Understanding the systemic changes in the context of services: the approach of future oriented...

Understanding the systemic changes in the context of services: the approach of future

oriented impact evaluation

Jatko-opintoseminaari25.11.2015

Kirsi Hyytinen

Valvova professori, Eila Järvenpää, Aalto; ohjaaja Marja Toivonen, VTT

Outline

• Context and focus of my dissertation

• Empirical context and data acquisition

• Results of the articles– Article 1: Future-oriented impact assessment: Supporting strategic decision-

making in complex socio-technical environments– Article 2: Future Energy Services: empowering local communities and citizens – Article 3: A System dynamic and multi-criteria evaluation of innovations in

environmental services – Article 4: Governance for collaborative development of system and service

innovations

Introduction to the context of my dissertation 1/2

• The role of innovations has been emphasized when tackling complex societal problems, among which environmental sustainability is particularly topical requiring a radical response.

• Challenges are systemic by nature: too big to be solved via individual product or service innovations. Converserly, large scale changes combining various innovations with the social support and engagement aiming at system level solutions are required– Innovations needed in this context are multiple and complex in nature:

technological, non-technological and service-based novelties are interlinked with broad social and systemic changes (Toivonen 2014; Rubalcaba et al. 2011; Djellal & Gallouj 2010; Gadrey 2010).

– Collaboration between multiple actors representing different sectors of society is needed; particularly the complementarities and synergies between public and private and third sector organizations are essential (e.g. Lévesque 2013; Gallouj et al. 2013).

– Furthermore, developing innovations and disseminating them at the systemic level requires understanding about the whole socio-technical system, including the dynamics and interplay between parts of the system (Geels 2002, 2004.)

Introduction to the context of my dissertation 2/2

• Consequently, new approaches and mechanisms to support the innovation development, strategic planning, management and governance have become necessary (e.g. Lévesque 2013, Hartley 2005, Smits & Kuhlmann 2004). – How to take into account the increasing complexity and pace of

change in order to guarantee robust information for decision-making?– What kind information is needed in the adaptive and rapidly changing

situations?• In practice, “plurality of methods” to develop traditional governance

approaches and evaluation are suggested as an answer; while there are good attempts to create more comprehensive information generation and management tools for the use of strategic decision-making (e.g. Lévesque 2013, Rotmans & Loorbach 2009, Hartley 2005, Smits & Kuhlmann 2004), there is still a need for more systematic and integrative approaches.

Focus of my dissertation

• The focus in my dissertation is to study how the societal complexity and challenges can be tackled via system and service innovations and how the development and implementation of innovative services can be supported with new types of evaluation mechanisms.

• More specifically, the aim is to understand current evaluation challenges in the context of service innovation in particular and sketch a new type of future oriented evaluation concept to support innovation activities and decision-making in the context of complex service innovations

• I thesis as an article dissertation that includes four scientific papers and a summary chapter. The first conceptual paper introduces the central idea of the future oriented evaluation approach. Three latter articles apply and demonstrate how the specific methodologies of the approach can be utilised in the context of service innovation.

Empirical context and methodologies

Analysis is based on the empirical material gathered in a case context to create understanding of the service and system innovations in the area of energy and environment: – Focus on new innovation policy instrument, SHOK – Strategic Centres for Science, Technology

and Innovations; Cleen Ltd. and in the three development programmes (smart grids, distributed energy production and environmental measurement). Programmes are based on a new type of public-private collaboration and aimed at accelerating service, system and social innovations to foster sustainability.

– Empirical material has been collected data from four types of sources. 1) The primary instrument for data collection was face-to-face interviews (35 in total). The

interviews were gathered between February and June 2013. Some complementary interviews were done in spring 2015.

2) Observations of new programme preparation process; six collaborative workshops which aimed to work on new research programmes. Workshops took place during the spring 2014 (February-May).

3) Programme documents and other material provided in the course of programme preparation.

4) Strategic documentary material provided by the case organisation. These include, for example, the strategic research agendas, guidelines and criteria for the programme preparation, annual reports and programme result material.

