Pwc transformative power-of-service-innovation

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According to this new report by PwC, innovation can no longer be considered as a purely technological endeavour aimed at developing products and processes.Service innovation comprises service concepts such as new or improved services as well as introduction of service process innovation, service infrastructure innovation, customer process innovation, business model innovation, commercialisation innovation (sales, marketing and delivery), service productivity innovation and hybrid forms of innovation used by several user grioups in different ways simultaneously.



Service innovation not only covers innovation in services, service sectors or service industries that are provided by service entrepreneurs and service firms, but also innfluences manufacturing industries through the involvement of new collaborative digital services, adding further value and signifcantly contributing to overall productivity and profitability.

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Pwc transformative power-of-service-innovation

  1. 1. www.pwc.lu Transformative Power of Service Innovation Call for Action on New Policy Framework (PART I/III)Definition, Trends,Instruments andChallenges forPolicy-MakersLaurent Probst,PartnerDr. Nuray Unlu Bohn,ExpertJanuary 2013
  2. 2. This publication is exclusively designed for the general information of readers and is (i) not intended to address the specific circumstances of any particular individual or entity and (ii) not necessarily comprehensive, complete, accurate or up to date and hence cannot be relied upon to take business decisions. Consequently, PricewaterhouseCoopers, Société coopérative (“PwC Luxembourg”) does not guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. The reader must be aware that the information to which he/she has access is provided “as is” without any express or implied guarantee by PwC Luxembourg. PwC Luxembourg cannot be held liable for mistakes, omissions, or for the possible effects, results or outcome obtained further to the use of this publication or for any loss which may arise from reliance on materials contained in it, which is issued for informative purposes only. No reader should act on or refrain from acting on the2 basis of any matter contained in this publication without considering and, if necessary, taking appropriate advice in respect of his/her own particular circumstances. PwC
  3. 3. Table of Contents 1 Introduction 3 2 Service innovation concept 6 3 Global trends 22 4 Key concepts and instruments in support of service innovation 31 5 Key challenges & barriers linked to service innovation 41 6 Conclusion 45 Transformative Power of Service Innovation, Call for Action on New Policy Framework   1
  4. 4. 1 Introduction 2 3 4 5 62 PwC
  5. 5. 1 2 3 4 51. Introduction 6Innovation can no longer participants, and the creation of Living Lab Organisations to experiment thebe considered as a purely theory in real-world settings3. In parallel, the Large-Scale Demonstrator concepttechnological endeavour was emerged in order to analyse and address the issues (e.g. interoperability,aimed at developing products lack of standards, etc.) related to service innovation with the involvement ofand processes. Today, innovation involves services various stakeholder groups, sectors at regional/multinational levels for that create new channels to the market, accelerating the market access by new business processes and new demonstrating the effectiveness of organisational and business structures new technologies (e.g. key enabling to better meet the consumer’s needs technologies) and services at pre- and expectations. Meanwhile, the market scale. The roles of Innovation- Open Innovation concept, which has based Incubators and Accelerators been defined as “the use of purposive involving service innovation into their inflows and outflows of knowledge scope, Clusters, Social and Business to accelerate internal innovation and Networks, Alliances as well as expand the markets for external use of Innovative Public Administrations innovation, respectively”1, has emerged are also recognised crucial in boosting as a new model of industrial innovation. service innovation. An important new development within Service innovation comprises service open innovation is its increased use in concepts such as new or improved service businesses, leading to Open services as well as introduction of Service Innovation. This involves a shift service process innovation, service in innovation from a product mindset infrastructure innovation, customer to a service mindset by placing the user process innovation, business model at the centre of innovation. In the field innovation, commercialisation of open service innovation, this finds its innovation (sales, marketing, and expression in the emerging concept of delivery), service productivity Public-Private-People-Partnerships innovation and hybrid forms of (PPPP)2, which are composed of innovation used by several user groups universities and research organisations, in different ways simultaneously. Service entrepreneurs, public entities and user innovation not only covers innovation communities (also known as quadruple in services, service sectors or service helix), with the involvement of society industries that are provided by service at the centre. Recent years have entrepreneurs and service firms, but seen the development of Living Lab also influences manufacturing industries methodologies, involving users as co- through the involvement of new creators on equal grounds with the other collaborative digital services, adding further value and significantly 1 Open Innovation: Researching a New Paradigm (2006). Chesbrough, H., Vanhaverbeke, W. & West, J. Oxford University Press., UK 2 OSI Socio-Economic Impact of Service Innovation 3 Service Innovation Yearbook 2010-2011 (2011) (2011) European Union: European Union: http://files.openinnovation-platform.eu//policydocs/ http://files.openinnovation-platform.eu/yearbook/ osi_study_final_report.pdf service_innovation_yearbook_2010_2011.pdf Transformative Power of Service Innovation, Call for Action on New Policy Framework   3
