How to address the grand challenges in Nordic … · How to address the grand challenges in Nordic...

How to address the grand challenges in

Nordic Countries and Europe through

demand-side innovation policies?

Dr. Seija Kulkki

Professor

Department of Management and International Business

Aalto University School of Business

Seija Kulkki Tekes and Ministry of Employment and the Economy of Finland Helsinki, November 7 2012

Innovation and growth through demand

Carlota Perez (2002) argument:

• The technological revolutions are ‘products’ of the industrial, infrastructural and capital market characteristics of the time.

• The technological revolutions are driving forces for major social, institutional and economic changes and consequently frame the life of human beings.

• The globalization is seen as mass production and mass consumption carried on by ICT.

• The ICT has turned to shape not only an industrial infrastructure but also the human, social, cultural, institutional and economic (infra)structures of life globally.

Innovation and growth through demand, Helsinki, Nov. 7, 2012, Tekes and TEM

Seija Kulkki

Underlying assumptions:

• (1) Globalisation – with mass production and mass

consumption - causes major structural changes in

industries: rethinking the role of local industries and

RDI?

• (2) Financial markets – with Wall Street Impact:

corporate sector conducts RDI driven by short-termism

within current competion structure

• (3) Role of technology has changed: ICT, energy, bio,

medicine, etc; not only product, indutrial or business-to-

business technologies – they are more ’infrastructural’,

’institutional’, or rather technologies of life.

Innovation and growth through demand, Helsinki, Nov. 7, 2012

Seija Kulkki

Europe on Global Innovation Map?

• Innovation emergency: Europe in general is lacking in

R&D (2% of GDP) in comparison to the US (2,8% of

GDP) and Japan (3,4%). China will invest 2,5% of GDP

(Innovation Mission 2020 of China)

• US: corporate driven RDI and scientific excellence

• China: RDI for transfer from sustained growth to

sustainable growth; science and technology driven

• Europe: In addition to (1) science and technology and

(2) corporate driven RDI, EU is aiming at (3) solving

major societal challenges of our time.

• EU: Human-centric RDI for the quality of human and

social life through public-private partnerships?

Innovation and growth through demand, Helsinki Nov 7, 2012 Tekes and TEM

Seija Kulkki

Horizon 2020

EU H2020 is a flagship initiative and financial instrument for implementing European Innovation Union for Europe’s global competitiveness. Its budget is €80bn for years 2014-2020.

Three pillars:

(1) Excellent science and technology (€25bn) for becoming a world-class science performer by 2020.

(2) Globally competitive corporate RDI (€18bn) for bringing new innovations quickly to marketplace.

(3) Solving societal challenges (€32bn) that concern citizens in Europe and globally: challenges such as health, demographic change and wellbeing, food security, sustainable agriculture, marine and marinetime research, and bio-economy, secure, clean and efficient energy, smart, green and integrated transprot, inclusive and secure societies, climate action, resource efficiency and raw materials.

European Innovation Partnership and Smart Specialization.

Innovation and growth through

demand in Helsinki, Nov. 7, 2012

Tekes and TEM

Seija Kulkki

Solving Grand Challenges? • Who defines the challenge and how?

• What are the underlying values and principles to apply when solving societal challenges?

• Should we apply human-centric approach to RDI around societal challenges?

• How could we organize for collaboration of firms, cities, regions and public agencies (European Innovation Partnership?)?

• Should we also engage citizens, people, for creating a better society, better economy and a better world?

• Should we also promote participative, all-inclusive and open societies?

• All in all: should we discuss the RDI as a new firm-society collaboration and shared value creation for better societies?

Seija Kulkki Innovation and growth through demand, Helsinki Nov 7, 2012, Tekes and TEM

Shared Value Creation?

The shared value creation involves creating economic value in a way that also creates value for society by addressing its needs and challenges (1).

Today, there is a cliff between economic and social development due to the presumed trade-offs between economic efficiency and social progress (1).

Conclusion: We should discuss what are the efficient ways and means for collaboration of firms, academia, public agencies, cities and people in order to bridge over the economic and social cliffs through shared value creation.

• 1. Michael Porter (with Kramer), Harvard Business Review HBR, January-February 2011)

Innovation and growth through demand, Helsinki Nov. 7, 2012, Tekes and TEM

Seija Kulkki

Human-centricity for Better Societies,

Economies and the Future? • Quality of human life and nature as starting point of

RDI!

• How does this play out in urban, rural, and regional social and economic development; role of new technology, service and business development?

• How do we perceive usage, efficiency, productivity and scalability assumptions when creating new markets and industries around grand challenges?

• Should we promote participative society, open society, wider responsibilities and individual and collective entrepreneurial spirit?

• Should we promote and how good for society and economy for the future?

Innovation and growth

through demand, Helsinki

Nov. 7, 2012, Tekes and

TEM

Seija Kulkki

Impact on leadership, strategy,

structure and processes of RDI?