Content of the dissertation

Article 1: Concept for future oriented impact assessment to aid strategic decision-making in the context of science, technology and innovation’

Integrates traditional methods of foresight, impact assessment , system dynamic modelling and empowerment multiple actors under a single framework to provide versatile information to increase the

strategic intelligence in decision-making.

Article 2: Futures of Energy Services Focus on foresight methodologies and

trend analysis

Article 3:Dynamic multi-

criteria evaluation for the evaluation of

services Focus on evaluation and system

dynamic modelling

Article 4: Governance for

system and service innovations

Focus on multi-actor collaboration and multiple voices in development and

dissemination of innovations

Article 1: Future-oriented impact assessment:Supporting strategic decision-making

in complex socio-technicalenvironments

Nieminen M. & Hyytinen K. (2015): Future-oriented impact assessment: Supporting strategic decision-making in complex socio-technical environment. Evaluation. Sage. Vol. 21 (2015) No: 4, 448-461.

.

Article 1: Future oriented impact assessment

Focus

• Is a conceptual article and introduces a novel framework for systemic and future-oriented impact assessment. In the core of the approach is the integration of foresight, impact assessment, system dynamic modelling and societal embedding

• Study has both theoretical and conceptual contribution: – It discusses and argues systematically the need for the systemic evaluation

approaches to respond to the current policy needs in the complex, rapidly changing and interconnected systems

– It introduces a novel future oriented evaluation approach to meet the challenges of the changing innovation environment and evaluation standards and to support decision-making in horizontal and complex situations


Concept to apply

• The evaluation approach is embedded in the theory of socio-technical change (Geels & Kemp 2007; Geels 2004, Geels 2000): it is used as a general theory to create holistic understanding of change in a socio-technical system characterised by a complex interaction and dynamic co-evolvement between the various actors, resources, institutionalized practices and regulations (e.g. Geels 2002, Geels 2004; Mitleton-Kelly 2007).

• Theory is useful when analysing dynamic interaction between macro, meso and micro levels as a precondition for the system change


Methodologies integrated into the concept of socio-technical change

Article 1: Future oriented impact assessmentIntegration of methodologies

Objectives/ Rationale for the data Outcomes

Foresight • Wide landscape and regime level changes in a long term, scenarios of potential changes

• Forward-looking data and dynamic, shared knowledge creation processes

• Supports strategic choices of alternative development paths

• Promotes networking of experts• Contributes to insights and shared visions of future

developments and consequent consensus of and commitment to future investments

Impact assessment

• Operationalizing the long term targets• Analysing the dynamics of the system elements

and their development with a special view on impacts.

• Analysing the impacts of policy instruments and decision-making

• Analysis of the current status of the system • Identification of system elements and their dynamics• Strategic and operational targets to support policy

implementation• Future-oriented impact assessment of policy

measures • Follow-up of system development

System dynamic modelling

• The simulation model is a theory of system, explaining its behaviour endogenously through feedback

• Model results are used to design good and robust policies

• To solve a particular policy problem

• The simulation model is theory of the system, explaining its behaviour endogenously through feedbacks

• Model results are used to design good and robust policies

Societal embedding

• Facilitating development and introduction of new sustainable innovations; chosen technologies and social targets

• Active and continuous dialogue among actors who set conditions for development and diffusion of innovations

Article 2:Future Energy Services: empowering local

communities and citizens

Hyytinen, K. & Toivonen, M (2015): Future energy services: empowering local communities and citizens. Foresight, Vol. 17, Iss 4, pp. 349 – 364.

Article 2: Future Energy Services: empowering local communities and citizens

Focus

• Article studies the future prospects of innovative services linked to the sustainable energy system. To analyse the futures of energy, foresight methodologies and especially qualitative trend analysis (Coates 1996) have been applied.

