Socio-economic impact of open service innovation

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

OSI Socio-Economic Impact of Open Service Innovation

Final report for DG INFSO Study SMART2009-0077 by Gohar Sargsyan (Editor), Geleyn Meijer Logica, The Netherlands (coordinator, lead contractor) Wil Janssen, René van Buuren Novay, The Netherlands Elmar Husmann, IBM, Switzerland Timo Ali-Vehmas, Veli-Pekka Niitamo Nokia, Finland Stephen McGuirk Intel, Ireland Brian Donellan Innovation Value Institute, Ireland

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Foreword by the European Commission Open innovation is one of the most popular words used discussing the development of services based on collaborative platforms, or on collaborative ecosystems. Open innovation captures the co-creative and crowdsourcing potential and integrates societal capital to enhance services innovation. This new paradigm is increasingly visible and exciting as it delivers high quality applications for services that are user-centric. Main challenge in this new approach is to understand the process that enables simultaneously a high degree of personalisation and efficient modern infrastructures for ideation, development and delivery of services. The role of the various stakeholders in this Public-Private-People Partnership (PPPP) is highlighted in this report through practical examples. This concept is extremely important in service innovation as value is not created just by offering services, but only when they are used in practise. The approach of the report is welcomed as it analyses the impact of this new paradigm based on a wide spectrum of real world cases. The report is published in collaboration with the OISPG, Open Innovation Strategy and Policy Group, an industrially led group which tackles the issues of open innovation from different angles. Earlier in OISPG series we have published reports on intellectual property, open innovation business models, service reference architectures and two editions of the Service Innovation yearbooks. All the reports are downloadable from the website www.openinnovation-platform.eu. This report on socio-economic impact of open innovation together with its' illustrative cases complements and brings into practice the work of this Directorate General on open service innovation. With this fresh report I wish you all interesting reading in the fascinating world of open innovation.

Bror Salmelin Adviser to the Directorate H Information Society and Media Directorate-General European Commission

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Foreword by the OSI Consortium Dear Reader, We live in a permanent dynamic digital evolution. In order to create maximum value out of this situation, we should be open, creative and innovative. We are facing challenges of a sustainable society and how to create values and wealth for all the European citizens, services and business ecosystems. Society has an important role to play in the wellbeing of individuals everywhere around us, we should understand what is adding the most value to that individual and we should also understand what the share-of-profit among all the participants involved in this ecosystem is. We believe that user driven open services innovation is a way forward to create maximum value for all the participants involved in this ecosystem. The “OSI: Socio-economic impact of open service innovation” is an industry-led study, which considers the role of users and citizens in open, user-driven service innovation, as part of the industrial eco-system, in the context of societal and ICT developments. It was my pleasure to be the project manager and the coordinator of this project. The consortium team is a unique combination of high level professional actors from industry and research (Logica, IBM, Intel, Nokia, Novay and Innovation Value Institute). The OISPG had an advisory board role bringing richness to the study progress and the results. In this report we offer new models, methods and approaches on open innovation, as well as analysing the challenges of economic values, wealth generation in socio-economic terms and creation of common values. I hope you will find this report interesting and useful.

Dr Gohar Sargsyan Senior Business Consultant, Logica Member of OISPG

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Contents page Foreword by the European Commission ..............................................................................5 Foreword by the OSI Consortium ........................................................................................7 Executive Summary ...........................................................................................................10 1

Introduction............................................................................................................... 14 The context of the Barroso agenda / EU 2020...........................................................................................15 Structure of this report ...............................................................................................................................17

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Open service innovation defined and illustrated......................................................... 19 The origins of open innovation.................................................................................................................. 19 Open innovation and services ................................................................................................................... 23 User empowered innovation ..................................................................................................................... 25 The role of technology ...............................................................................................................................28 The role of IPR in open innovation ........................................................................................................... 29 Classifying open innovation ......................................................................................................................30

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Methodology ..............................................................................................................32 3.1

Results from desk research .......................................................................................................... 33

Discussion .................................................................................................................................................. 36 Impact of Open Service Innovation Model ............................................................................................... 37 3.2

Overview of innovation policies in EU member states in relation to open services innovation.38

Austria . ..................................................................................................................................................... 39 Czech Republic...........................................................................................................................................40 Germany .................................................................................................................................................... 43 Spain..... .....................................................................................................................................................48 Ireland ....................................................................................................................................................... 50 France... ..................................................................................................................................................... 52 The Netherlands ........................................................................................................................................ 53 Norway. ..................................................................................................................................................... 56 Portugal .....................................................................................................................................................60 Romania .................................................................................................................................................... 63 Slovenia...................................................................................................................................................... 67 Switzerland................................................................................................................................................ 67

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Bulgaria .....................................................................................................................................................68 Conclusions................................................................................................................................................ 69 3.3

OSI in social networks: Facebook ................................................................................................ 70

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Case study approach..................................................................................................................... 70

4 Cases ..............................................................................................................................72 4.1 Case summaries.................................................................................................................................... 72 4.2 The Case Studies ..................................................................................................................................82 Blue Cloud Initiative..................................................................................................................................82 Smarter Planet Initiative .......................................................................................................................... 92 OMT: Energy Efficiency with people engagement at web ......................................................................98 IBOR: Integral Maintenance for Public Space ...................................................................................... 102 NPR: National Pension Registry ............................................................................................................ 106 Mobile Point of Care East Cheshire .........................................................................................................113 Mobile Point of Care: MPoC St Johns Hospital, Lothian .......................................................................119 Capability Maturity Framework............................................................................................................ 126 AbelLife .....................................................................................................................................................131 Collaboratory.nl ...................................................................................................................................... 134 IZIT....... ................................................................................................................................................... 139 MeeGo ....... .............................................................................................................................................. 142 Dialogues Incubator: the Next Generation Bank .................................................................................. 146 Intelligent Transport Systems (ITS) SPITS............................................................................................. 151 Innovation Mill........................................................................................................................................ 154 4.3 Cross-Case Analysis ........................................................................................................................... 156 5 Findings and recommendations on open service innovation policy ............................... 162 References....................................................................................................................... 169 Annex. Measuring openness, services, innovation and impact of ICT ....................................................173

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Executive Summary The study on socio-economic impact of open service innovation (OSI) assesses the economic and societal potential and impact of open service innovation approach in Europe. The study considers the key role of users and citizens in open, user-driven and inclusive service innovation, as part of the industrial eco-system in the context of societal and ICT developments. After the start of this study, the EU 2020 agenda has been published [1]. The scope and the results of this study are placed in the context of this new EU strategy, “the Barroso agenda”. This strategy has three major components: • • •

Smart growth: knowledge & innovation intensive economy; Address productivity, R&D, qualification & competitiveness gap. Sustainable growth: resource efficient, greener & competitive economy; Address climate change and the environment. Inclusive growth: cohesive high employment economy; Address unemployment, demographics and social cohesion.

In order to reach these goals, 7 flagship initiatives have been defined, of which the Digital Agenda for Europe [2] is the most important one in this context. It sets ambitious goals: such as creating an inclusive society, sustainable societal development and growth, based on advanced ICT infrastructures, like ultra fast broadband; and interoperable inclusive applications and services. The digital agenda identifies seven obstacles in a self reinforcing digital economy, some of which are strongly related to services and service innovation. The study report elaborates on open service innovation, then it classifies schemes for open innovation for a better comparison of different forms of open innovation and different types of underlying Intellectual Property Rights (IPR) constructs. Our methodology gives an overview of the literature, leading to an open service innovation model with society´s participation in innovation process, which is new to the research community. The model forms the basis of the case analysis. Then we give an overview on innovation policies in EU member states in relation to open service innovation. After a more detailed justification of the research approach, we pass to the case study approach description. We describe fifteen detailed case analysis on open service innovation on innovation process, firm, network, service, society level questions. After detailed analysis of the cases in all level questions we show the cross-case analysis and summarise the key barriers and lessons learnt. Then we identify the relation to the Europe Digital Agenda and beyond it, as we believe that not all the identified barriers and the lessons learnt in our study are fully covered in the actions of the Digital Agenda. The case-study analysis lead us to a new open innovation model by reversing the innovation pyramid where the user is one of the key drivers and wealth generators in the new open innovation ecosystem. This model is also new to the research and industrial community. Policy should be used to remove barriers that would not be removed by normal market mechanisms. Market failures or systemic failures can prevent the uptake of innovations or new innovation mechanisms, such as open innovation in services. As an industry-led study, this study findings and recommendations on open service innovation policy are grouped from the perspective of the market; namely, from the perspective sharing ideas (input), the interaction process of open service innovation, and wealth generation in socio-economic terms.

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This three-perspective grouping is new to the market on open service innovation approach and we call it `Open-Box` model. Here are the three perspectives: A. Given that open services innovation is about sharing ideas, (half-) fabricates and results of intellectual creativity, what then are the barriers for people and organisations to make this input available. Are there policies that enable novel sharing principles and accelerate the availability of this input? B. The processes of open services innovation as described in the model section of this study indicate that the most productive driver for innovation is end-user and their interaction with producers and service providers. The case studies indicate likewise. Then what are the barriers that we seek to remove to improve this interaction process. C. Open service innovation seeks to create value for our society and our economy. Harnessing the available input into a productive interaction process must lead eventually to services that benefit our European society and economy. What then are the barriers that keep us from exploiting the creativity of our organisations and people and how can be stimulate wealth generation in socio-economic terms.

A. Findings and recommendations on sharing creativity The main finding on input and sharing ideas is that the rise of creative class, that takes open services innovation as the baseline, has an impact on society – Creative Society. Creation of virtual communities will allow new groups to form, defined by their media interests. Old barriers to entering the creating sector will go. We better participate to make that happen. Recommendations: • • •

Open data of public bodies; Open data must be secure; Open communication-participation is a “must”.

B. Findings and recommendations on a productive interaction process The role of the services chain and the services creation partners is crucial. Services production chain starts and ends with the end-user. The innovative aspect of the creative technology chain is that it runs from science via valorisation into education, impact and social innovation. Services innovation happens where the creative core plus research & development plus industry meet. The creative core, science and industry need to meet. The creative climate has proven to be an important attractor. The creative climate should be stimulated regionally. Collaborative skills are often lacking. Shared ideas, values, and processes are lacking. There is lack of joint vision on open service innovation processes, due to immature innovation and R&D culture in services firms. Recommendations: • • • • •

Take the end-user of a service as co-creator Create and experiment with new forms of open laboratoria Create new forms of PPPs (public private partnerships) or PPPP (public private people partnerships) to stimulate the creation of new services. Stimulate the role of corporate industries as upscaling partners for the creative core. Implement the approach IPR protection with openness requirements

Education Despite all development, end users often lack the skills (innovation, ICT, etc) to actually participate in open innovation and creative society. Services are all about experience. The 11

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distinction between learning at school and learning in life will fade. Learning for personal development will be supplemented by learning for sustainability and society. Recommendations: • • • •

Educate a new generation how to operate in a networked society A life-long employment with a corporate firm will be replaced by a life-long employment in a network. Educate service professionals, raise awareness of ICT potential, invest in ICT knowledge of civil servant / public authorities Support and participate in Education Transformation - increase student competitiveness

C. Findings and recommendations on wealth generation Wealth generation relates to client, employee and shareholder satisfaction in equal terms. In fact, this means a further raise of the role of the individual. Our society is becoming aware of the role the individual is playing in the wellbeing of everything around us. The consequence of this trend is that we also have to reverse thinking about the innovation cycle. We have to start at the individual and focus on what is adding the most value to that individual. This thinking is described as reversing the innovation pyramid (see Figure 10). In the reversed innovation pyramid, we have to find a new understanding of share-of-profit. Wealth generation for the market The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. “Buyers” or “users” can be both consumers and innovators/participants, given all of the supporting conditions (Figure 11). Wealth generation in an inclusive society The right combination of creativity, content and technology will generate services that close the digital divide. Reintroducing story telling in computer settings almost without interfaces will serve societal coherence. Wealth generation for well-being There are many opportunities once the worlds of information, monitoring and communication have been brought together. Sharing content and creativity by Internet will create new well working life styles: where-ever and whenever. Recommendations: • • • • • •

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Adopt a policy to stimulate Social Innovation Sciences in the recognition that wealth generation is driven by the rights balance between citizens, clients, employees and shareholders’ interest. Push a new service mindset versus a new product mindset. Involve users to participate in the innovation process and creation of new services by studying their motivations. Stimulate heterogeneous cluster forming and create financial and fiscal constructs to help them. Initiate an EU-wide creative council where employers, unions, public agencies, politics and SME’s are represented. Promote Creative Thinking as foundation for open services innovation. Build a single market for services in Europe with active participation of users.