  6. 6. contributing to overall productivity Even though there is an increasing Part-I of this series aims to raise and profitability. Western economies awareness and consensus on service awareness on the transformative power are highly dependent on service innovation, the potential impacts of of service innovation by providing a view innovation for growth and employment service innovation on transforming on main industrial trends, challenges, (e.g. services industries account for industries, value chains and economic key barriers, newly emerging concepts approximately 70% of GDP). Combining patterns as well as its environmental related to service innovation at global services and technological advances and societal impacts have not been and EU level as well as key instruments in the manufacturing sector (e.g. new sufficiently analysed and documented to mainly used in service innovation for materials and processes, robotics) provide evidence to the policy-makers better understanding the “Concept of is expected to give rise to the third for the development and implementation Service Innovation” as a key factor in industrial revolution4. of evidence-based policies to unlock achieving economic transformation. the potential of service innovation. Service innovation is expected to Part-II will focus on the support the Europe 2020 Strategy Service innovation is expected to achieve “Transformative Power of Service by stimulating smart growth (mobile economic transformation by reforming Innovation” by providing case studies Internet, cloud computing, ICT services, traditional industries as well as boosting at the regional level by illustrating growing sensor networks) to capture, the development of newly emerging the transformative power both on the store, manipulate and communicate industries. In order to make it happen, traditional and the emerging industries increasing quantities of information smart policy mixes involving smart as well as the economic, environmental to fixed or mobile network devices, specialisation and cluster strategies and societal impacts at the regional thus transforming the everyday lives should be developed for strengthening level. of people and businesses. Regarding the competitiveness of businesses, sustainable growth, new services notably SMEs. The fast strategic move Part-III will provide “Policy increasingly enable a shift towards more to a customer-oriented approach at Recommendations” based on the intelligent use and reuse of resources firm level as well as the impact of best practices as well as failures and that will enable firms to capture the introduction of new enabling identified gaps on how to achieve significant global market shares in technologies, new products, processes, economic transformation at regional, high-value markets such as intelligent and services in business have led policy- national and supra-national levels. transport systems and environmental makers to reassess their economic impact management. Innovations in development strategies and innovation service systems are expected to ensure policies. The challenge is how to shift inclusive growth first by reaching out the focus onto customer issues and how and supporting marginalised groups to reshape industry models accordingly via smart infrastructures and, second, into an ecosystem with supportive policy by developing the skills and supporting environment. the active involvement of such groups in modern society. PwC intends to raise awareness on the “Transformative Power of Service Innovation” by addressing different aspects within the scope of three consecutive articles. 4 Manufacturing and Innovation: A third industrial revolution (April 21, 2012). The Economist4 PwC 4 PwC
  7. 7. 123 Service innovation concept456Transformative Power of Service Innovation, Call for Action on New Policy Framework   5
  8. 8. 2. Service Innovation Concept Service innovation not only • Service industries and service sectors in the customer interaction channel, comprises innovation in (also including public sectors) refer to a new distribution system, a novel official macro-economic classification application of technology in the service services, service sectors or systems. A service company or service process, new forms of operation with service industries that are firm refers to a company that is officially the supply chain, new ways to organise provided by service classified as belonging to a service and manage services or a combination entrepreneurs and service industry or sector. of these. A service innovation always firms but also takes place in • Service provider is used to refer to all includes replicable elements that can be manufacturing industries, kinds of companies that provide services identified and systematically reproduced as a part of their activities. in other cases or environments. The leading to an increase in replicable element can be the service overall productivity and • Service business is a term that is heard outcome or the service process as such profitability. in everyday language, but it is often or a part of these. A service innovation ambiguous as it may refer to a service benefits both the service producer and provider, a specific service sector, or 2.1. Definition to different business models based on customers and it improves competitive advantage. A service innovation is a services. Therefore, the term “service The terminology on services and service product or service process that business” is best avoided. service innovation varies considerably. is based on a technology or systematic • Service innovation is a new or method. In services, innovation does The definitions used in the “European significantly improved service concept Policies and Instruments to Support not necessarily relate to the novelty of that is taken into practice. It can be the technology itself, but the innovation Service Innovation (EPISIS5)” study either in the form of a new solution aiming to facilitate transnational often lies in the non-technological areas. cooperation between policy-makers