• How does the solving of grand challenges

through firm-society collaboration transform

the leadership, strategy, structure and

processes of RDI?

• What about funding?

• How to make all of this this happen?


Seija Kulkki

What kind of problems do we solve through

open R&D for innovation (RDI)?

Product or Service

Innovations

User experience-based

RDI for better usability

Business Model Innovations Economic and social

validation with users,

social networks and

user communities for

scalability of production,

marketing and delivery

around ”usage”

”Ecosystem” Innovations Wider human-centric ”systemic

Innovations”, new market or

usage creation, even industry

creation, solving major

societal challenges of our time

Innovation and growth through demand, Helsinki Nov. 7,

2012, Tekes and TEM

Seija Kulkki

User experience and product and service

development…. – (1) Idea collection and generation

– (2) Opportunity Assessment

– (3) Concept Creation

– (4) Product and Services Development

– (5) Implementation (for value creation)

• Create, capture, evaluate, innovate!


Seija Kulkki

Value Creation and Business Models

• (1) Wide Idea Collection in Interaction with Potential Users

• (2) Wide Economic and Social Validation around Value Propositions

• (3) Wide Commitment through Users´ Learning and Co-Creation; Market Creation

• (4) Understanding the Sources of Scalability through Pre-Market Experimentation and Piloting

– experimentative RDI with users for behavioral changes and functionalities and for changes in market dynamism; new demand and market creation

• (5) Experimentation for Implementation for Value Creation

Innovation and groth through demand, Helsinki Nov. 7, 2012, Tekes and TEM

Seija Kulkki

RDI process for solving societal challenges?

• (1) Mission, vision and strategy creation with a wide

collection of ideas where the societal challenge is

identified and defined and the first ’Grand Design’ or

’Template’ of the whole RDI process drafted.

• (2) Experimentation where many potential solutions to

the societal challenges are created and ’put under first-

round’ testing and piloting.

• (3) Roll-out where all the most promising solutions are

brought to the ’real-life test’ of experimentation, piloting,

validating and scaling up.


Seija Kulkki

RDI Ecosystems for Shared Value

Creation? • Open ecosystems for research and innovation

incorporate all the relevant players in ”a nutshell”.

• They include partners of both ”supply and demand side”; it is like a ”prototype” of new business or service system or even of a new emerging industry or industry under reformation.

• They can be consciously constructed: Ecosystem joint ventures, consortiums and companies! They seems to have a Life Cycle of their Own!


Seija Kulkki

Leadership Challenge!

• Distributed leadership where wisdom is embedded in every

individual and collective practice and action (Nonaka and Takeuchi,

2011).

• Competence of grasping the essence of a problem and knowing

how to draw conclusions from random observations and acting on

them immediately.

• ’Hands-on’ leadership in touch with the reality.

• This implies that we consciously act based on aesthetic and ethical

values such as goodness, beauty and truth;

• They are applied, tested and recreated with other people in every

action.

• Nonaka, Ikujiro and Takeuchi, Hirotaka (2011): The Wise Leader: How CEOs can learn practical

wisdom to help them do what is right for their companies - and society. HBR, May 2011


Seija kulkki

Cases to discuss:

• Industrial and/or regional renewal-driven RDI-collaboration in ecosystems that are concsciously in place for solving contemporary wicked problems (local, European, global) such as:

• Renewal of the socio-economic structure of a city for growth and wellbeing (Aqua City North from Lisbon, Portugal)

• Improving energy efficiency through changing consumption patterns of energy usage in cities (public buildings in Helsinki, Lisbon, Manchester, Leiden, Luleå)

• Opening the Public Data for New Social and Economic Activities to Emerge (Helsinki)

• Creating housing areas that activate citizens for new economic activities and Life Management (Arabianranta in Helsinki)


Seija Kulkki

More cases:

• Creating and reforming an industry (building up the car industry in Portugal, close to Lisbon)

• Reforming the fishery-industry in Spain (EU: IP: Collaboration@Rural)

• Creating new ”AgroMarket” based on on-line real-time auction principle in Hungary with 3000 farmers, ICT-firms, academia and public agencies (Collaboration@Rural)

• New forms of Social Banking, granting loans for businesses and other investments that do incorporate not only economic but also social value creation


Seija Kulkki

Corporate cases: • A global glass company (AGC) wanted to rethink its

technology base and the role in marketplace?

– What is the glass for? What can it be made of? How do we

make this happen?

– Includes wide use of specialists!

– Includes wide social validation!

• IBM wanted to redirect its service offering for the future

in order to participate in solving global problems

– IBM Jazz Jam: for wide dialogues with customers, experts and

own personel

– Results into strategic initiatives around Wellbeing, Socio-

Economic Development, Smart City and Smart Planet (Global

Outlook)

Innovation and growth through demand, Helsinki, Nov. 7, 2012

Seija kulkki

Corporate cases:

• SAP develops in South Africa and in other emerging

markets ICT- and wireless service infrastructures - even

user-centric service architectures - for small businesses

and start-ups

• Cisco has a specific concept for developing information

and communication infrasrtuctures for cities (technology

as an enabler for reforming future cities)

• Etc.