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

As we are living a permanent digital revolution which is constantly changing, we, the OSI partners as a strong industrial group together with OISPG members, see an urgent need to take our study recommendations into an action today. In this digital revolution we should take maximum benefits for the EU society as a key participant in forming the next generation society, which cannot be postponed.

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Introduction

Nowadays we are living through a permanent digital revolution. This long and peaceful revolution is changing how we organise our lives. Powerful computing platforms are creating new markets and we are finding new ways to leverage user creativity. The most visible consequence is that Internet traffic on both mobile and fixed networks is growing by about 50% every year. An ever larger part of our economic and social activities are shifting on line. Digital media consumption is growing with double digits. Social networks were once considered an irritant to the mainstream media. Now they have either overtaken the mainstream media or are becoming the mainstream media. To illustrate: 96% of under 30-year-olds have a social networking account. But more is yet to come. Infrastructures and business processes are getting "smarter", which is crucial if we want to deliver the smart, sustainable and inclusive growth which is set out in the EU2020 strategy [1] [3]. On Dec 3, 2010, Neelie Kroes, Vice-President of the European Commission responsible for the Digital Agenda gave speech: “Unlocking the digital future through Open Innovation” during the 4th panEuropean Intellectual Property Summit, where she clearly stated that openness is central to succeed in this digital revolution and that we should create maximum room for user-driven innovation [3]. The combination of mobile Internet, cloud computing, ICT services and growing sensor networks supports the needs of the "smart economy". The question is whether Europe is able and willing to make the most of this opportunity. Public bodies, policy makers, should use their role to ensure the openness of platforms and hence maximum room for user-driven innovation. Standards and openness are consequently a key requirement. Openness is central to the success of the initiative. What is the position of western economies towards services industry? In Western and newly developed countries the service industries’ contribution to GDP amounts to approximately 70% [4]. Western economies are therefore highly dependent on service innovation for their growth and employment. Technological developments in information and communication technology act as drivers and enablers of many service innovations [5]. The maturation and proliferation of ICT and Internet technologies has connected the world as never before. Because of these developments the scale at which services can be deployed, and the level at which services can be composed is unprecedented. Services that were previously considered non-tradable are being increasingly codified, standardised, and suitable for delivery at a distance [6]. Sustainable growth in Europe requires service innovations and systematic innovation processes that can deliver them. Open innovation, as introduced by Chesbrough (2003) [7], is an innovation practice that strives to make innovation quicker, easier and more effective by the exchange of ideas fostered by collaborative environments. Chesbrough essentially sees this as a tool to improve the marketing of ideas, to the benefit of the companies involved. The basic idea revolves around ‘purposive inflows and outflows of knowledge to accelerate internal innovation, and expand the markets for external use of innovation, respectively’. ICT and internet technologies support the flow of knowledge in a connected world. We follow in this study the broader definition of open innovation as defined by OISPG – Open Innovation Strategy and Policy Group (2009) [8] and V. Nedimovic (2009) [9] revolving around the following fundamental elements: extensive networking between all involved stakeholders (research organisations, businesses, public entities, user and user communities, i.e. the quadruple helix), innovation as a co-creative and user-centric collaborative procedure, availability of and access to

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open functional platforms for interaction between users and service providers. Open innovation is about public-private-people-partnerships (PPPP). The main objective of the study is to assess the economic and societal potential and impact of open service innovation approach in Europe. The study follows the Quadruple Helix model, i.e. the civil society is considered as a fourth and full stakeholder in addition to the traditional innovation actors: research organisations, businesses and public authorities (Triple Helix). The study considers the key role of users and citizens in open, user-driven and inclusive service innovation, as part of the industrial eco-system, in the context of societal and ICT developments. The study explores and analyzes the drivers of open service innovation, from ICT, societal and economic perspective, including user-centricity and the role of Web 2.0 applications, functional platforms, and economic aspects of open service innovation processes. The study also provides an analysis of national policy and research programmes supporting open innovation in Member States. OSI gathers, analyzes and synthesizes evidence on the economic and societal potential and impact of open service innovation for Europe’s knowledge intense service industry in the context of rapid ICT and societal development, and the importance of driving open service innovation paradigms as strategic choice in future research and policy programmes. It will do so through the following steps: (1) To conduct a broad research of available literature, especially company and industry reports from organisations implementing open service innovation, and gather evidence from practitioners to clarify the open service innovation paradigm. The research provides a state-of-the-art on emerging open usercentric service innovation practices and processes, driving trends and factors, benefits and drawbacks, economic and societal potential and impact, and an overview of national policies. (2) To find practical evidence of the economic and societal impact of open service innovation from indepth case studies of open user-centric service innovation implementations. The case studies provide a multi-actor, multi-stakeholder view on open service innovation from multiple perspectives, i.e., economic, societal and organisational perspective. The case studies focus on knowledge intense services, and involve different innovation ecosystems, e.g. industry wide innovation, chain innovation, or cross-domain innovation. (3) To provide a synthesis of the desktop and case study research in terms of a systematic analysis of the economic and societal impact of service innovation approaches, and the success and fail factors that may drive the (positive) effects of open service innovation. Also recommendations for future research and policy programmes are derived. This final report covers all the three steps mentioned above. In addition, this report elaborates on open innovation, giving a better delineation and examples of open service innovation from different countries.

The context of the Barroso agenda / EU 2020 After the start of this study, the EU 2020 agenda has been published [1]. The results of this study should be placed in the context of this new EU strategy, “the Barroso agenda”. This strategy has three major components: •

Smart growth: knowledge & innovation intensive economy; Address productivity, R&D, qualification & competitiveness gap. 15

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Sustainable growth: resource efficient, greener & competitive economy; Address climate change and the environment Inclusive growth: cohesive high employment economy; Address unemployment, demographics and social cohesion

These three components of growth should lead to clearly defined results for Europe: 1.

75% of the population aged 20-64 is employed

2. R&D investment up to 3% 3. 20/20/20 climate/energy targets met (+30%) 4. 40% of the younger generation has a tertiary degree, and early school leavers reduced (below 10%) 5. Reduce risk of poverty by 20 million people. In order to reach these goals, 7 flagship initiatives have been defined, of which the Digital Agenda for Europe [2] is the most important one in this context. The Digital Agenda for Europe was launched on 19 May 2010 as the first flagship initiative, guiding the work of the Commission for the future. It sets ambitious goals: such as creating an inclusive society, sustainable societal development and growth, based on advanced ICT infrastructures, like ultra fast broadband, and interoperable inclusive applications and services. The digital agenda identifies seven obstacles in a self reinforcing digital economy, some of which are strongly related to services and service innovation. The fragmented digital market is one of those obstacles; the service directive that has been issued is not sufficient for a strong European market. Open access to content, for example, is a necessity for the uptake of many services. This is regulated on a national basis, still. Also, the completion of the single Euro payment area (SEPA) is essential for efficient cross-border electronic payments and invoices. One of the actions identified in the digital agenda is the support of industry-led initiatives aiming at open platforms for new products and services. This is an element of the seventh framework research programme (FP7) and will be in the FP8. Also, the digital agenda promises a Universal Service Directive, indicating how the benefits of the digital society can be brought to all. In his article “Open Innovation supporting the Digital Agenda” in Services Innovation Yearbook 20102011, Salmelin B. highlighted that open, interoperable platforms and ecosystems are necessary for gaining a triple win in Europe. Simultaneously, we need to develop affordable, personalised services, businesses to provide them, and which are able to tackle the demographic and inclusion challenges also addressed in the Digital Agenda, offering ways to respond to Europe’s societal challenges, and creating opportunities for new businesses delivering services for the benefit of all [10]. Open innovation is a means to create the necessary lively and continuous interaction between public sector actors, users and service providers which is critical in the transformation of existing businesses and public services towards sustainable ones in the citizen centric knowledge society of today and tomorrow [10]. The relation with the Europe Digital Agenda and this study is at least threefold. • •

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First of all, open service innovation is a way of working contributing to smart growth. It improves and speeds up R&D and productivity. Secondly, user driven innovation, as an element of open service innovation, can contribute to inclusiveness. More and different groups of people can participate in innovation processes.


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

The Universal Service Directive can increase the speed at which users will become interconnected through high-speed internet. Thirdly, open service innovation has a relation with the digital agenda, with respect to promoting R&D on the role of ICT based service platforms enabling open innovation in FP7[11].

When the user is provided with the tools and building blocks of this infrastructure, which they can use on an as-needed basis, they can remodel and combine the basic blocks to create services tailored to their needs. But, again here the speed is not the only remarkable change; it is the bidirectional rich connectivity and high-level of personalisation on the service platforms built upon this infrastructure which will make a significant difference, as services integration in a highly context-sensitive manner will be the winning key [12]. The Future Internet of Services is characterised by much richer content accompanied by many interaction mechanisms such as wikis, blogs, tagging, mashups, etc. All these tools have come to be called Web 2.0. But what Web 3.0 (adding semantics to the interactivity of Web 2.0) really means is not to introduce one of these tools in one site but to make the transition to a new model in which user participation is key, where high context sensitivity and personalisation will ensure the service quality for all. In addition to the Europe Framework programmes, which are good examples of (open) innovation (FP7 going to FP8), during last few years number of regional, national and EU initiatives are established and run by the policy makers in support of (open) services innovation. One of such initiatives run by the EC DG INFSO is the OISPG (Open Innovation Strategy and Policy Group). OISPG is an industry-led group advising on strategic priorities for service innovation, both towards open innovation ecosystems, as well as towards a framework for next generation user-centric (for citizens and businesses) service architecture and knowledge-intense service industry. The core members include SAP, IBM, BT, SITRA, HP-Labs, INTEL, Philips, Orange, Logica, Atos Origin, Nokia and several other lead industrial companies. The group consists of several leading research institutes as well [7].

Structure of this report After an introduction to the subject of the project, this report elaborates on open service innovation. The main contribution to this chapter is a classification scheme for open innovation that allows for a better comparison of different forms of open innovation and different types of underlying IPR constructs. The chapter 3, ”Methodology” gives an overview of the literature, leading to an open service innovation model with society´s participation in innovation process that is new to the research community. The model forms the basis of the case analysis. Then we give an overview on innovation policies in EU member states in relation to open service innovation. In this chapter we also address OSI involvement in social networks: Facebook and outcomes. After a more detailed justification of the research approach, we pass to the case study approach description. The chapter 4, ”Cases” we describe fifteen detailed case analysis on open service innovation. After detailed analysis of the cases in all level questions we summarise the key barriers and lessons learnt, then we identified the relation to the Europe Digital Agenda, that comprises 101 actions. The last chapter is the Findings and recommendations on open service innovation policy, where we as industry led study group provide recommendations, grouped from the perspective of the market, namely, from the perspective sharing ideas (input), the interaction process of open service innovation, 17

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and wealth generation in socio-economic terms. This three-perspective grouping is new to the market on open service innovation approach. In this chapter we also suggest a reverse innovation pyramid as a new open innovation model, which is also a new contribution to the service market.

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Open service innovation defined and illustrated

OSI studies the socio-economic impact of open innovation, focused on open service innovation in the context of ICT trends and developments. Open innovation, as coined by Chesbrough, is part of a wider spectrum of open, user driven and networked innovation strategies. We follow in this study the definition of open innovation as defined by OISPG [7] revolving around the following fundamental elements: extensive networking between all involved stakeholders (research organisations, businesses, public entities, user and user communities, i.e. the quadruple helix), innovation as a co-creative and user-centric collaborative procedure, availability of and access to open functional platforms for interaction between users and service providers. This paragraph gives an overview of the field, and illustrates open service innovation with examples.

The origins of open innovation We are seeing a gradual change in the way in which markets and innovation are viewed (see Figure 1). Porter’s work emphasizes competition, which translates into a choice between two strategies: low cost or differentiation [13].

Figure 1: Changes in vision of innovation through time 19

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The differentiation strategy is mainly geared towards high-end customers with the potential for a varied and extensive product portfolio. Innovation takes place within organizations themselves in accordance with the strategy that they choose. Hamel and Prahalad (1990) [14] give more of a central role to the key competences and the activities of the company. Companies stand out by focusing on their core competences and using them as a basis to enter new markets. The associated organizational structure is completely geared towards streamlining technology, resources and processes in accordance with these core competences. Core competences are kept ‘in house’, while others are outsourced. This poses a potential danger: companies can become less flexible, while today’s core competences will not necessarily be the same as tomorrow’s. Strong streamlining leaves companies almost unable to work internally on new business that deviates from the familiar path. Chesbrough’s introduction of the term ‘open innovation’ [7] placed the innovative capacity of companies central and was based on the principle that large companies no longer have a monopoly on R&D funding and knowledge.