and innovation agencies in the field of Innovation in services can be defined as6: services innovation through parallel policy, strategic and operational level “A new or considerably changed service activities were: concept, client interaction channel, service • Service activities are used as a delivery system or technological concept that common headline for all economic individually, but most likely in combination, activities based on services that aim to provide added value for companies. leads to one or more (re)new(ed) service The term “activities” was selected functions which are new to the firm, change to highlight the process nature of the services/goods offered on the market and services, so this intends to cover firms in the manufacturing and service require structurally new technological, sectors and their significance across human or organisational capabilities of the the industries. service organisation”. • 5 EPISIS Final Report of Task Force 1: Service typologies and tools for effective innovation policy development (2011): www.proinno-europe.eu/projects/episis6 PwC
  9. 9. 1 2 3 4 5 6This definition distinguishes between It is important to clearly understand the Another approach shows the differencesseveral types of technological profiles taxonomy by distinguishing between between four key categories on the basisand between three types of non- “innovation in services” and “service of their intrinsic characteristics and theirtechnological innovation6: innovation”, as indicated in Table 1. innovation processes: The first concerns the innovative change • knowledge-intensive,1. new services concepts; within the service activity or sector itself. The latter refers to the innovative change • network-intensive,2. new interfaces with clients; in those organisations or companies • scale intensive,3. new systems of service delivery. that use innovative services or those • external innovation-intensive. engendering innovation. It is worth highlighting that the majority Service innovation affects growth by means of the approaches conducted to date of three key mechanisms: refer to modes I and III. However, quantitative approaches are based only • As services comprise around 70% of on modes I and II, since the lack of data activity in advanced economies, their regarding service activities hinders innovation process will be essential for quantitative approaches to the analysis the group of innovative systems and of modes III and IV7. their impact on growth; • Certain services were and are essential in the development of some technological innovations;Table 1: Modes of service innovation7 • Business services, especially Knowledge-Intensive Services (KIS), are used as intermediate inputs in Innovation in services Service innovation (supply approach) (demand approach) production, due to their positive effects on innovation in those Service companies Innovative services companies Use of innovative services (Mode I) companies (e.g. external KIS) companies that make use of these (Mode II) services. This includes impacts on Service activities Innovative services Use of innovative services manufacturers that provide products (any sector) activities activities (e.g. internal or for the service sector. (Mode III) external KIS) (Mode IV)*Knowledge-Intensive Services6 Van Ark, B., Inklaar, R. and McGuckin, R. (2003a), “ICT and productivity in Europe and the United States. Where do the differences come from?” , Research Memorandum, Groningen: GGDC. Van Ark, B., Melka, J., Mulder, N., Timmer, M. and Ypma, G. (2003b), “ICT investment and growth accounts for the European Union 1980–2000” , Research Memorandum, GD-56, Groningen: GGDC. Van Ark, B., Broersma, L. and den Hertog, P. (2003c), Services innovation, performance and policy: a review. Synthesis report in the framework 7 Promoting innovation in the services sector. of the SID project (structural information provision Review of experiences and policies. United on innovation in services), The Hague: Directorate- Nations. New York & Geneva, 2011: General for Innovation, Ministry of Economic http://www.unece.org/fileadmin/DAM/ceci/ Affairs. publications/icp3.pdf Transformative Power of Service Innovation, Call for Action on New Policy Framework   7
  10. 10. Table 2: Types of innovation that promote business services7 Innovative Main innovation Business services Functions components (some representative activities) Technological • Major technology incorporation • Computing services Innovation • Major use of existent technology • Engineering services • Technological adaptation to the business necessities • Design services • Efficiency in the information and communication advanced processes • Communication services • Automation of routine processes • Electronic on-line communication services • Enhanced flexibility of productive structures • Quality control services • Improvement in quality Organisational • Efficient internal organisation • Efficient internal organisation Innovation • Integration of control and coordination processes • Integration of control and coordination processes • Improved selection, training and use of human factor • Improved selection, training and use of human factor • Improvement in different functional specialisations • Improvement in different functional specialisations • Management consultancy • Management consultancy • Legal audit and services • Legal audit and services • Personnel services (selection, training and part-time jobs) • Personnel services (selection, training and part-time jobs) Strategic • Flexibility for dynamic environments • Flexibility for dynamic environments Innovation • Positioning in complex markets • Positioning in complex markets • Strategic information on alliances • Strategic information on alliances • Information on product adequacy • Information on product adequacy • Information on allocation and markets • Information on allocation and markets • Defense in an adversarial legal environment • Defense in an adversarial legal environment • Management services • Management services • On-line services • On-line services • Audit services • Audit services • Legal services • Legal services • Fair and exhibition services • Fair and exhibition services • Market studies • Market studies Commercial • Competitive product design • Competitive product design Innovation • Innovative commercialisation • Innovative commercialisation • Major use of opportunities • Major use of opportunities • Business development • Business development • Innovative Marketing • Innovative Marketing • Image and branding • Image and branding • Design services • Design services • Exhibitions • Exhibitions • Advertising • Advertising • Direct marketing • Direct marketing • Public relations • Public relations • After-sale services • After-sale services Operative • Functional work division • Functional work division Innovation • Focus on core activities • Focus on core activities • Operative consideration • Operative consideration • Image consideration • Image consideration • Language services • Language services • Courier services • Courier services • Security services • Security services • Operative services • Operative services8 PwC
  11. 11. 1 2 3 4 5 6The strategic role of business services Furthermore, potential service activities The changed perception of the servicesin industry is associated with their that may possess this transformative sector over the last years is mainlyinnovative nature. This function can power can be listed as: due to the acknowledged and growingbe better understood by analysing the 1. Networking, connecting and importance of KIS as a significant sourcefive types of innovation that promote brokerage services linking of growth. The recent growth of KIS isbusiness services: technological, consumers, firms and supply chains partly due to the outsourcing of businessorganisational, strategic, commercial aiming at improving the allocation support processes. KIBS are defined9 asand operational, as shown in Table 2. and distribution of goods and “services that involve economic activities information in society; which are intended to result in the creation, accumulation or disseminationTransformative services 2. Utility and infrastructure services of knowledge”. Furthermore, these are (e.g. telecom, energy, waste disposal) activities which enable and maintainServices are defined offering high value added to their various business processes, involve highas transformative customers; professional skills and knowledge, relywhen they disrupt 3. Knowledge-Intensive Business on advanced technology and strategic inputs, use their knowledge to producetraditional channels Services (KIBS) supporting their customers’ innovation processes. intermediary services for their clientto market, business Typical for these activities is that they industries, and supply their outputprocesses and adapt technologies to the customers’ mainly to other businesses. In addition, KIBS are seen as a parallel knowledgemodels, to enhance needs. Thus, acting successfully in this infrastructure in the national innovationcustomer experiences business requires understanding the technologies, structure, functioning and system contributing to the nationalsignificantly in a way features of the specific businesses in competitive advantage10.which impacts upon which their customers may operate. The This transformation is kicked off andthe value chain as a effects and impacts of these services are seen in the client industries for example supported by service innovations aswhole8. as new service offerings, new business their production calls for cooperation and bundling of intermediate inputs models, new customer interfaces, entry from various industries. The traditional into new markets, changes in delivery industries begin the transformation and payment systems and finally as into emerging industries starting from increases in efficiency and productivity. the design and engineering phases of These changes won’t, however, remain production. Services which apply or are within the enterprise, but will very likely based on Key Enabling Technologies spill-over to benefit the economy and (KETs) play an instrumental role in society at large. shifting production processes towards a more output-oriented (and therefore service-oriented) approach. 9 Miles, I. (1995) Services Innovation: Statistical and Conceptual Issues. DSTI/EAS/STP/NESTI (95)23.8 Expert Panel on Service Innovation: 10 Hertog P D (2000) Knowledge-Intensive Business http://www.europe-innova.eu/web/guest/ Services as Co-Producers of Innovation. innovation-in-services/expert-panel/publications International Journal of Innovation Management 4: 491–528. Transformative Power of Service Innovation, Call for Action on New Policy Framework   9
  12. 12. While the transformation of 2.2.1. Intangibility Intangible value is based on a variety manufacturing processes is an of elements such as brand, experiences, important and tangible component of In the world of services, there is greater reputation, trust, and knowledge. service innovation, the significance intangibility. Often, customers need Intangibles are becoming increasingly of companies relying less on new to explain more about what they need important in services as well as in manufacturing processes should not be in the way of services, and their needs manufactured products. For example, disregarded. ICT, financial, business often vary from one organisation to the the recognition of design and creativity and engineering services companies are other. Suppliers in turn can no longer as drivers of innovation, renewal, and embedded within all industry sectors follow a “one size fits all” approach to modernisation is significantly increasing and have demonstrated their ability to serve these customers. They need to by other industries. The rise in the raise large amounts of funds and to be figure out not only how to meet customer importance of intangible assets is likely visible targets for potential acquirers. needs, but also how to do this profitably. to continue, but not all countries have Over the last 5 years, they have widely This introduces a tension between been able to unleash innovation at the contributed to profound market standardisation (which makes service same rate or harness the productivity transformations and are considered to be provision more cost-effective for the boost that intangibles can bring12. essential contributors to the growth of supplier) and customisation (which emerging industries in Europe11. more closely matches the customer’s needs, but may require different solutions for each customer). 