• Article has three main contributions: – It narrows the research gap linked to foresight in services by examining the

futures of services in the area of sustainable energy systems – It studies how foresight studies create improved and analytical understanding

of system level drivers and system interdependences to support the development and implementation of services

– It identifies the central trends in the development of energy services and by combining the aspect of service innovation to socio-technical transition and social innovation it indicates the significance of macro level drivers and social processes in development of energy systems


Concepts to apply

• Socio-technical transition (e.g. Geels 2002, 2004, 2005; Kemp & Loorbach 2006) helps in understanding the broad societal context and of the macro-level driver of renewal the energy sector; it highlights multi-level, interdependent and dynamic nature of socio-technical systems

• Social innovation (Harrisson et al. 2010, Hubert 2010) analyzes the bottom-up and top-down processes in the market and policy spheres; the process is examined as a engine for the change

• Service-dominant logic (Vargo & Luch 2004, 2008, 2011) helps in understanding the interactional nature of value creation; replacement the producer centric view with an actor-to-actor perspective means that both producer’s and customer’s value-creating activities are taken into account.


Summary of the results: two groups of trends identified The trends primarily driven by the technological development requiring the advancement of technological systems:

Renewable energy sources: diversity of energy sources and the mass production of new technological devices are in the core of trend

Hybrid solutions: Combining different renewable energy sources (solar, win, biofuels) and company networks to provide these combinations are emerging; optimising the hybrid solutions (well-designed, functional, reliable and cost-efficient)

Smart grids: ‘Intelligence in the grid is a novelty achieved through the combination of ICT with the system (gathering and acting on information provided by citizens; reliability of the grin). Bidirectional nature in the grid removes sharp distinction between production and use of energy

Smart energy markets: Open energy market, many actor in the markets (e.g. European level energy markets); open energy and information networks; ‘Super grid’ connecting different locations of production


Summary of the results: two groups of trends identified The trends focusing societal, managerial issues and requiring profound changes in consumer behaviour:

Distributed energy production: focuses on emergence of local and small scale energy production including residential areas, cooperatives and energy villages (also island power systems with no connection to the grid)

Demand response: Transfer from production management to demand response:, production adjusted with consumption

Optimisation of sustainability: Multi-target optimisation by reconciling sustainable solution with technological functionality and cost-effectiveness; Also balancing centralised and distributed energy production

The role of energy as an opportunity and as service: Moving the focus from separate technologies to the entire energy chain: sources, production, distribution and consumption; Also enhancing sustainability as a value in energy investments


Analysing the impacts of the trends on service development and empowerment phenomena

Example: Smart energy market

The trend

The main contents of the trend

Impacts on energy as service, new services

Empowermentphenomena

Factors supporting the trend

Sources of discontinuity

Smart energy markets

Open energy markets, many actors in the markets (e.g. European-wide energy market) Open energy and information networks‘Super grid’ connecting different locations of production

Multiple types of service agreements, e.g. solutions-based agreements and individual service agreementsMarket-based service structure; enabled by an automatic system for energy control

Smart users participate actively in the energy market, reacting to energy pricesSurplus of individual production is fed into the grid

Plans for common European energy markets are readymade Plans for smart grids exist

National energy systems and protectionist politics slow down common plansInefficient steering: e.g. different kinds of subsidies for different energy formsFragmented energy markets

Article 3:A System dynamic and multi-criteria

evaluation of innovations in environmental services

Hyytinen, K., Ruutu, S., Nieminen, M., Gallouj, F. & Toivonen, M. (2014): A System dynamic and multi-criteria evaluation of innovations in environmental services. Economics and Policy of Energy and The

Environment, no. 3/2014, pp. 29-52

Article 3: System dynamic and multi-criteria evaluation of innovations

Focus

• The article develops a new type of dynamic evaluation methodology by integrating the approach of multi-criteria evaluation and system dynamic modelling.

• The study has three main contributions: – Conceptual part of the article examines the use of different economic and

sociological justificatory criteria to evaluate the complex services – In the methodological part of the article, article suggests a new combinatory

evaluation approach to evaluate the dynamics and multifaceted performance of services. Methodology integrates the multi-criteria perspective of services (Djellal & Gallouj 2010) and system dynamic modelling (Sterman 2001).