Figure 2: Chesbrough’s model of open innovation

Open innovation suggests a ‘reconsideration’ of the internal innovation process, distinguishing itself by its specific focus on bringing in and passing on knowledge and technology. Often this is illustrated by adding holes and the associated flows of knowledge and money to the familiar innovation funnel diagram (see Figure 2). In Chesbrough’s work, the business model of the ‘parent’ company and the business model for a new technology/service are central. Added value is sought in increasing the efficiency of the internal innovation process by becoming aware of your environment. Insufficient light is cast on the innovation process itself and the collaboration with partners during innovation.

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TomTom is a good example of open innovation in the sense of Chesbrough. The leading provider of car navigation was able to develop and deliver its products and service by building on technologies developed by others. Technology is licensed from that party, or, preferably, the company was taken over by TomTom to mitigate dependencies. Without this external knowledge, the speed of innovation would have been much slower. An interesting next development is TomTom in the context of free and open content, such as Ovi Maps by Nokia. In 2007 TomTom acquired Tele Atlas for its map information, a costly acquisition. At the same time, access to map data is moving into the public, allowing for a new set of services with much lower costs. This means that TomTom is pressed even more to added value in service. Currently, TomTom services are evaluated positively, and revenues and profit are intact. The question is how sustainable this is. Vanhaverbeke (2007) [15] expands on Chesbrough’s ideas about open innovation in a number of essential respects and applies them to the value network perspective and the management of relationships in the associated innovation networks. The central question is: how the successful coproduction can be achieved? He emphasizes that a structural capacity for innovation requires network management both in and between companies. The network must be co-ordinated by a leading innovating company. This is similar to the OEM model in which a large company gives leadership to its suppliers and involves them in the necessary innovation (Faber, 2007) [16]. The innovation is strongly focused on short-term market introductions, with less attention being paid to jointly exploring new opportunities. Vanhaverbeke notes that, besides co-ordinating the network, there is also an important role for competences that are connected with and complementary to the network, requiring organizations to make changes as compared with traditional internal innovation processes. Regional collaboration increases the chance of success due to proximity and due to the greater likelihood of there being matching competences and working methods. In Feb 2009 Sun Microsystems launches a portal for participative innovation [17]. Sun Microsystems, extending its belief in Open Source, as a catalyst to encourage innovation launched the first ever Open Innovation Portal. Mr. Joe Hartley, VP of Global Education, Government, and Healthcare, Sun Microsystems launched the portal at the Centre for Excellence in E-governance, Department of Management Studies, and IIT Delhi. The portal Open Innovation, an initiative by the Centre for Excellence in E-Governance, Department of Management Studies, IIT Delhi, Sun Microsystems, Jawahar Lal Nehru University and Knowledge Commons will allow innovators from the scientific community, student community and from all walks of life to publish their innovations with no IPR encumbrances. Furthering the process of participative innovation, this portal will also help others to add to an Open Innovation that has been published online. The scope of open innovation is changing according to several large corporates: moving towards participative innovation. In his presentation entitled `Towards participative innovation – A real life case study in lighting` during the ICT 2010 event in Brussels on Sept 27th 2010 Prof. Dr. E.H.L.(Emile) Aarts, Director Philips Research stated that open innovation changed drastically since 2000 [18]. See Figure 3 below.

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Figure 3: The changing scope of open innovation (source: presentation of Prof. E. Aarts, Philips, ICT 2010 event Brussels, Sept 27, 2010)

Most large corporates move towards participative innovation where the society, solutions and ecosystems are joint together in open and participative environment. Looking at the history of creativity, open and participative innovation which had different naming over the time was existent even in 1919. An example is the Bauhaus in Berlin 1919-1933 (http://www.bauhaus.de/) [19]. The Bauhaus began with a utopian definition: "The building of the future" was to combine all the arts in ideal unity. This required a new type of artist beyond academic specialisation, for whom the Bauhaus would offer adequate education. In order to reach this goal, the founder, Walter Gropius, saw the necessity to develop new teaching methods and was convinced that the base for any art was to be found in handcraft: "the school will gradually turn into a workshop". Indeed, artists and craftsmen directed classes and production together at the Bauhaus in Weimar. This was intended to remove any distinction between fine arts and applied arts. In 1923, the Bauhaus reacted with a changed program, which was to mark its future image under the motto: "art and technology - a new unity". Industrial potentials were to be applied to satisfactory design standards, regarding both functional and aesthetic aspects. The Bauhaus workshops produced prototypes for mass production: from a single lamp to a complete dwelling [19].

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Open innovation and services Service innovation is complex as it often requires simultaneous consideration of multiple interrelated changes such as organizational innovation, involvement of multiple actors in the process of innovation, and codification of knowledge for innovation (Forfas, 2006) [20]. This multi-dimensional complexity is also clear from the widely accepted definition of service innovation of Den Hertog (2000) [21]., i.e. “a new or considerably changed service concept, client interaction channel, service delivery system or technological concept that individually, but most likely in combination leads to one or more (re)new(ed) service functions that are new to the firm and do change the service/good offered on the market and do require structurally new technological, human or organizational capabilities of the service organization.” Service innovation typically involves a combination of structural changes that together lead to new service functions. Services are found to innovate in a different manner than manufacturing (Miles, 2008) [22]. However, a sound knowledge of service innovations and service innovation approaches is lacking. Policymakers are considering how to stimulate service innovation, but have limited knowledge of service innovation practices. Service companies are looking for new methods and approaches to service design and service innovation that would make their service innovation process more effective (Spohrer et al., 2006) [23]. Service innovation joins four trends that currently shape the western economies: the growing importance of services, the need for innovation, changes in consumer and business markets, and the advancements in information and communication technology (ICT) (Bouwman & Fielt, 2008) [24]. Technological developments in information and communication technology act as drivers and enablers of many service innovations. For example the distribution of content no longer depends entirely on physical carriers but makes use of a variety of broadband networks, both fixed and wireless. In the public sector electronic government services are introduced, and in the health care sector much is expected of electronic record sharing and tele-health. With the growing importance of services, service innovation becomes a more important element in the innovation strategy of a firm, which means that more capabilities and resources have to be made available. In fact, major firms with a manufacturing background, like IBM and Nokia, are developing into service solution providers and are among the first to invest in services innovation in a more formalized way (Meiren, 2006) [25]. Other service firms benefit from service innovation performed by others, for instance by making use of white labels in the insurance industry. Service firms discover that their service design and development is ill-structured and time-consuming, and knowledge regarding service innovation is tacit and hardly formalized, hardly supported by relevant tools, and customer orientation is hard to guarantee (Simons & Bouwman, 2005) [26]. How a service development approach should be structured depends on things like the type of service innovation and the kind of service (Fähnrich et al., 2006) [27]. Open innovation models feature quite prominently, but there is considerable room to improve collaboration within service firms as well as between service firms (Reneser, 2006) [28]. Successful inter-firm collaboration and innovating in networks requires specific (dynamic) capabilities to accomplish the necessary internal and external transformation (Amit & Schoemaker, 1993) [29]. The capability to change depends on the ability to scan the environment, to evaluate markets, and to quickly accomplish reconfiguration. Actual measurement tools, capability models and innovation roadmaps are largely missing. Open innovation is characterized by a sharing of knowledge, critical resources and capabilities within and across the boundaries of organizations, and it is enabled by institutions in an open network environment, allowing for the emergence of new technologies, products, services, processes as well as management practices and business models. There is a growing realization that innovation is 23

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interdependent in each of these domains: service innovation requires innovation in business models, while product innovation is directly related to service innovation, and process innovation leads to innovations in business models. Consequently, innovation can seldom be restricted to the product or service offering or the delivery process, but also involves the way organizations collaborate and the supporting information and communication platforms and architectures. The work of Hansen & Birkinshaw (2007) [30] summarizes this concisely with the term: innovation value chain. They argue that the weakest link principle applies throughout the innovation process, from conception through to production. Three main phases are identified: creation, development and diffusion. A company needs to manage or control all three aspects sufficiently; being good at just one will not suffice. According to the weakest link approach, the focus must actually shift to the phase in which the company fares worst. Many companies fall into the trap of focusing solely on creation and on incorporating specific customer requirements, rather than taking responsibility for co-ordinating or managing the entire innovation value chain. To successfully co-ordinate the entire innovation value chain, a company must be skilled at a number of important tasks related to the flow of ideas, collaboration and knowledge. These are: internal sourcing, cross unit sourcing, external sourcing, selection, development, and the company-wide spreading of ideas. Put simply, this means that people need to collaborate and exchange ideas, while also having the resources to do so. The external sourcing function establishes the link with the work of people such as Chesbrough and Vanhaverbeke in the field of open innovation. Although the work identifies a relationship with obtaining knowledge externally, the innovation value chain concept seems to be strongly linear, particularly when it comes to finding external parties and solutions. The innovation value chain describes the process of an organization in a linear manner, from conception through to production.

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Figure 4: Innovation value chains within an open innovation network

Collaboration between organizations is central to networked innovation. Constant co-ordination and exchanges take place in respect of innovation competences, work processes, agreements and technologies. This does not mean that, when viewed from their own perspective, the organizations that participate in the network are in the same phase of their own innovation value chain. The Networked Innovation process can be described by extending Hansen’s standard model to a network level and drawing a distinction between the innovation value network and the individual innovation value chains of the companies involved. An illustration is given in Figure 4.

User empowered innovation The individual user influences the way new services are created and incorporated into their day-to-day routines. Service innovation is to a large extent user-driven, and directed towards providing a specific user experience. Service innovation is an interactive process in which multiple actors, including 25

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consumers, play a role. Service innovation is about co-creation, i.e. users providing feedback with regard to existing services and suggesting alternatives, or even developing their own services or content. Intensified interaction with customers will improve the effectiveness of service innovation. The major issue is how to move from personalized services to asset-based services, i.e. services that are reusable and scalable, and that allow for replicative use. However, technology-based services may cause companies to lose touch with customers, which mean they lose an important source of information for service innovation (Matthing et al., 2006) [31]. The rise of the user in participating in the innovation process and acting as innovators changed drastically over the last decade from consumer role to the innovator role.

Figure 5: The Rise of the User (Source: IPTS, Jean Claude Burgelman, EC 2007)

Because services involve a considerable amount of human activity, they rarely adhere to a predefined process. Services are perceived as the outcome of a process (the service product) as well as the process itself. Generally speaking, products contain elements of both goods and services in varying degrees. The term (total) offering, or total/integrated customer solution, is used to emphasize the fact that a mix of goods and services is required to satisfy the want or need of a customer, for example, a copying machine with a service contract. In his work The Wealth of Networks, Benkler (2006) [32] describes a fundamental change in how people in modern economies think and act. Communication and making something meaningful of

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

one’s life have become important building blocks for modern economies. Personal computers and the internet make it possible for people to work out what is important to their lives more often and more quickly. Individuals and groups are obtaining and being given a clear role in the innovation chain and exercising direct influence on developments in companies and governmental authorities so that the latter meet their specific requirements (von Hippel, 2005) [33]. LEGO is a well-known example of individuals directly influencing products. From the LEGO website, consumers can download software to design products of their own, order them, and share/upload them in a community. One can download the designs, or order the products. Another example of individuals/users participating and cocreating products design is FabLab [34]. The FabLab program (fabrication laboratory) was started in the Media Lab at MIT in 2007, broadly exploring how the content of information relates to its physical representation, and how a community can be powered by technology at the grassroots level. The Fablab has developed into a global network of standardized open hardware setups. People from all over the world are using it to create and develop their own ideas and solutions. As of July 2010, there were 45 labs in 16 countries, per a list assembled by MIT [35]. In The Netherlands only, there are 4 FabLabs in different cities. Furthermore, large organizations no longer have a monopoly on knowledge. Larger companies are becoming aware that they must specifically seek to collaborate in order to acquire the knowledge and other assets that they lack. ICT plays an indispensable role here. Knowledge can be shared 24 hours a day on a scale and at a level of efficiency that is simply unprecedented. The role of ICT has been particularly ground-breaking in terms of granting access to the knowledge of individuals, groups and smaller companies, referred to as ‘crowdsourcing’ or ‘intelligence of the crowd’. Crowdsourcing is a technique that uses the collective knowledge available in a group of people or organizations that is not predefined. Crowdsourcing as innovative power is seen increasingly being used in services development and problem-solving. Companies such as P&G, IBM and Google are already making use of this technique. P&C’s management has decided to source more than 30% of the company’s R&D knowledge externally and has set up the Connect & Develop programme and an associated portal to do so. IBM uses its annual worldwide jam sessions to obtain ideas and solutions from outside the organization, and when Google launched its mobile Android platform it held a competition to design the best mobile applications. Crowdfunding is another form of crowdsourcing, which describes the collective cooperation, attention and trust by people who network and pool their money and other resources together, usually via the ICT. The recent experiences in this line of the Obama Administration, such as challenge.gov (challange.gov) [36] powered by the Idea-Scale (Ideascale) [37] platform, crowdfunding of music [38] (www.sellaband.org), books [39] (tenpages.com) or the crowdfunding or the crowdsourcing exercises in Amsterdam [40] and ABN AMRO bank´s corporate venturing Group Dialogues Incubator [41], and other places in Europe, certainly point to this direction. The sustainability of such initiatives under the current economic and policy climate in Europe is, however, unclear. Sellaband has already stopped, and crowdfunding as an addition to venture capital is still struggling towards scale.