2.2. General characteristics of Figure 1: Service Innovation Triangle12 service innovation Services currently account for approximately 70% of employment and VALUE: Innovation Outcomes GDP in Europe. The specific features Value Layers of Innovation of the services sector call for a specific Sup policy mix by fully comprehending its plie ers rs Business tom specific characteristics as summarised Model C us MANAGEMENT: below. Service Customer Innovation Ability Operations Experience Technology People RESOURCES: Tangible Financial Intangible Innovation Capacity Assets Assets Assets Service Firm 12 EPISIS Conference Proceedings on positive 11 European Cluster Observatory (ECO)-Phase III impacts of Service Innovation: From Intangible Study (2011-2013). Conducted by PwC for the Investments to Emerging Industries and European Commission, DG-ENTR. Ecosystems (4-5 June 2012) Helsinki, Finland.10 PwC
  13. 13. 1 2 3 4 5 62.2.2. Interoperability Figure 2: Intellectual Property Strategies for Innovative Service ProvidersInteroperability between functionalitiescommon to all applications is a key aspectand covers issues like identity management, Registered Trademarkstrust, security, mobility, service roaming Registered Unregistered Trademarks Designs(geographically and over different devices),financial cross-border transactions andintellectual property rights (IPRs). Open Utility Unregistered Models Designsinnovation is essential for the servicesindustry in order to profit from theeconomic and social benefits generatedby interoperability. It provides several IP Copyrightdirect benefits to service providers and — Patents Rightsconsequently — consumers by deliveringproducts and services which are betteradjusted to the market, more flexible coststructures, increased creativity, adaptability, Know-how Database Rightseasier access to knowledge, and quicker andcheaper innovation cycles. Comprehensiveinteroperability between functionalities is Trade Secrets First Mover Advantageessential not only on a technical level, but Confidential Infoalso on a service convergence level13.2.2.3. IPR managementfor service innovation Creative Commons (CC) Meanwhile, during recent years, open (www.creativecommons.org), a non-profit (service) innovation conceptThe benefits of patenting include the organisation, is offering free legal tools (see Section 4) has been well recognisedprotection of inventions from copying in order to enable the sharing and use of as a means of obtaining a competitivewhich enables them to be exploited through creativity and knowledge for the last 10 advantage on a highly competitive marketlicensing, thus preventing the duplication years. CC licenses are not an alternative to by the active involvement of differentof effort. By definition, patents were created copyright, but work alongside and enable stakeholder groups on the innovationfor new technical inventions, and are not the innovator to modify the copyright terms. process. However, as a co-creative processnecessarily best suited to other areas, such It makes it possible to give other people the among different stakeholder groups that areas services. Many innovations in services, right to share, use, edit, remix, and even not totally formal organisations, it requiressuch as new business models or technology build upon the existing work within the a challenging legal and policy frameworkdriven organisational innovation, do not boundaries of copyright law. It offers a big particularly for IPR management. For thismeet patent protection requirements so that pool of CC-licensed creativity to the ones reason, effective strategies are needed bothexisting IPR mechanisms are difficult to looking for content (e.g. songs, videos, for formal and informal IP protection inapply. For this reason, informal IP protection scientific and academic material) to be used order to address the following issues on14:is more prevalent in the case of services. This freely and legally while aiming to maximise • IPR management in open (service) lead to the emergence of additional ways of the interoperability of data. innovation;protecting and rewarding IP as illustrated inFigure 2 (www.proinno-europe.eu). 14 OSI Socio-Economic Impact of Service Innovation (2011) European Union:13 Service Innovation Yearbook 2010-2011 (2011) http://files.openinnovation-platform.eu//policydocs/ European Union: osi_study_final_report.pdf http://files.openinnovation-platform.eu/yearbook/ service_innovation_yearbook_2010_2011.pdf Transformative Power of Service Innovation, Call for Action on New Policy Framework   11
  14. 14. • The role of the user as an innovator on new generation of talents shaping new view, investment readiness and investor user-driven innovation; ideas, and new prototypes and services awareness training is needed to attract • Interoperability standards. Deeper generated by these new structural private investment, especially in emerging understanding on the IP and legal issues changes. industries and services innovation. This in open service innovation can be found concept leads to the development of on the synthesis report15 aiming to open Traditionally, innovation financing different innovation funding mechanisms a deeper policy dialogue in order to involves a public entity investing seed specific to each sector. achieve right legal framework for open funding into a company or into a service innovation. This work is closely research institute project to cover the MOBICAP (Mobilise Capital for Mobile linked to the strategy work of the Open initial part of the innovation value chain. and Mobility Services) and EMMINVEST Innovation Strategy and Policy Group This would be further continued by the (European Mobile and Mobility (OISPG), which is an industrially led visionary approach of a stand-alone Industries