– Empirical application of the evaluation methodology in the context of environmental services reveals multifaceted impacts of service innovations and the dynamic and complex relationships between different factors in their generation and diffusion.


Concepts to apply 1/2

• The multi-criteria framework (Djellal & Gallouj 2010, 2013) to describe the multi-faceted dimensions of innovation and the importance of quality and societal value. It analyses the benefit and outcomes of innovation by the perspective of different “worlds of services” aiming to give insight to the different justification criteria of different societal spheres by considering their different principles and values

Industrial and technical world

Market and financial world

Relational world

Responsibility world

Reputational world

Output (direct, short term)Performance related to output

Volumes, flows and technical

operations

Value and monetary and

financial transactions

Interpersonal and

organizational relations, trust,

quality of relationships

Social and environmental sustainability,

equal treatment,

fairness and justice

Brand imageOutcome (indirect, long term)Performance related to outcome


Concepts to apply 2/2

…However, analytical table remains static and does not increase understanding the their dynamic and complex nature. It does not show how the different impact criteria are mutually interlinked and may reinforce or contradict each other.

• For the reason we apply the system dynamic perspective (e.g. Sterman 2001) to understand the dynamic impacts of innovation. – System dynamic modelling pays attention to the interaction of various actors

and their values in evaluation situation and provides information how the system structure creates complex dynamic behaviour over time.

– It helps to explain the role of feedback loops between different actors and factors and promote or hinder the emergence of impacts.

Results: A multi-criteria framework applied for the evaluation of environmental data platform

Industrial and technological world

Market and financial world Relational world Responsibility world Reputational world

Output (direct, short term)

• A technological solution for gathering data from various sources and sharing it

• Processing mechanisms for the continuous upkeep of data

• Tools to visualize data

• Volume and variety of data

• Free access to data • Economic efficiency in the

provision and sharing of environmental data

• New cost-effective environmental services in public and private sectors

• New connection to data for professionals and partially to general public

• New networks between public and private data providers

• Increased connectivity between various data sources

• Awareness about the condition of environment and the consequences of pollution based on easily understandable and accessible data

• Open and equal access to public data

• The developer gains reputation as a pioneer in the enhancement of sustainable development

Performance related to

output

• Integration of dispersed environmental data

• Efficient processing of data for various purposes

• Increase of the volume and variety of data

• Increased understanding of the business potential of environmental data

• Emergence of new market openings based on environmental monitoring

• Improved understanding of needs for environmental data

• Increased knowledge and competence sharing in environmental issues

• Increased trust in the reliability of data

• Increasing activity in environmental issues among citizens and policy makers

• Increasing transparency and usability of public data

• Increased attractiveness of platform and it’s developers

Outcome (indirect, long

term)

• An advanced architecture based on the big data management open data policies

• End-user applications

• Quality control of the data

• Centralized market place for environmental monitoring, analyzing and reporting – additional monetary gains

• Free access to general public

• End-users and commercial users as a data providers

• Personalized environmental data

• Environmental data applied in educational services

• Environmental data for entertainment - integrated into games, for instance

• Public bodies and private companies gain visibility for their sustainability efforts by participating in the application and further development of the platform

Performance related to outcome

• Versatile environmental information, resulting in improved warnings, for instance

• Increased reliability of environmental data

• Improved usability of data

• Opportunity for the development of a new competitive cluster: start-ups, value networks, new jobs etc.