27

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The motivation of the users to participate in crowdsourcing is not fully clear. There is number of business and scientific papers and academically proven thesis’s on this subject. See [42] [43] [44] among others. A range of social phenomena are also emerging in which people club together based on their ideologies or interests to gather knowledge, design software or make content freely available. Wikipedia, open source software and Creative Commons licensing (http://creativecommons.org/) [45] are typical and well known examples of such phenomena. Value is created by bundling knowledge and efforts; direct financial gain for individuals is not always the priority. The reasons for which people are actively contributing go beyond the simple monetary rewards. Rather, it seems that people are taking up the possibilities of social computing applications to do things differently, to do things in ways that have not been available before and that make sense to people. As Benkler [32] in `The Wealth of Networks: How Social Production Transforms Markets and Freedom` also argues, "personal computers, camera phones, audio and video editing software and similar utilities are examples of tools whose value increases for users as they are enabled to explore new ways to be creative and productively engaged with others". These trends make the innovation process more complex and less predictable. New tools and methods, such as living labs, can play an increasing role in guiding the innovation process.

The role of technology Services are more and more enabled by information and communication technology. Technological developments like the digitization of information, the increased processing capacity of computer chips, miniaturization and increased mobility of devices, the use of sensors and location technologies, increased interoperability between services, security, and natural interfaces (Bouwman et al., 2005) [46], enable mature architectures and platforms for knowledge sharing, collaboration, and electronic commerce transactions, anywhere, anytime. Information and communication technology, more specifically the Internet, make it possible for service innovations to open up entirely new markets, for instance Netscape, Google, eBay, SAP, Adobe, EasyJet, and Skype. These new technologies made it possible to move away from the labour-intensive, interactive services that were set in a physical environment. Thanks to information and communication technology, services delivery can be asynchronous and does not require the presence of a service delivery staff. It became possible to separate services and to deliver them at a distance. Information and communication technologies help distinguish the information world as separate ‘marketspace’ from the physical marketplace (Rayport & Sviokla, 1994) [47] and make it possible to exploit virtual value chains (Rayport & Sviokla, 1995) [48]. “Technology has transformed many former inseparable services into services that can be consumed any time or place” (Berry et al., 2006, p. 57) [49]. ICT is an important driving force behind innovation. The special role that ICT plays in boosting innovation can be attributed to a variety of features, such as , for which Novay uses the term networked innovation (van Buuren, Haaker, Janssen, 2009) [50]: • • • • •

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its ability to connect people and systems, the possibility of remote access of services and resources, the possibility of combining or integrating ICT with existing services, collecting and interpreting information, its ability to offer a platform to build upon concerning new services, the personalization of services.


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

These features of ICT affect the definition of services, products, processes, business relationships and business models, as well as the innovation process itself. Innovation using ICT entails specific opportunities and challenges. The nature of the technology invites collaboration, for instance in the development of generic platforms, or in establishing a connection between partners, colleagues or customers. This is unique to ICT and therefore also an essential element of collaborating on ICT innovations. LEGO and FABLAB are excellent examples thereof. For ICT service innovations in particular, more open and networked forms of collaboration between industrial, governmental, academic and user stakeholders in the innovation process have been identified as a crucial policy challenge. Living Labs are platforms that implement this open innovation model. Living labs are defined as user driven open innovation ecosystems based on a public-privatepeople-partnerships, which enable users to take an active part in the research, development and innovation process. Examples of Living Labs are environments in which technology is given shape in real life contexts and in which (end) users are considered ‘co-producers’. They bring together stakeholders from the quadruple helix. An ecosystem is established in which new products and services in real-life environments are created, prototyped and used. Users are not treated as mere customers, but as early stage contributors and innovators. The Living Lab is therefore an important mechanism for RDI activities as it. Over the past decade, Living Labs have become an established part of local and regional innovation systems, using a variety of methods and tools, and focusing on a wide array of domains and themes.

The role of IPR in open innovation In the initial work on open innovation, much emphasis has been on trading IP. To quote Chesbrough in Open Business Models [51]: “Patented technologies that are not used in the company’s business, and are not used by somebody else, are a waste of shareholders’ money.” At the same time, much evidence exists of open innovation that is hardly based on protecting intellectual property, such as the move to open source and open knowledge, where large communities of experts collaborate in an open environment on complex products. Think for example of Linux or the open knowledge car Common. Benkler gives a good account on drivers in this field in his work the Wealth of Networks. Open source development is not an informal licensing scheme. The use and re-use of software under open source is strongly regulated, and can be restrictive. Also, it does not always preclude that a commercial fee is demanded for distribution of the software. Often, governance structures are in place to make sure software development leads to high-quality products. For the creative commons licensing scheme of digital content (www.creativecommons.org), different types of IP protection are available and are well-defined, ranging from sharing with only an attribution requirement, to restrictions on commercial use or on developing derivative works. It cannot be stated that one sort of innovation is more open than another. Depending on the context of a company or organisation, different strategies can and should be followed. Using an open IP strategy can help opening up a latent market. Protecting IP in collaboration can help in getting a competitive edge in a highly competitive market. In that sense, IPR does not play a different role in open innovation than in closed innovation, albeit that the fact that collaboration is involved makes it more complicated. An excellent account of the legal issues of in open innovation in services is given Vallat (2009) [52]. She defines open innovation as innovation with extensive networking between all actors (not 1-1 as in Chesbrough), user involvement/user centricity, and open access to the innovation process through 29

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open functional platforms. These three elements lead to the following recommendations for policy and law: • • •

Patents should be questioned as they hinder spill-overs in networked innovation; they do not seem to be legitimate in this context. Current frameworks for IP ignore the difference in motivation between user driven innovation and manufacturer-driven innovation. Also, the role of the user as an innovator is not taken into account. Interoperability is required for effective open platforms, including a larger role of open standards.

For services, many innovations do not meet the requirements for protecting through patenting. Think of new business models or technology driven organization innovation. So many existing IPR mechanisms are hard to apply. This implies to informal IP protection becomes more important in the case of services. Publishing ideas in order to strength your brand, secrecy are examples. Formal and informal ways of protection are not exclusive or competing, but should be used complementary. Effective strategies for this are lacking, however.

Classifying open innovation We have seen many different styles of open innovation. In Feb 2008 Logica management consulting published a Survey `The Road to Successful Open Innovation: A Little Like being in Love` [53] - Ten different cases are discussed and analysed here. In van Buuren et al [50] fifteen different cases are analysed. In our OSI study, also fifteen different cases are discussed and analysed. When looking into these examples, it is clear that there is a large diversity, leading to confusion and making it difficult to draw good and solid conclusions. By means of a classification of open innovation, we can shed a better light on different forms of open innovation. We take two dimensions in open innovation as leading: 1.

The structure of the network or collaboration: is it one-to-one or networked based, is there user involvement, is there of role for mediation?

2. The role of intellectual property rights (IPR): is it structured and regulated, or is it informal. This gives the structure as given in Table 1. The traditional definition of open innovation, as used by Chesbrough, primarily covered one-on-one, non-mediated open innovation with formalized IPR. It concerned trading intellectual property that was obsolete. Others emphasized the role of open source/open knowledge, or the role of innovation intermediaries. All these innovation structures can be seen as different forms of open innovation.

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Non-Mediated 1 + User

Informal IPR Lead User innovation User Panel services (e.g. Gfk Panel services)

Mediated Non-Mediated 1 on 1

Human capital flow Joint Tenders

Open innovation cf. Chesbrough Mergers/Aquisition

Social networks based

Innocentive Search&Selection employment services

Fora; Conferences

Networked Innovation; Framework Programmes; Open Source / Creative Commons

Leading technological institutes; Innovation networks (Syntens, IIP Create, NL; Pera, UK)

Leading technological institutes

Mediated

Non-Mediated Network (incl.User) Mediated

Formalised IPR Crowdsourcing (e.g. LEGO)

Table 1: Classification of open innovation

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3

Methodology

To achieve the goals outlined above, the study applies an interdisciplinary research approach based on literature reviews, industrial input and case studies. The relationship and interdependencies of the different research methodologies is given in the figure below.

Figure 6: Overview of the Work-plan

The research work will start with an in-depth analysis of the state-of-the-art related to open service innovation, including relevant societal and technological trends, and open service innovation practices described in industry reports. The study follows the quadruple helix model (public sector, research, industry and people perspectives) and considers impact aspects like user centricity and service quality, and changes in economical aspects in enterprise innovation in relation to open innovation processes. The results of the state-of-the art analysis will provide input for the design of a case study protocol to be used in the case studies. In a second step case study research is performed, and the results made subject to cross-case analysis. Findings from the case studies will be documented in a highly structured way in order to enable subsequent analysis. In a last step the findings from the state-of-the-art and the case studies will be combined and synthesized into a model for the economic and societal impact of open service innovation. Also an assessment of the potential for Europe’s intense knowledge services industry and policy implications is given, based upon benchmark results from leading OECD countries.

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

3.1

Results from desk research

Companies face competition every day and continuously deploy a variety of strategies to increase their market share or profit margin. Innovation plays a large role in this respect, both in terms of process optimization and in developing new products, services or even business models (Den Hertog, 2000 [20]; Forfas, 2006 [21]). It is striking that most authors focus on –and limit themselves to– the microeconomic level (i.e. the individual company or organization). The focus is on survival, geared towards the best market and innovation strategies for a particular company, but not, for instance, innovation from the perspective of the impact that companies have on each other. The loss of one company may result in the rise of a much larger and more valuable market for other companies or activities. Consider for instance that it was IBM’s outsourcing of the development of an operating system that helped Microsoft to secure its leading role. Strategic collaboration between different parties also receives insufficient attention and is often limited to the outsourcing of R&D. Meso- and macro-level thinking can be found in the more economic and policy-oriented literature, but this is often limited to a sector, region or country, casting insufficient light on the level in between. In the project plan a list of relevant literature for the study of the impact of open innovation was summarized. The literature differed from descriptive firm based evidence of the impact and implementation of open innovation to large scale EU and national surveys on this topic. From the literature list we have selected papers that provide measures or approaches to determine the impact of open service innovation [54], [55]. In addition to the literature in the project proposal, additional work was selected on the macro level of impact. In the next subsection we briefly summarize the main findings of these papers. For details we refer to the full papers. The innovation value chain Hansen & Birkinshaw (2007) [30] introduce the concept of the innovation value chain. Three main phases are identified: creation, development and diffusion. They argue that the weakest link principle applies throughout the innovation process, from conception through to production. A company needs to manage or control all three aspects sufficiently; being good at just one will not suffice. Van Buuren et al. (2009) [50] extend Hansen’s standard model to a network level drawing a distinction between the innovation value network and the individual innovation value chains of the companies involved. The Inter-organizational Context of Open Innovation Vanhaverbeke (2007) [15] expands on Chesbrough’s ideas about open innovation in a number of essential respects and applies them to the value network perspective and the management of relationships in the associated innovation networks. He emphasizes that a structural capacity for innovation requires network management both in and between companies. Innovation and ICT in service firms Gago and Rubalcaba (2007) [56] explore the increasing importance of innovation in services in a regional setting. They argue that measuring innovation impact of services by means of conventional indicators does not fully capture the multi-dimensional nature of innovation in services. Coproduction indicators such as trust, quality and timing may be just as important as more conventional indicators such as costs, productivity, employment etc.