International Investment think-tank. private investor. Programme), are two ongoing projects running under the European Mobile and In this new context, innovation financing Mobility Industries Alliance (EMMIA), There is still intense debate over the would imply a more comprehensive aiming to tackle the funding gap extent to which software patents should approach, calling on all stakeholders for early-stage mobile and mobility be granted, if at all. Important issues responsible for regional development industries and build seed funding for concerning software patents include the to contribute with a common strategy mobile and mobility services, whereby unclear boundary between patentable for the shaping of tailored framework the European venture capital community and non-patentable software, and conditions. Innovation financing would and institutional financiers are working uncertainty on the inventive and non- therefore be the outcome of a common hand in hand to better match private obviousness features of the software. design, in which risks are shared and public funds such as the Structural Additionally, most countries treat software among all participants such as supra- Funds. The expected benefits are to patenting differently. The differences national public entities and banks, boost growth in mobile and mobility on interpretation and implementation national and regional bodies, business SMEs, especially across borders, by between different countries create a angels and venture capitalists, private providing access to training, funds and barrier since software algorithms are equity funds, high net worth individuals investment networks through a web- recognised as one of the strongest tools in as well as foundations and cooperatives. based information system on financing support of service innovation. Risks would be absorbed by the fact that possibilities, training seminars and the service innovation value chain could participation in the Investment Network 2.2.4. Innovation Funding be covered at different points in time by & Clusters. Likewise, investment overlapping and diversified financing organisations will gain access to In the context of rapid transformation in mechanisms, addressing the various a professional network of promising the sectors of industry and finance, the aspects and dimensions of innovation: investments through the webinar reorganisation of innovation financing is new ideas and results, new business programmes, the networking as well as perceived to be instrumental. Financing models, new production processes, new the development of a funding facility and no longer covers product design and testing needs, new governance models cluster platform. Additionally, the cluster conception alone. It should have the and, last but not least, attracting and platform will allow innovation agencies power to address not only risks related fostering new talents. to improve not only their capabilities to new business models, but also a and knowledge in guiding local In addition to consider the value chain as a companies, but also their access to other whole, which relies both on technological 15 Intellectual Property and Legal Issues in Open international investors and innovation Innovation in Services (2009) Jacqueline Vallat. products and services in the innovation agencies. European Commission Information Society and life-cycle, one should also take into Media: http://files.openinnovation-platform.eu/policydocs/ consideration the specific funding needs Intelectual_property_policy_doc.pdf of the targeted sector. From this point of12 PwC
  15. 15. 1 2 3 4 The development of mobile banking mechanisms 5 has enabled many people with no or little access 6 to financial services, particularly in Africa, to gain access to financial services. Mobile banking offers an open multi-telecom and multi-bank access to make deposits, withdrawals and financial transactions possible between private users, banks, large public and private investors.Crowd funding has recently emergedas a revolutionary tool to raise funds 2.3. Main drivers This interaction between consumers and public and private stakeholders requiresin order to meet the funding needs of and tools for multidisciplinary and cross-sectoralcultural and creative industries, projects service innovation cooperation for the spill-over effectsand individual talents with creative to be seen. For instance, developingideas, which are considered as the core innovative services to ensure activeof service innovation. Crowd funding 2.3.1. Main Drivers ageing and ambient assisted livingis the cooperation and trust between of service innovation requires close collaboration betweenpeople who network and pool their patients, healthcare practitioners, There are two main drivers of servicemoney and other resources together, nutritionists, the medical industry, innovation: the consumer (at the centreusually via the Internet, to support medtech, pharma and ICT experts, of innovation) and the creativity.efforts initiated by other people or among others.organisations. 2.3.1.1. Consumer 2.3.1.2. CreativityIn addition to new financing mechanismsfor service innovation, financial The most productive innovation driver Creativity is believed to be the coreservices are also becoming increasingly is input from the end-user, since the driver of service innovation. For serviceinnovative in offering unique solutions, services production chain starts and innovation to take place, the creativesuch as the development of digital ends with the end-user. Thus, consumer core must meet industry and sciencefinancial services based on existing interaction with producers and service in a creative atmosphere that can bemobile networks. providers during the innovation life- stimulated regionally. cycle is essential in the generation of socio-economic added value. This OECD member countries have been concept lead to the emergence of open increasingly interested in understanding service innovation with the involvement and measuring the role of creative of all parties, from public and private industries in growth and development. stakeholders to society as a whole. Creative industries such as design, Nevertheless, collaborative vision and architecture, advertising, visual and skills in the sharing of ideas, values performing arts, and software design and processes are still lacking in open add value in several ways. They provide service innovation processes due to the cultural goods and services, create new immature innovation and R&D cultures experiences and services for users, in services firms, IP protection gaps in and support productivity in traditional open service innovation, confidentiality sectors by relying heavily on human issues, etc. capital, skills and talent. The search process for novelty is less dependent on large-scale scientific infrastructure, and such creative industries usually include a high share of self-employed and small Transformative Power of Service Innovation, Call for Action on New Policy Framework   13