• New export possibilities with the related income flows

• Deepening collaboration and trust in actor networks fosters the opening of data reserves

• The emergence of ‘expert amateurs’ (user communities) supports the acquisition of real time environmental data

• Better database for responsibility strategies in established and critical business sectors (e.g. energy companies)

• Environmental sustainability as primary societal value becomes more concrete

Usefulness ofplatform

Availabilityof data

Businessecosystem

actors

Access toenvironmental data

Environmentalawareness

User-producers

Brand image ofdevelopers

Demand forsustainability

services

Free and openpublic data

R1

Developmentactors R2

Brand image aspioneer

R3

Demand throughbrand

R5

Businessecosystem

User-producers

R6

Application ineducation andentertainment

R7

Education andentertainment

R4

Awareness ofopen access

End userapplications

Newsustainability-based

business

R8

Widersustainability

Potential forenvironmental

awarenessIncrease inenvironmental

awareness

Closed data

Potentialuser-producers

New userproducers

Potentialbusiness

ecosystemactors New business

actors

Technologicalplatform

performance Platformdevelopment

Furtherdevelopment needs

-

- B1

Opening ofdata

Platformdevelopment

Developmentactors

Newdevelopers

Potentialdevelopment

actors

Understanding ofbusiness potential

B2

Data quality

Results: Dynamic Impacts of Environmental dataPlatform

Article 4: Governance for collaborative development of

system and service innovations

Hyytinen, K. (2015) Governance for collaborative development of service and system innovation. XXV International RESER conference, 10. – 12. 9. 2015, Copenhagen, Denmark. Submitted to the journal EGS

(Economies & Sociétés)

Article 4: Governance for collaborative development of system and service innovations

Focus

• The final article of focuses on the multi-actor collaboration in the context of service innovation; participative and interactive process between variety of actors in setting the conditions for social development and in generating and in scaling up innovations

• Analysis explains: – the structure of collaborative networks in the context of service

innovation– the significance of multi-actor collaboration to co-construct the

society and to co-produce and scale up innovations which aim to tackle the complex societal problems

– the complexity of networked and participatory process by listening the experiences of different actors taking part in the collaboration


Concepts to apply

• Public-Private Innovation Networks in Services (ServPPIN ; Gallouj et al. 2013) to understand how the collaborative arenas for variety actors are organized. In the heart of the ServPPIn is the integration of technological and service based novelties as well as equal and collaborative relationship between public, private and third sector organizations (Gallouj, et al. 2013; Rubalcaba et al., 2013).

• Social innovation to analyses the participatory and collaborative processes which are necessary for the emergence and implementation of innovations in a multi-actor environment (Toivonen, 2015; Harrisson et al. 2010, Hubert 2010). Social innovations may emerge at the grassroots level or in the collaboration of private, public and third sector organizations or may be initiated by policy makers and regulatory bodies. Integration of bottom-up and top-down processes is essential (Rubalcaba et al., 2013)


Results: Cleen as a ServPPIN


Results: Significance of multi-actor collaboration in the context of service innovation

• Tackling societal challenges in the collaboration of multiple partners – Multi-actor collaboration is a prerequisite to create the comprehensive picture

of the societal challenges and to make of a strategy for the promotion of systemic change; variety of actors, representing different sectors, competences and world views, are needed to co-produce the integrated solutions that correspond with these comprehensive needs.

– Currently the collaboration is dominated by universities, research organisations and private companies. What is lacking is the understanding of citizens’ needs and broader societal aspects. That may hinder the acceptance of novel solutions and therefore hamper the societal renewal.

– Broadening the collaboration is crucial: especially more collaboration with users and better communication with decision-makers is required both for the development of better and viable solutions and for their implementation as nationwide decisions


Results: Significance of multi-actor collaboration in the context of service innovation

• Creating new competences and business solutions in a trust-based

collaboration – Network‘s capacity to create of new competences and business solutions is

based on the informal trust between network partners. Trust is based on the persistent work, continuous interaction and on the partners’ will to create an open, collaborative culture. That requires the changes in traditional ways of working: mindset and organisational boundaries need to be opened up to recognise the common interest, to produce novel combinatory competences and integrative service solutions.

• Promoting the multi-actor collaboration by the top-down mechanisms– Current governance mechanisms may threat the multi-actor collaboration and

development of service innovations: neglecting the dialogue between bottom-up and top-down processes to create shared vision and to set targets for the development as well as ignoring the dynamic and long term performance of collaborative networks are such threats in particular.

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