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The paper provides an econometric model that measures the influence of different variables on the various dimensions of service innovation. Next to product/service and process innovation also organizational innovations are included to study the impact of the restructuring of internal and external collaboration and workflow. ICT, Innovation and Business Performance in Services In their paper Hempell et al. (2004) [57] study the link between ICT use, innovation and business performance in services in Germany and the Netherlands. They find a positive correlation between ICT investment and productivity increase in service firms. Moreover, with respect to the innovation process they conclude that continuous innovation has a positive pay off on ICT productivity and that ICT is used more productively if it is complemented by own innovation efforts in ICT-using firms. Adoption of open innovation strategies Chesbrough (2003) [7] describes a paradigm shift from a closed to an open innovation model based on observations of a small number of (large) companies. The literature on open innovation is dominated by case studies regarding the implementation of open innovation, which does not provide insight into the full implications, and impact of open innovation. Based on a longitudinal innovation surveys in the Netherlands starting from 1992 Poot et al. have conducted, possibly as the first, a large scale study on the adoption of an open innovation strategy by firms from different industries. Next to the definition of measurable variables for the adoption of open innovation the paper provides some valuable insights. First, they provide evidence for the paradigm shift towards open innovation. Moreover, they show that this shift occurs in shocks instead of in continuous process and that the timing differs significantly across industries. Second, the study suggests that internal and external strategies are complements instead of substitutes. Important is the observation that in their view the limitation of CIS data does not provide the possibility for a full study of the adoption of open innovation. HP’s Open Innovation Strategy is leveraging Academic Labs [58]. HP Labs seek technology from around the world for next-generation smart printers, optical chips, wireless nano sensors, and more. Laser on a chip: Funded under an HP Innovation Research Award, this chip, fabricated by Professor John Bowers and his group at the University of California, Santa Barbara, uses a new technique to integrate a 50-micron laser on a silicon photonics platform. When Rich Friedrich of HP Labs looks into the future, he sees desks used as 3-D displays, printers that automatically tailor a newspaper to a reader's tastes, faster and more secure cloud computing servers, and wireless nano-sensor networks that monitor the environment. But he also sees that achieving these technologies will require tapping into resources beyond HP's own intellectual property. It will require an embrace of "open innovation," the idea that companies should make wider use of ideas and technologies that come from other sources—and allow their own technologies and ideas to be adopted by others. Balance scorecard for open innovation Investing time in collaboration, innovation and knowledge exchange can be costly matter. Based on findings of a number of case studies Flores et al. (2009) [59] have developed a special version of a balanced score card to measure the impact of Industry-University collaboration. The proposed balanced scorecard distinguishes six different perspectives and defines the associated objectives and measures. Moreover, the cause and effect relationships between the objectives are identified. Although developed in the context of university-industry collaboration, the perspectives and objectives could be applied in a more generic setting when the measures are adapted accordingly. However, extrapolation to a mesa level could be difficult since the main perspective of a balance scorecard is a single firm.

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Related EU studies In 2006 a study was conducted on the impact of open source software on innovation and competitiveness of the ICT sector in the EU - EU FLOSS [60]. The importance of ICT in service innovation, the knowledge intensive open source networks, and the adoption of the open source software by companies have interesting parallels with the current study. The study provides a high level model for determining the economic impact of open source. Baffling numbers regarding the impact of economics value, hidden productivity, and market shares are presented. Interestingly the EU plays a significant role in the open source arena, even compared to Asia and North America. Nedimovic (2009) [61] gives an interesting account on trends in open innovation in services, renewing the definition of open innovation of Chesbrough to the definition used in the context of this project. In an accompanying study Vallat (2009) [52] discusses first insights on the intellectual property issues and competition issues of open innovation, identifying possible obstacles for the proliferation of open service innovation. Both studies, however, do not give directions for assessing the impact of open innovation. The Innovation Index This NESTA [62] report gives an intermediary overview of a project developing an innovation index for the UK, measuring investment in innovation and its effects. Therefore it seems to be most relevant to measuring the impact of open innovation. Reason for the work is that measuring innovation is very much biased to industrial innovation and R&D. Especially in the services sector, these indicators fail, however. This is report by many other studies, including Reneser, identifies so-called “hidden innovation” and derives that hidden innovation is responsible for two-thirds of UK’s labour productivity growth in the private sector. The index builds upon the Community Innovation Survey (CIS) as well on the European Innovation Scoreboard (EIS). It extends the usual innovation metrics with downstream co-investments needed to commercialise and profit from new ideas, such as organization innovation, investments in skills, product design and marketing/branding. Next to measuring at the meso/macro level in the UK, it also measured innovation at the firm level, based upon the innovation value chain of Hansen & Birkinshaw. Relevant aspects include the nature of the firm’s partners for innovation and the nature of collaboration, as well as innovation management and process innovation. Challenges for EU support to innovation in services This report gives an overview of statistical evidence of innovation in services and the policy rationale for better support to innovation in services from an economic perspective. It tries to identify support measures at activity level, firm level, sectoral level as well as market level. At the firm level, the role of the user is emphasized. At the sectoral level it is shown that current innovation support mechanism is predominantly biased towards technological innovation. Generally speaking, services companies seem not to innovate less than manufacturing companies, but they innovate differently. Business expenditure in R&D is much less, as well as collaboration with public science institutions. Moreover, there is an enormous diversity in innovation in the services sector, where knowledge intensive business services innovate even more than in manufacturing. The report mentions the service sector innovation index as a basis for measurement, again based upon the EIS. This uses the following 12 indicators, ranging from R&D expenditure, non-R&D innovation expenditure, so nature of the innovation and nature of the collaboration. 35

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Discussion As mentioned in the introduction of this chapter the literature covers a wide range of different topics and economical levels at which the innovation is studied. In the following figure we plot the literature summarized in the previous subsection according to their specific focus area and economical level. For the focus areas we distinguish between: innovation, openness, services and ICT. For the economical levels we take the common distinction between micro, meso and macro level. The meso level refers to networks of organisations, and not so much to sectors. One of the characteristics of open service innovation is that it is not retrained by sectoral borders.

Figure 7: Literature overview by example according to focus area and economic level

The study of innovation in general and service innovation in particular can be approached from many different angles. This is also reflected by the vast amount of available literature. Many authors have approached open innovation from a managerial point of view with an emphasis on innovation strategy and implementation thereof. This is often substantiated by case studies and CEO inquiries. More recently, studies have been published, such as Poot (2009) [63] and Gago (2007) [56] that tried go beyond the hype of open innovation, and studied the impact of open (service) innovation based on a limited set of objectives measures and available data. Although a major leap forwards, only parts of the impact of (service) innovations are studied, leaving many open issues. From the literature, a number of hypotheses can be derived related to the subject of the project: 1.

Open innovation is the main R&D modus;

2. Open innovation in general is stronger in larger firms than in SME; 3. Open service innovation is stronger in SME than in larger firms; 4. Innovation in services is less prominent than industrial innovation;

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

5. Clustering is weaker in service networks than in industrial networks; 6. Societal impact of open service innovation is larger than the open innovation in general; 7.

OSI is better suited for areas for high intangible components like services;

8. IPR regulation is not a strong impediment for OSI. To our knowledge the available literatures does not provide a uniform model with which the full impact of open (service) innovation can be determined. Therefore in the next section we try to construct an impact model based on relevant findings, models and measures from individual contributions that would allow validating or refuting these hypotheses. The list of hypotheses will be extended on the basis of case insights.

Impact of Open Service Innovation Model In order to be able to compare the cases and link them to literature and statistical data, it is crucial to start from a common model of issues that we want to study. The model is important to the study; it shows where EU or national policies influence open service innovation and where open service innovation can lead to impact.

Based upon the literature identified above, we developed a model comprising 5 interrelated subjects that are of interest: 1.

The firm/organization itself

2. The network of organizations in innovation 3. The societal context: including the role of the user / people 4. The innovation process: iterative and interactive 5. The service(s) that are innovated. For all 5 subjects and their relations, relevant issues have been identified from literature. These are given in the model below. This model is the linking pin between literature, cases as well as statistical data. In the Annex of this report we give the relation between our model and the models used in literature.

37

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Figure 8: Open Service Innovation Model

The service delivered is the key concept in the model. It is delivered by a firm or organisation, in the context of a network of organisations and society. Society encompasses the user or customer perspective; impact of open innovation can be beyond the scope of the individual, but in this study user participation has focus (PPPP). The innovation process is the final top-level subject, as this is also strongly influenced by open innovation. Each of the top-level subjects as well as their relationships can be operationalized in a number of relevant issues, characterising the subject or the relation. From the firm perspective, for example, the reasons for innovation (productivity growth, cost savings, market growth, as well as the reasons for opening up are included (skills shortage, skills development). Many of the relations are two folded: the catalytic nature of a service can have a severe impact on society; on the other hand, society can introduce barriers to adoption or inclusiveness, such as limited access to the Internet.

3.2

Overview of innovation policies in EU member states in relation to open services innovation

This section will feature some of the most interesting general examples from across the Member States. This inventory is based on De Jong et al (2008) [64] then it is extended considerably and analysed in the OSI study. Different types of policies can be distinguished. De Jong et all (2008) [64] use the following classification scheme.

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Policy area Research and Technology Development (RTD) policies

Description Policies to stimulate private RTD efforts.

Interaction-oriented policies

Policies to facilitate linkages in the innovation system, thus aiming to favour an interactive environment.

Entrepreneurship policies

Entrepreneurship policies aim for the creation, survival, growth and transfer of private enterprises.

Science policies

Science policies help to maintain a strong public knowledge base. Scientific knowledge should also be diffused to private enterprises. Education policies help to develop and maintain a sufficient supply of well-qualified employees.

Education policies Labour policies

Labour market policies determine the size and flexibility of a country’s working population.

Competition policies

Policies to stimulate the functioning of markets. Policy makers should break down barriers to access markets, fight against cartels, and thoroughly analyze intended mergers.

Table 2: Classification schemes: Policies (2008)

Most of the schemes were national polices but a few focused on the regional and local level. When analysing policy schemes from the national and local/regional level, we should group the different initiatives according to the four categories above. Moreover, additionally, to understand the rationale and impact of a given initiative it should be seen in the wider innovation context in the given country.

Austria . Dienstleistungsinitiative (Services Initiative) http://www.ffg.at/content.php?cid=1059 Date of launch 01.10.2009 The Dienstleistungsinitiative of the Austrian Federal Ministry of Economy provides financial support (Euro 8.7m in 2009/2010) for services innovations in all sectors of the economy. Within established innovation support programmes like “COIN” and “basic programs” administered by FFG (Austrian Research Promotion Agency) an extra budget was defined for services innovations. Over this, the development of innovative services, business models or organizational innovations are supported. Before the programme, only 28% of all research funds in Austrian companies were spent on services innovation (and 71% for product innovation). This is a clear market failure, because overall, services count for 68% of the Austrian economy. Therefore the purpose is to: • • •

raise awareness of the value creation through services innovations; enhance the productivity of the service enterprises; and Support services innovation around products in the traditional industry as well. 39

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Target audiences are businesses with low or no experience in innovation programmes in the past, e.g. in the tourism industry, retail or IT-services. SME receive more support than large companies. There has been a high response rate from service businesses, i.e. spending the money is not a problem; rising awareness of characteristics of services innovations among experts working in juries and public agencies; and rising awareness of services innovations among businesses. Thus, the traditional perception of innovation is changing: away from technical innovation towards a comprehensive notion of innovation Impulse program: http://www.impulse-awsg.at/iP/ Date of launch 2004 The “impulse” programme of the Austrian Federal Ministry of Economy provides financial support for companies in the creative industries. It awards funding to excellent innovations within design, architecture, multimedia/games, fashion, music, film, media, advertising and the art market. There are three programme tracks: impulse XS for micro enterprises and self-employed people, impulse XL for SMEs and impulse LEAD for networks (consisting of SME and non-profit-organisations). The purpose is to support innovation within the Creative Industries. “Impulse” is administered by AWS (Austria wirtschaftsservice). There are several calls every year. There is strong competition and a clear excellence principle. Projects receive funding corresponding to between 50 and 80% of project costs. The programme has increased awareness of innovation in the creative industries, and more risky innovations and business models have been are implemented by enterprises

Czech Republic According to the survey performed by the Czech Statistical Office (April 2005, http://www.mpo.cz/dokument11671.html) less than 50% of Czech enterprises operating in services can be considered “innovative”. Among various types of services provided, most actively innovating companies exist in the field of data processing and in the research and development sector. In these fields, 54-55% of national enterprises systematically introduce various services innovations. Companies specialized on technical measurements and testing, insurance, financial services and retail business appear to be substantially less innovative, with 24-29% of the companies applying innovations of their services. Service-oriented companies operating in the building and architecture sector, technical engineering, transport and telecommunication services were found to be even less innovative. Surprisingly, only 13% of these companies have admitted that they introduce any services innovations on a systematic base. Geographically, the highest share of innovative service enterprises is concentrated in Prague (48.8%) and in the Vysočina region (47.7%). Similarly, a high share of innovative service companies is also recorded in the Karlovy Vary (Carlsbad) region, which is explainable by the influence of major spa centres attracting foreign visitors to that area (Pokorný et al., 2008).