  16. 16. businesses. The specificities of such industries call for differentiated policy support. The performance of those industries is poorly captured by traditional business and industrial indicators. Defining and measuring the contribution of creative industries to value added and the innovation process has yet to be developed and generalised. Local and regional administrations tend to be in a better position to identify the specificities of those activities, since the characteristics of creative assets and talents are highly contextual and access, store, transmit, and manipulate ICT has catalytic impact on the following localised. information. It plays an important key areas: role across all industries (e.g. IT, • Productivity and innovation, 2.3.2. Major tools of Service telecommunications, entertainment, by facilitating creativity and Innovation media, satellite systems, retailing, financial services, life sciences, management; Major tools in support of service healthcare services, manufacturing, • Modernisation of public services, such innovation can be listed as: Information education, etc.) as a key enabling as health, education and transport; and Communications Technologies technology for changing production, • Science and technology, by supporting (ICT), Software, Cloud Computing, work, and business methods, trade cooperation and access to information; Web 3.0, Global Monitoring Systems, and consumption patterns between • Societal challenges, such as ageing and Social Networks as explained in enterprises and consumers. ICT enables population, sustainable health, social detail below. radical changes in organisation structure care, inclusion, education, security, and in ways of learning, researching, climate change, energy efficiency. 2.3.2.1. ICT developing, producing, marketing, distributing and servicing digital and However, the ICT sector faces many The most recent technological advances traditional goods and services, while challenges in Europe, as illustrated in in ICT — often used as an extended enhancing quality of life. Figure 3. synonym for information technology (IT) — are transforming our ability to “The innovative model scenarios, collect and process information in “real time” and act upon society and changing circumstances. ICT covers sustainable economy unified communications and includes of Europe 2020 will telecommunications (telephone lines and wireless signals), computers as be based on ICT- well as necessary enterprise software, empowered citizens middleware, storage, and audio-visual and industries” systems, which enable users to create, (EFIA Mission)16 16 The European Future Internet Alliance (EFIA): http://initiative.future-internet.eu/14 PwC
  17. 17. 1 2 3 4 5 6 ICT has a large spectrum of applicationFigure 3: Major barriers of the ICT sector in Europe17 areas in different sectors such as: ICT-enabled Government e-Services Technological advances in ICT enable governments to offer a large spectrum of public services electronically, such as: orderless Service • Location-based e-services to help t &B s people in their day-to-day commutes ten or routines such as information on on weather conditions, road construction, fC traffic, walk-in health clinics, public no transit, passport services and post l La a tio digit ck offices; of Crea mark mented int Incre ero • Online renewal of IDs (e.g. driver’s ets s pe wer ans nges rab licence, health insurance card, Frag ntedchalle ilit me l ase of Se Fragocieta passport, etc.) via computers or smart y Lack of investment in to s networks Lac phones using electronic signatures; ko tru e fS • Receiving automatic e-notifications on w im kill st Insuffici lo rcr s & ybe available government services that rvic c g are most relevant to citizens at certain sin ant R&D Ri eD points of life, such as after giving birth ks (birth registration, obtaining a health e or m card, passport, etc.) w an et d ofN ut The three key themes identified Rool-o as Canadians’ expectations from government e-service delivery, which may also be common to other countries, are listed below and illustrated in Figure 4 18: • Convenience of service delivery services: Ease of access channels (e.g. via telephone, in-person, mail, smart phones, tablets, etc.) and usability; • Cost: Fees by service type and channel; • Control: Personal security and privacy. 18 Next Generation of Services: Citizen Compass: Enhancing service delivery in the Canadian Public Sector (2012) PwC Canada Public Sector17 European Commission COM (2010)245 Final/2 Publication Transformative Power of Service Innovation, Call for Action on New Policy Framework   15