Innovation and growth through demand, Helsinki, Nov. 7, 2012, tekes and TEM

Seija Kulkki

Changing role of firms for shared value

creation when solving grand challenges? • Efficient integration of production factors – especially

technologies. Technology ”setting the boundaries” of a firm. Price mechanism taking care of resource allocation. Oliver E. Williamson and Sidney G. Winter: The Nature of the Firm: Origins, Evolution, and Development, Oxford University Press, 1993

• Firms are best positioned for problem solving and innovation. R.W. Scott and G.F Davis: Organizations and Organizing: Rational. Natural and Open Systems, Englewood Cliffs, NY: Prentice Hall, 2007

• Firms for shared value creation: Porter&Kramer (HBR, May 2011)


Seija Kulkki

Shared Value Creation through

Collaborative Open RDI?

RDI is not only about technologies or products but also about business models (Chesbrough, 2003), service designs and systems and even wider social or systemic renewal and change (EU, Service Innovation, 2011). Open and inclusive innovation, ”democratizing” of innovation: co-creation with people: involving or engaging demand-side, markets, customers; i.e people (von Hippel 2005)

Von Hippel (2010): Consumer Innovations: Traditional division of labor between innovators and customers is breaking down; about 70% of innovations comes from markets and customers (A survey with 1200 interviewees ).


Seija Kulkki

Transformative Challenge? • (1) Transformation from ”industrial logic” to ”services logic” or

even to shared value creation/ecosystem logic: issue of productivity, efficiency and scalability?

– The role of users in developing new sources of and mechanism for productivity, scalability and value creation

• (2) Transformation from vertical approach to a more horizontal approach?

– The demand and market dynamism may determine the collaborative structure for value creation? – A rich collection of user cases, user communities, social webs and networks may be needed.

• (3) The opportunity to learn from users about the functionalities of service business models and service systems

– What are the functionalities and how to design an internationally competitive value constellation that brings about personalization, safety, security and interoperability, etc.

• (4) Critical role of societal problems around which we collaborate: challenges such as Green and Clean Growth, Wellbeing, Sustainablity, Environment and Energy Efficiency, eDemocracy – The demand-driven, human-centric and user –driven RDI may

include private and public services, citizens, people and social networks – as well as industries.


Seija Kulkki

Leadership challenge!

• Who takes leadership in RDI for solving societal challenges through firm-society collaboration?

• How do we make this to bring about structural and transformative innovations, and even new socioeconomic dynamism that inspire society-wide responsible entrepreneurial spirit?

• This may bring even new type of firms and jobs that are for improved quality of life.


Seija kulkki

Sources •

Economist (2012): The third industrial revolution: The digitization of manufacturing will transform the way goods are made – and change the politics of jobs too, April 21st, 2012

•

European Commission (2011): Horizon 2020 - The Framework Programme for Research and Innovation, Communication from the Commission to the European Parliament, the Council, the European economic and Social Committee and the Committee for regions, SEC (2011) 1428 final

•

European Design Innovation Board (2012): Report on Design for Prosperity and Growth.

Kristensen, Peer Hull and Lilja Kari (eds. 2011): Nordic Capitalism and Globalization: New Forms of Economic Organization and Welfare Institutions, Oxford University Press

•

Kulkki Seija (2011): Europe on Global Innovation Map: Human-centric RDI for solving major societal challenges of our time. Public Service Review: European Science & technology: issue 13

Kulkki, Seija (2012): Human-centric RDI, Pan European Networks: Government 4, November 2012

Kulkki, Seija (2011): Science and Society, Pan European Networks: Science and Technology, www.paneuropeannetworks.com

Kulkki Seija (2012): Towards a European socioeconomic model: Firm-society collaboration for shared value creation. Public Service Review: Europe: issue 24

Kurosu, Masaki (2009, eds.): Human-centered Design: First International Conference, HCD 2009, San Diego, CA, USA, July 2009, Proceedings, Springer

Nonaka, Ikujiro and Takeuchi Hirotaka (2011): The Wise Leader: How CEO’s can learn practical wisdom to help them to do what is right for their companies – and society. Harvard Business Review (HBR), May 2011, Reprint R1101C

Perez, Carlota (2002): Technological Revolutions and Financial Capital: the Dynamics of Bubbles and Golden Ages, Edward Elgar, Cheltenham, UK and Northampton, MA, USA

•

The Finnish Country Brand Report (November 2010): www.tehtavasuomelle.fi


Seija Kulkki

http://www.paneuropeannetworks.com/

Thank you!

• Dr. Seija Kulkki

• Professor

• Department of Management and International Business

• Aalto University School of Business


Seija Kulkki

How to address the grand challenges in Nordic … · How to address the grand challenges in Nordic...

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