• via EU Bookshop (;• t the European Union’s representations or delegations. You can obtain their contact a details on the Internet ( or by sending a fax to +352 2929-42758.Priced publications:• via EU Bookshop ( subscriptions (e.g. annual series of the Official Journal of the European Unionand reports of cases before the Court of Justice of the European Union):• ia one of the sales agents of the Publications Office of the European Union v (
  • 140. KK-32-11-939-EN-Cdoi 10.2759/67300