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Over the last decade, the Czech government has approved a number of key political and strategic documents that provide a basis for a systematic policy supporting national research, development and innovations. Though most of these documents revolve around various aspects of technical innovations in general, very limited space has been devoted so far to innovation services as such. Chronologically, the earliest document formulating the governmental attitude towards innovations and R&D in general, was the National Innovation Strategy of the Czech Republic (http://www.mpo.cz/dokument11688.html), approved by the Czech government on 24 March 2004. The Strategy, which was elaborated by a group of top national specialists from relevant state bodies, primarily concentrated on principles how to build-up and cultivate innovation-stimulating environment and the respective national innovation infrastructures. According to the Strategy, the Czech innovation system should have consisted of four principal building components: 1.

management of innovations (i.e. state and public bodies, the national government, the ministries etc.);

2. educational system, including the institutions supporting life-long learning; 3. financing of innovations (i.e. risk and venture capital funds, pre-start seed capital funds…); and 4. innovation entrepreneurship. The National Innovation Strategy also mentioned three weak areas of the Czech innovation system which included (1) insufficient financial support for research, development and innovations, (2) weak political and legal framework for innovation activities, and (3) insufficient collaboration between the national research organizations and the enterprises. Following the principles outlined in the National Innovation Strategy, the National Innovation Policy of the Czech Republic for 2005-2010 has been articulated (http://www.mpo.cz/en/businesssupport/innovation). This policy defines four fundamental strategic goals to be reached in order to further develop national innovative environment: • • • •

boosting national R&D as a primary source of innovations; creating an effective partnership of public and private sectors; developing the appropriate human resources for innovations; creating effective mechanisms for state R&D and innovations support.

Recent critical evaluation of national research, development and innovation system, however, has revealed a range of weaknesses of the system. In particular, it has been noted that the results of most national R&D projects are rarely applied by the industry. The practical applicability of many R&D outputs is problematic. That is why the R&D results are only seldom transformed into high-quality innovative products and services. Currently operating national system supporting R&D activities is over-complicated, highly fragmented among a number of administrative bodies and largely ineffective as such. The quality of the national R&D is generally problematic. The current practice of evaluation of R&D results is based on formal criteria. As a result, the replications of average quality research are common whereas truly outstanding research and/or development outputs are rare.

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In order to cope with these problems, the Government has approved the Reform of the Research, Development and Innovation System in the Czech Republic (http://www.vyzkum.cz/FrontClanek.aspx?idsekce=535919). The most prominent goals of the Reform include: • • •

Major reduction of administrative burden and a general simplification of the whole R&Dsupporting system; Heavy focus on quality and excellence in R&D and innovations; Major support to R&D projects involving aspects of practically applicable cooperation between research organizations and enterprises.

Based on the principles outlined in the Reform of R&D&I system, the Government has approved the National Policy of Research, Development and Innovation of the Czech Republic for 2009-2015 (http://www.mpo.cz/dokument65232.html). In this act, the fundamental strategic milestones for national R&D are defined as follows: • • • • • • • • •

Implement strategic management for R&D and innovations at all levels; Formulate public R&D support in accord with the concept of sustainable development; Enhance effectiveness of the system of public support for R&D; Use R&D results in innovations and improve the cooperation of public and private sector in R&D; Improve the participation of the Czech Republic in international cooperation in R&D&I; Ensure and cultivate quality human resources for R&D&I; Create in the Czech Republic the environment stimulating R&D&I; Elaborate appropriate links to other policies; Thoroughly evaluate R&D&I system.

It is envisaged that the application of the National Policy of Research, Development and Innovation of the Czech Republic for 2009-2015 shall be closely concerted with recently revised Act No. 130/2002 Coll. on the Support of Research and Development from the Public Funds (http://www.vyzkum.cz/FrontClanek.aspx?idsekce=532844). These two fundamental documents create a complex framework necessary to boost the effectiveness of Czech national research, development and innovations to the benefit of the national economy. In order to further stimulate industrial and services innovations, the Government has also newly established the Technology Agency of the Czech Republic (http://www.tacr.cz/en/) which shall provide financial support to high-quality R&D projects with market potential. Reviewing the national policies and legal acts related to R&D and innovations, the National Conception of support for small and medium-sized enterprises for 2007-2013 (http://www.mpo.cz/dokument24151.html) has also be briefly noted. The SMEs are known as the main innovation movers. Therefore, the effective SMEs support is considered as a crucial building stone of a national innovation potential. The document outlines primary targets and relevant instruments that are to be applied in order to facilitate further development and competitiveness of domestic SMEs. The principal goals which are to be achieved by 2013 include: • • •

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Further improvement of a national infrastructure supporting the development of SMEs; Creating direct support measures for SMEs (i.e. the development of dedicated advisory and information services, improving the access of SMEs to financial sources…); Boosting the competitiveness of SMEs, with special emphasis on the use of EU structural funds.


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Besides the above-outlined political documents, more detailed analysis of the Czech R&D and innovations can also be found in a series of topical studies which have been recently published by the Technology Centre of the Academy of Sciences of the Czech Republic. These studies prepared in a collaborative effort of top national experts from public research organizations, universities, private enterprises and state administrative bodies, have been widely employed during the preparation of the above outlined national R&D&I acts and policies. In particular, the Green Paper on Research, Development and Innovation in the Czech Republic (Klusáček et al., 2008a) provides comprehensive analytical and conceptual material which critically evaluates the state of research, development and innovation in the Czech Republic in an international context. The follow-up of the Green Paper – the White Paper on Research, Development and Innovation in the Czech Republic (Klusáček et al., 2008b) formulates concrete measures that should lead to an enhancement of the national innovation system. The document also provides brief characteristics of ultimate goals that are to be achieved in individual areas of national innovations – innovation management and legal framework, human resources for innovations and financial resources for R&D&I. Another recently released study covering national innovation environment – Innovation Potential of the Czech Regions (Pokorný et al., 2008) provides detailed geographical and statistical analysis of current innovations performed in individual regions of the Czech Republic.

Germany ”Entrepreneurial Regions” http://www.unternehmen-region.de/en/index.php Date of launch: 2001 The initiative was first launched in 2001, but since then a couple of sub-initiatives and new branches were added which focus on particular topics within the initiative. “Entrepreneurial Regions” stands for the building and expansion of special technological, scientific and economic competences in East German regions. Its goal is the sustainable transfer of these competences to innovations, economic growth and employment. The ”Entrepreneurial Regions” development programmes therefore establish the basis for the creation of regional economic clusters. The approach taken by “Entrepreneurial Regions” is simple and straightforward: it is not important where the initiatives' headquarters are located, but how they use their potentials and competences to strengthen their region's competitive ability. As basic principles the following point must be met by all projects: lateral thinking, cooperation, strategic planning and entrepreneurial action. Thus, the region's identified core competences feed into innovation-oriented regional alliances which develop to clusters on a high level and with strict market orientation. The programmes' aspirations are based on the fact that the most innovative products and applications are almost exclusively the result of highly specialised and integrative knowledge from many sources, minds and organisations of widely varying origins and orientation. In ”Entrepreneurial Regions”, this philosophy is closely tied to an entrepreneurial approach. The entire philosophy of ”Entrepreneurial Regions” and the corresponding programme policy is based on four guidelines: 43

•••


Only the best from the region - innovation based on regional strengths Innovation is the key to successful economic development. ”Entrepreneurial Regions” promotes outstanding innovation potentials (”strengths”) in the region. Innovations: taking action together in a creative and strategic manner Innovation potentials are set free in regional alliances made up of members from the industrial, scientific, academic and administrative community. ”Entrepreneurial Regions” demands a binding, consistent strategy with a symbiosis of flexibility and creativity from the initiatives. Innovations with market orientation ”Entrepreneurial Regions” initiatives must be based on strategically designed concepts and a longterm marketing strategy. This also holds true of R & D projects. The background: entrepreneurial thinking, planning and action are pivotal to the success of regions. The aim: regions with clear profiles based on outstanding technological platforms The aim of ”Entrepreneurial Regions” is to develop regional alliances into regions with a clear profile regional clusters. This can only be achieved when emphasis is placed on top quality from the start of development support onward. The BMBF manifests this claim to excellence of the supported initiatives through the high standards of the funding guidelines and the accompanying evaluation. Companies as well as universities, extra-university research and educational institutions in the New German Länder are based in the same region. The initiative is continuously monitored and to be evaluated, but the data are internal to the funding Federal Ministry of Education and Research. ZIM – Central Innovation Programme SME http://www.zim-bmwi.de/zim-ueberblick Date of launch 2008. The initiative aims to sustainably support the innovative performance and competitiveness of small and medium-sized businesses, including crafts and independent entrepreneurs. Thus, it helps firms growing, to create new jobs, and to secure existing opportunities. The initiative is not focussed on a particular technology. (http://www.zim-bmwi.de/download/infomaterial/informationsbroschuere-zim-englisch) The funding includes • • • • • •

incentives for SMEs to make an greater effort KMU towards market-oriented R&D and innovation, to minimize risks linked to technologically based R&D, to transfer R&D results quickly into innovations on the market, to strengthen cooperation between SMEs and research institutions and to intensify technology transfer, to enhance the engagement of SEMs in R&D cooperation and in innovative networks, to improve the management of innovation, cooperation- and networking in SMEs.

Companies and economically oriented research institutions which cooperates with the respective SME. An evaluation study confirms the wide acceptance and high impact of ZIM can be found at: http://www.zim-bmwi.de/download/studien-berichte-expertisen/zim-endbericht-kurz_08-2010.pdf Strategic Partnership “productivity of services” http://www.service-productivity.de/

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Date of launch 2009. The initiative links the topic productivity of services with central questions of innovation management for services. It aims at improving R&D within the field productivity of services. Main tasks of the partnership are: • • • • • • •

to provide a structured process supporting the funding scheme “productivity of services” to link projects of this funding scheme in a network to link national and international activities within research about services as well as innovation policies to strengthen the public awareness for the topic productivity of services to provide analysis of existing statistics, standards and indicators to support a broadly based knowledge transfer between science and industry to recommend future steps for all stakeholder groups as guidelines for a better productivity

Tight cooperation of economy, science and politics are based on the PPP model, including enterprises, educational institutions, intermediaries, politics, and research institutions. Monitoring of the activity accompanies the initiative, but the results are internally to the Federal Ministry of Education and Research so far Integrated Productivity management for Services in SMEs (ProDiK) http://www.prodik.de/DasProjekt/tabid/307/language/de-DE/Default.aspx?PageContentID=276 Date of launch 2009 The initiative provides instruments to measure review and evaluate services for small and mediumsized enterprises. This innovative tool „Service Navigator“ supports SMEs in analysing their service performance to shorten their way into “Service Engineering”, i.e. to systematically develop innovative and new services. As a second step, a coaching package is tested to reach a maximum of SMEs and support their effort to steer the correct course to sustainable growth using the “Service Navigator”. Aims of the measure are: • • • • • •

Development of the tool “Service Navigator” as an instrument to systematically evaluate productivity of services To link this instrument to existing Service Engineering tools without gap Development of an approach towards integrated management of productivity in SMEs Raising of awareness for added business chances in SMEs based on a systematic evaluation of services productivity Development and testing of a coaching instrument for SMEs Development and testing of new and innovative approaches to improve productivity

Target audience are small and medium-sized enterprises. Monitoring of the activity accompanies the initiative, but the results are internally to the Federal Ministry of Education and Research so far. Individual-related services using the example of rare illnesses http://pt-ad.pt-dlr.de/de/982.php 45

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http://www.mobilehybricare.de/ http://www.servcare-projekt.de/ http://www.eive.de Date of launch 2008. Complex value chains in individual-related services using the example of rare illnesses have not been often under investigation so far. Thus, we have a deeper understanding of enterprise-related services. Due to the requirements of a modern health management, needs and options related to the economy of health have to be developed. Rare illnesses will be used as a model for new needs and requirements in medical as well as care services. Aim of the collaborative projects is the development of client-oriented solutions concerning services along the whole chain of consultancy, supply and care. This includes new funding approaches, particularly by linking public and private service contractors. Barriers and chances will be identified and internationalisation will be taken into account as well. With a second step the dissemination of the identified services to other service fields will be ensured. Three sub-lines will be followed: • • •

Mobile HybriCare – Use of Mobile Services to integrate hybrid individual-related services in home-care-cases develops instruments, models and tools towards systematic design of individual-related hybrid products. Servcare_ALS – design of cooperative service systems focuses on transformational processes concerning interaction, services and technology. EIVE – development of innovative support concepts aims at a holistic accommodation of people suffering from rare illnesses.