  18. 18. ICT for the low carbon economy Figure 4: Citizen’s expected and demanded service delivery from both public and private sectors18 ICT provides various sustainability solutions, including: • Energy efficiency through the use of Simple, intuitive “Smart Energy Grids”; Instant access and easy-to-complete transactions • Energy efficient design and decision support tools for the optimisation of energy during systems development and operation; • Efficient water resources management; Real-time A rich, well-crafted information user experience • Energy-efficient buildings and spaces; gathering • Low-carbon multi-modal freight and logistics technologies and services; • Improved energy efficiency and reduced CO2 emissions in all modes of transport Cross-channel for passengers and goods for energy- capability - start An experience an interaction in that’s relevant positive neighbourhoods; one channel and to me finish it in another • Fully electric vehicles to lower CO2 emissions. ICT for Enterprises and Manufacturing ICT for Health, Healthy Ageing, Inclusion and Governance • Smart factories composed of control and sensor-based systems, laser systems and Specific applications of ICT for the healthcare sector include: industrial robots; • Personal Health Systems (PHS) for remote management of diseases, treatment and • Manufacturing solutions for new ICT rehabilitation outside hospitals and care centres; products; • Virtual Physiological Human (VPH) research focused on more elaborate and • Virtual factories and enterprises reusable multi-scale models and a VPH information infrastructure of larger addressing end-to-end integrated ICT repositories for the development of “Digital Patient” for better prediction and allowing for innovation and higher treatment of diseases; management efficiency in networked • Patient Guidance Services (PGS) to enable patients’ active participation in care operations and supporting the processes; emergence of ‘smarter’ virtual factories and enterprises; • Healthy Ageing focusing on the development of services, social robotics and highly intelligent environments in support of the ageing population in conjunction with • Digital Factories capable of performing Ambient Assisted Living (AAL); life cycle management, modeling, design and optimisation. • ICT for smart and personalised inclusion addressing advanced solutions to improve social and economic inclusion by designing inclusive, accessible and customisable human-ICT interfaces; • Advanced solutions for learning and skills acquisition; • Trusted governance and policy impact analysis.16 PwC
  19. 19. 1 2 3 4 5 6ICT for Learning (Technology- • Supercomputing e-Infrastructure • Leading brick-and-mortarenhanced learning) and Access to addresses the data-intensive and retailers are now using softwareCultural Resources complex challenges of modern science to strengthen their logistics and by providing new computing and distribution capabilities to increaseICT-based services are used to foster simulation capabilities (PRACE); competitiveness;e-Science, allowing instant access • Global Virtual Research Communities • Delivery companies use softwareto data and remote instruments, “in to reap the high innovation potential of networks to monitor distributionsilico” experimentation, setting up multi-disciplinary research by sharing vehicles within the distribution hubs;virtual research communities enabling best practices, software and data and • Airline companies use software totrans-national, multi institutional and to help researchers exploit the benefits price tickets, optimise routes andmultidisciplinary research collaboration. that requires enhanced training efforts yields correctly;Existing e-Infrastructures provide a to ensure optimal benefit.variety of services, such as: • Agriculture is increasingly powered 2.3.2.2. Software by software with the involvement of• GÉANT Platform (high-capacity and satellite based soil analysis linked to high-performance communication Companies in all industries, including seed selection algorithms for each research network): the world’s largest software-based industries, need to square meter; multi-gigabit communication network accept that a software revolution is • The financial services industry has dedicated to research and education, coming. Software is observed to disrupt been visibly transformed by software serving around 4,000 universities much of the value chains in industries over the last 30 years; and research centres to connect 34 that are widely considered as existing National Research and Education • Fundamental software-based primarily in the physical world: networks to form a global research transformations are commonly used network; • The automotive industry uses in healthcare and education;• E-Science Grids: meeting the software to run engines, control • National defence is becoming requirements of the most demanding safety features, entertain passengers, increasingly software-based. The scientific disciplines (high-energy guide drivers to destinations and modern combat soldier is embedded physics, bioinformatics) by sharing and connect cars to mobile, satellite and in a web of software that provides combining the power of computers and GPS networks. The trend toward intelligence, communications, sophisticated scientific instruments, hybrid and electric vehicles will only logistics and weapons guidance; e.g.: Enabling Grids for E-sciencE19, accelerate the software shift since • Transformation in the music and European Grid Infrastructure20, which electric cars are completely computer publishing industries was caused by will work in cooperation with the Life- controlled. In addition, the creation the software revolution; Science Grid Community21 to serve of software-powered driverless cars is • Development of e-tailors through the the life science community in scientific already under way; use of software for the production of domains; • Software allows designers and glasses, customised shoes and outfits• The scientific data domain (data engineers to simulate products in 3D (among other applications); infrastructure), aiming to enable as digital prototypes long before they • Smartphone-based software research communities to better are actually built. Such software can applications. manage, use, share and preserve data also be used by other departments in relevant to scientific reports, research the same company (e.g. marketing); articles, experimental or observational data, rich media etc. through user- friendly e-Infrastructure services;19 EGEE, http://www.eu-egee.org/20 EGI, http://www.egi.eu/21 LSGC, http://wiki.healthgrid.org/ Transformative Power of Service Innovation, Call for Action on New Policy Framework   17

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