Target audience Consortia of research institution, enterprises and associations Examples from North Rhine-Westphalia (NRW) for “Sustainable Growth” Effizienz-Agentur NRW Website: http://www.efanrw.de/index.php?L=1 The Effizienz-Agentur (EFA) North Rhine-Westphalia (NRW) develops numerous instruments for enhancing resource efficiency in companies and concerning the sustainable economy through new strategies, innovative technology and ecologically-oriented measures. With the PIUS-Check (Cleaner Production), EFA provides companies in NRW with a tried and tested instrument for the development of new business opportunities. With the check, the relevant material flows and the current level of production technology are recorded and the possible improvements in production are illustrated. Since the year 2000, over 1000 projects have been initiated with small and medium-sized companies. Thus, for example, since the introduction of the PIUS-Check – a process oriented material flow analysis – in 2000, over 500 projects have been started in companies and total savings of 18 million euro identified. InnovationCity Ruhr Website: http://www.innovationcityruhr.de/de/

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

InnovationCity Ruhr is a pilot project and long-term economic stimulus package concerning innovation and energy efficiency which is intended to give an economic impetus for the future. A city with about 50.000 inhabitants or a district in the Ruhr Area shall be rebuilt as a low energy city. Aim of the project is the bisection of the demand for energy of the InnovationCity Ruhr till 2020 through the application of new technologies. Therefore, buildings are to be redeveloped energy-efficiently and new constructions shall be built by means of state-of-the-art technology. Innovative technologies shall facilitate low-carbon power generation and modular and energy-efficient transport systems shall enable environmentally friendly mobility. Fraunhofer inHaus Center Website: http://www.inhaus-zentrum.de/site_en The inHaus innovation centre is the cooperation platform of the Fraunhofer-Gesellschaft for new technology and application solutions in residential and commercial properties. Practical application laboratories for living, office, teleservice, hotel, events, hospital and nursing homes in the two research facilities inHaus1 (residential properties) and inHaus2 (commercial properties) serve as interface to the market. In close collaboration with partners from industry and research innovative product components and systems solutions with new efficiencies are developed and tested for investors, operating authorities, residents of residential properties and users of commercial properties. The objectives are, among others and apart from decreasing the running costs, reducing the energy consumption, protecting the environment and increasing security. ExcellenceNRW – Cluster Policy in http://www.exzellenz.nrw.de/nocl/noth/?L=1

North

Rhine-Westphalia

(NRW)

Website:

The state government of North Rhine-Westphalia (NRW) aims to make NRW the number one state for innovation. In this regard, clusters play a special role, as they bring innovations to the market faster due to the physical and thematic focussing of know-how and experience. The cluster policy of the state government of NRW supports the cooperation of firms, research facilities and the public purse in a total of 16 branches and fields of technology. These 16 clusters possess particularly significant potential for growth and are of great importance for the economic development of the state. Through the intensive cooperation of the players, a professional Cluster Management and with the help of competitions, special impulse for growth and innovation is to be set in motion. Example: Cluster Creative.NRW _ Cultural and creative industries NRW North-Rhine Westphalia's cultural and creative sector makes a significant contribution to Germany’s competitive and innovative capacity. Currently, 157,000 people are employed in the cultural and creative sector in NRW by approximately 46,200 companies. The central objectives of the Cluster Management are to showcase the growth potential of the creative and cultural sector in NRW on a national and international scale, and also to provide a sustainable upturn to the competitiveness of local self-employed traders and businesses within the cultural and creative sector. The Cluster Management is responsible for the following subsectors: Music sector, book market, art market, design sector, fashion design, advertising. The cluster project began in September 2009 and the initial set-up phase of the cluster features the development and establishment of the “Creative.NRW” brand, setting up a support network and concerted promotion of new talent at national and 16 Clusters in NRW international events by finding and presenting young talented people in individual sectors. 47

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http://www.exzellenz.nrw.de/kulturwirtschaft/noth/clusters/cluster-portraits/culturalandcreative-sector/?L=1&cHash=f635b3a7e5 http://www.creative.nrw.de/ Example: Logistics cluster “LogistikLand NRW“ The logistics sector is one of the leading growth sectors in North Rhine-Westphalia and, with 21,600 businesses employing 270,000 people, ranks as one of the federal state’s largest sectors. If employees with logistics-related jobs in industrial and commercial companies are taken into account, then the amount of people engaged in the logistics sector stands at over 600,000. The main objectives of the cluster activities are to bundle all the strengths in the logistics industry in the state of NRW, to increase the sector’s competitiveness, to market NRW as a logistics location and to secure jobs. On 1.2.2008, the Cluster Management launched Logistics NRW under the name ”Logistikland NRW”. Its main tasks focus the establishment of a logistics community in NRW, the marketing of the state as a location and a comprehensive site policy, the generation of key future areas of technology and industry, further development of product strategies for logistics SMEs, the improvement of the sector's image in NRW, the representation and support for members vis à vis third parties and the support for regional logistics networks and institutions Websites: http://www.logistik.nrw.de/ http://www.exzellenz.nrw.de/logistik/noth/clusters/clusterportraits/ logistics/?L=1&cHash=6383491de2 Example: Leading Edge Cluster competition-excellence logistics cluster “LogistikRuhr“ The Leading Edge Cluster competition is intended to take Germany to the top of the league of technologically advanced nations. The Federal Ministry of Education and Research launched the competition in the summer of 2007 under the slogan ”Germany's Leading Edge Clusters - more innovation, more growth, more employment”. The high-performance clusters formed by business and science that enter into strategic partnerships are set to bring forward Germany's innovative strengths and economic success. (Total 200 Mio. Euro, 2010 - 2015, 5 winners)-Success for “EffizienzCluster LogistikRuhr“ (2010): 40 Mio. Euro funding for next 5 years. Website: http://www.logistik-ruhr.de/

Spain..... The Government of Spain begun in 2004 policies to encourage the transition towards a more knowledge-intensive and innovative economy in all sectors. To achieve this goal the Ministry of Science and Innovation (http://www.micinn.es) was created specifically to provide support for innovation in all sectors of economy. The Ministry has a total budget for 2011 of 5,401,987.74 thousand Euros. Specifically for innovation is expected a total budget of 2,426,974.62 thousand Euros.

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The Ministry of Science and Innovation helps to promote innovation through the following policies: •

Development programs through direct aid, mainly in the form of grants, repayable loans to long-term zero interest rate and other types of aid (support for venture capital, mutual guarantee companies, etc.).

These programs are generally applied to stimulate innovation activities in certain fields and projects are selected through a competitive bidding process. •

Incentives in the form of tax, applied to the amount of income tax. These incentives are horizontal, and its general application is free (there is no competitive bidding or budget predefined limit). Are aimed at encouraging private sector initiative, without influencing the innovation field that focuses the company (not limited to certain areas, programs or initiatives). Other forms of support, such as reductions in contributions of researchers in exclusive or promotion of foreign procurement for carrying out R & D.

The Development Programs are reflected in the annual Work Program (http://www.micinn.es/stfls/MICINN/Investigacion/FICHEROS/PROGRAMA_TRABAJO_011_1201-11.pdf) as a tool for planning and programming in the short term. Specific programs in innovation are: •

• •

INNOCREDIT (1,000 M Euros, Loans), to support innovative projects aimed at renewing the production model of the companies through investments that increase the value added of their activities, consequently increasing their productivity. The innovation may be product, process or organizational nature. Apoyo a Agrupaciones Empresariales Innovadoras (AEI), (Support to Innovative Business Groups) , which supports the strengthening of clusters as a measure to mitigate the impact on certain market failures related to problems of size and coordination have on the possibilities for companies relate to each other and knowledge flows within reach sufficient critical mass to develop innovative projects that improve competitiveness. The Science and Culture Program of Innovation (4,000,000 Euros) Projects which aim to promote scientific culture and innovation through dissemination, outreach and communication, both from the perspective of the professionalization and training in this type of outreach activities and from the perspective of the realization of events or other activities and the publication and distribution of products and tools for dissemination whose final destination is the company or specific segments thereof.

To follow the implementation of these policies there is a Spanish Observatory of Innovation and Knowledge (http://icono.fecyt.es/) where they generate metrics and information for monitoring, analysis and prospective permanent and systematic actions of I + D + i. The innovation strategy, E2i, (http://www.micinn.es/stfls/MICINN/Innovacion/FICHEROS/E2i_texto_web_100806.pdf) aims to double the innovative activity of the Spanish economy and focuses on the promotion and creation of structures to facilitate better use of scientific and technological development. Open innovation in Services is focused in the modernization of the administration as key element of the production model change.

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Ireland 1 . Ireland’s enterprise development agencies, namely: IDA Ireland, Enterprise Ireland, the County Enterprise Boards and Science Foundation Ireland are responsible for enterprise promotion. They each have a core area of focus, which enables them to build a depth of relevant expertise and understanding of the enterprise cohort for which they are responsible, and to focus their own resources to best effect. The enterprise agencies are operating within a wider business environment which has a strong bearing on the ultimate performance of enterprises and on the impact of firm level interventions. The companies supported by the enterprise agencies occupy a critical place in Ireland’s economic performance, in that the value of agency supported firms to the Irish economy extends beyond their immediate employment effects. They contribute greatly to the country’s turnover, employment, exports, domestic economy and tax. Agency assisted enterprises employed over 300,000 people in 2009. Through indirect impacts, the enterprise agencies support between 0.7 and 0.99 additional services jobs, for every person directly employed by their client companies. Agency supported enterprises also accounted for approximately 80% of total exports, and 38% of national GVA in 2008. Agency assisted companies are a very productive part of the economy with average GVA per employee of €235,000, compared to a national average of €75,700. These enterprises also contribute greatly to the domestic Irish economy having contributed almost €40 billion in 2008 through payroll, materials and services. In addition, agency assisted clients accounted for approximately 63% of total corporation tax for 2008; this is estimated to rise to 78% in 2009. Over the past decade, and against a background of deterioration in national competitiveness, the share of high value added manufacturing and internationally traded services in agency supported employment increased from 62% in 2000 to 75% in 2009. Productivity growth was twice the national average over the same period, and the number of R&D active firms has grown. During the recent recession, most of the job losses in internationally trading firms resulted from a restructuring of operations rather than closures. These firms continue to trade from Ireland and should be better positioned for employment growth as the world economy recovers. A government-sponsored Innovation Task Force developed a vision for innovation in Ireland in March 2010. Central to the vision is the development of an innovation ecosystem. The key elements in such an ecosystem are: • • • • • •

Entrepreneurs and enterprises (indigenous and foreign-owned); Investment in research and development; The education system, in particular, higher education institutions; Finance, in particular risk capital; The tax and regulatory environment; Public policy and institutions.

The Taskforce agreed six principles as fundamental to creating an International Innovation Hub: • • • 1

The entrepreneur and enterprise must be at the centre of our efforts. Establishing, attracting and growing and transforming enterprises Availability of smart capital is crucial for starting, growing and transforming enterprises.

Material adapted from “Making It Happen – Growing Enterprise for Ireland (Forfas recommendations for Irish Government), “Innovation Ireland – Report of the Innovation Task Force” (March 2010) and information available at Enterprise Ireland http://www.enterprise-ireland.com/

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SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

• • •

An education system which fosters independent thinking, creativity and innovation Establishing flagship projects and prioritising the provision of excellent infrastructure Focus of our national research system to target areas of strategic and economic advantage

The table below describes a range of innovation support mechanisms available in Ireland. Name of the Innovation Support Mechanism

Description

Competence Centres

Competence Centres are collaborative entities established and led by industry. They are resourced by highly qualified researchers associated with research institutions who are empowered to undertake market focused strategic R&D for the benefit of industry. A successful centre would operate with State funding of the order of EUR 1M per year over a five year period. Continued funding would depend upon a range of metrics such as increasing industry research funding, growing the numbers of companies involved, licenses and the revenue from them and spin-offs, new products and processes leading to increased export sales.

Applied Research Enhancement (ARE) Centres

ARE Centres are research facilities funded by Enterprise Ireland specialising in a number of technology fields including ICT and Software, Bio Life Sciences and Pharmaceuticals, Bio Medical Devices and Materials. The Centres exist to develop next generation technology platforms for the benefit of Irish industry through a dedicated applied research strategy. However, the Centres also provide expert knowledge and research capabilities for Irish based companies in search of innovative solutions. The Innovation Partnership Programme encourages Irish based companies to work with Irish colleges to access their expertise and resources to develop new and improved products, processes, services, and generate new knowledge and know-how. Enterprise Ireland provinces grants of up to 80% towards eligible costs of the research project. The proposal process and administration of the project is managed by the participating third level research institution. To qualify for funding the research project must outline how the company will benefit in terms of its growth, the evolution of strategic R&D within the company and the creation of new knowledge that can be used by the company to generate commercial advantage. Grant funding to projects involving early stage companies and pre-HPSU (High Potential Start-Ups) clients will normally be capped at EUR 100,000. All Innovation Partnership projects require the company partner to contribute a minimum cash contribution of 20% of the total budget. The aim of the R&D fund Simulation Grant is to assist a company, who is not actively involved in research and development activities to investigate the potential for an R&D project. Funding under this initiative is designed to assist a company to explore suitable product or process development projects and to gather the necessary information to enable the company (and Enterprise Ireland) to come to firm conclusions about proceeding with a full R&D project. For more information, go to R&D Stimulation Grant. The R&D Small Projects Fund supports product, process or service R&D projects where the expenditure amount is less than EUR 150,000. This may suit companies undertaking R&D for the first time or companies progressing R&D Fund: Small Projects. The R&D Large Projects Fund is suitable for companies that are ready to progress to larger projects or what to set their own research agenda. The maximum R&D grant that a company can receive is EUR 450,000.

Innovation Partnerships

R&D Fund

R&D Advocates

The R&D Advocates Programme is designed to help companies develop and grow through engaging in technical innovation, development and design. We can provide the assistance you need to work out if R&D can help your business. An R&D Advocate with a proven track record of success in business is selected to work with your company on our behalf. The initial half-day visit is free. You can apply for an additional 3 days consultancy support at a subsidised rate. Enterprise Ireland pays EUR 600 per day and the client pays EUR 300 + VAT per day for this consultancy support.

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Innovation Vouchers

The Innovation Voucher initiative was developed to build links between Ireland´s public knowledge providers and small businesses. Innovation Vouchers worth EUR 5,000 are available to assist a company or companies to explore a business opportunity or problem with a registered knowledge provider. An individual voucher is worth EUR 5,000. You can pool your voucher with up to ten other companies to create a larger fund to a maximum of EUR 50,000 to address an issue of common concern.

France... Public Policies for Open Innovation Open Innovation is relatively new in the landscape of French research and innovation. However, a significant number of tools have already been implemented by the French government to allow greater knowledge and technology transfers from public research to the private sector. Here are some examples: CIFRE PhD thesis Subsidy for any company that hires a French doctoral student for research collaboration with a state laboratory. The Agence Nationale de la Recherche The ANR deals with public research institutions and companies with a dual mission: produce new knowledge and promote interaction between public laboratories and corporate laboratories by developing partnerships. The Crédit d’Impôt Recherche (Tax credit on Research) The CIR allows to partially funded research activities undertaken by companies. It allows, among other things, a grant award for companies outsourcing part of its R & D to a public research laboratory. Clusters “Poles de compétitivité” are the emblematic solution that France has put in place to foster collaborations between public research and industry by bringing together in one geographic location companies and research centres. “Cellules de valorisation” These Technology Transfer Offices help promoting technology outside labs and universities as well as create start-ups. Start-ups: Driving Open Innovation Start-ups are a key element in the landscape of Open Innovation. This was clearly explained by Chesbrough in his book Open Innovation, for the United States, where the ecosystem is extremely favourable to the creation of start-up, which is not as clear for Europe and France. A start-up is a young company that develops and commercializes innovative technology. The initial technology may be the result of public or private research. Nevertheless, the project is usually carried

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by a group of highly motivated people, making start-up very dynamic and responsive. They are a very important vehicle for transferring knowledge and technology. References and links • This article is partly inspired by an article http://www.eirma.org/eiq/016/pages/eiq-2009016-0018.html published by Frédérique Sachwald, head of R&D within the French ministry of higher education and research in QIS, the magazine member EIRMA. • Study conducted by the OECD Open Innovation Global Networks http://www.oecd.org/document/43/0,3343,en_2649_33703_41441387_1_1_1_1,00.html • Global networks Open Innovation systems and national public policy report by the Ministry of Research and Higher Education, by Frederique Sachwald. • Henry W Chesbrough [7] Open Innovation: The New Imperative for Creating and Profiting from Technology. See especially Chapter 2 on the closed innovation and erosion.

The Netherlands Services innovation and ICT innovation program Links: www.si-i.nl Date of launch 2010-2011 (extension to 2013 envisioned) The Dutch service industry accounts for 70% of the GDP and has generated the bulk of the job growth in the Netherlands over the past decade. The services industry is subject to major changes, particularly as a result of market liberalization and the impact of new technologies. In the digital age, companies and institutions are faced with radical changes in consumer behaviour, with citizens and consumers having access to technologies that allow them to actively create value in society as individuals. Information and communication technology (ICT) also plays a leading and disruptive role in the innovation of products, services and revenue models. The services sector presents major opportunities for growth, given the increasing trend towards the liberalisation of services on a global level. New innovative service concepts on the basis of ICT can be duplicated in a relatively simple way and then exported. The focus here is on those service sectors that are prominent internationally in terms of both technology and market potential. Companies and organisations operating in the all important creative and financial industries (including Philips, Logica, IBM, ING ABN/AMRO, and Rabobank) have joined forces in this innovation programme to integrate their ambitions with respect to service innovation and ICT. Although supported by the Dutch Government, the board of directors and supervisory board consist of representatives of large companies, SMEs and knowledge institutions acting and innovating in the field of service innovation itself. More than half of the funding of each project which runs under the SII programme is taken care of by market companies. Each individual project will have to contribute to one or more of the ambitions of the SII programme. On a strategic level, these ambitions aim at the Netherlands becoming the European hub for smart services, the European knowledge centre for financial logistics. The programme is initiated by IIP CREATE, Holland Financial Centre and Novay. Main elements of the programme: •

Innovation tender: R&D support: 25–50 % of R&D costs, o The first innovation tender related to the following issues: content, connectedness, einvoicing, e-payments, and micro-paid micro-experiences. o Eight proposals have been awarded public funding. 53

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• • •

o The second innovation tender deals with issues like lifestyle and e-files. Scientific research on service innovation and engineering and on e-identity and e-profiling Platform projects: Virtual Creative Collaboration Platform, e-Invoicing platform, Dutch Valley Human Capital and dissemination of results and knowledge valorisation: academic exchange programme, conferences, publications. See [65].

Financial: 25MEuro turnover, 12, 5 governmental contributions. No assessment as yet on the impact. Services innovation and ICT innovation regional innovation program Links: http://www.overijssel.nl/thema%27s/economie/economische/ict/ Date of launch 2008; runs until 2011 The region/province of Overijssel wants to give directed support to a number of societal sectors, aiming at innovative services. Societal innovations are combined with economic innovation by companies; demand and supply are brought together. The program leverages the investments in broadband infrastructures and pilots of 5MEuro over the last few years. The program focuses on a number of sector, where public organizations are in the lead: education, knowledge transfer and innovation support, creative industries (culture, tourism, media), public services for businesses, and healthcare and wellbeing. The program was implemented through 4 tenders; early discussion and pre-evaluation of tendering organizations was possible. Impact: No assessment as yet on the impact, but all tenders were highly successful. Size: 12MEuro, of which 50% public funding. WBSO (R&D promotion act) http://www.senternovem.nl/wbso/nieuws/2007/evaluatieonderzoek_wbso_doet_wat_zij_beoogt. asp Links: http://www.senternovem.nl/wbso/English.asp Date of launch 1994 (still running) WBSO is a Research and Development (R&D) tax credit. This Act provides a fiscal facility for companies, knowledge centres and self-employed persons who perform R&D work. In this context, R&D means technical/scientific research, the development of technologically new physical products or physical production processes (or parts thereof) and the development of technologically new software (or parts thereof). Non-companies qualify only if they perform R&D on the instructions and at the expense of a Dutch company. Under the Act, a contribution is paid towards the wage costs of employees directly involved in R&D. The contribution is in the form of a reduction of payroll tax and social security contributions and an

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increase in the tax deductions available to self-employed persons. Applications must be received one month before the start of the period for which these facilities are required. The WBSO strongly favours technological innovation, but has been liberalized towards software development in 2009. Broader application towards other services sectors, was advised in an evaluation, but is not expected. Yearly expenses 400-500M Euro. Impact: WBSO was evaluated in 2007 for the period 2000-2005. Main conclusion was that WBSO indeed increases private R&D expenses. It has a stronger effect on SME’s than on larger companies. SME’s take 69% of the budget; 25% goes to the services sector. Innovation voucher scheme http://www.senternovem.nl/innovatievouchers/English.asp Date of launch 2004; ended in 2010 Innovation performance contracts are in progress to be replaced the Innovation vouchers as of 2010 The goal of the innovation vouchers is to lower the threshold of SME’s to involve knowledge institutions for research. Originally, two different vouchers were issued: small vouchers worth 2500€ that can be handed over to universities and research institutions, and larger vouchers worth 7500€, of which two-third is government sponsored and 1/3 has to be paid by the company itself. Only one voucher can be requested per year. Later, private vouchers were introduced (same size, slightly different funding) that can be used to involve private R&D institutes in research. A specific voucher scheme was introduced in healthcare. Yearly expenses 10-15 Million Euro (public part); 3000 small vouchers; 3000 larger vouchers (of which about 60% is used eventually). Impact: the scheme was evaluated in 2008, and proved successful (http://www.senternovem.nl/mmfiles/Evaluatie%20innovatievoucherregeling%2020052006_tcm24-263659.pdf). Main conclusions were that innovation vouchers are effective and unique. It is easy to use and reaches a large audience. It is often used for services innovation. It is mainly used by innovative SME’s. Not all vouchers handed out are used: less than 60% was used eventually. This can be explained by the low threshold of the scheme. Of the larger vouchers, 54% is used for product innovation. Of the small vouchers this is less (more is used for services). The instrument reinforces existing relations between knowledge institutions and companies, more than it creates new (lasting) relationships. Despite its success, the new cabinet of Prime Minister Rutte decided to abolish the innovation voucher scheme. Leading technological institutes LTIs are public-private partnerships for research and innovation. There was one LTI aiming at services, the Telematics Institute (ICT based services, now Novay). In addition to the description above, the LTI were evaluated by the OECD in 2003. A major conclusion of the OECD Growth Study was that governments need to be more responsive to the rapid transformation of innovation processes and related business needs and strategies, and that greater use 55

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of public-private partnerships can increase this responsiveness and enhance the efficiency and costeffectiveness of technology and innovation policy. In the framework of its follow-up work on micropolicies for productivity and growth, the OECD is conducting peer reviews of member countries' public-private partnership (PP/P) programs for research and innovation. This report examined and assesses PP/P initiatives in the Netherlands, with a special focus on the LTIs. It was prepared by the OECD Secretariat, in co-operation with the Dutch Ministry of Economic Affairs and in consultation with other stakeholders in LTIs. It takes into account the results of a peer review meeting which took place in June 2003 within the OECD Working Party on Technology and Innovation Policy. Link: http://www.oecd.org/dataoecd/49/18/25717044.pdf LTIs were evaluated positively in 2006 by the Dutch government, reinforcing the innovation infrastructure and bridging the gap between academia and companies. Despite the positive evaluations both nationally as well as internationally, the LTI instrument was replaced by a program-based approach to innovation policy, leading to, amongst others, the Services innovation program. This program is set up as a temporary initiative instead of on an institutional basis.

Norway. Norway has three governmental funding agencies for research, development and innovation: 1.

The Research Council of Norway (RCN): Norway's official body for the development and implementation of national research strategy. The Council is responsible for enhancing Norway's knowledge base and for promoting basic and applied research and innovation in order to help meet research needs within society. Annual budget (2010) NOK 7 billons, 350 employees. See www.rcn.no

2. Innovation Norway (IN): Promotes nationwide industrial development profitable to both the business economy and Norway’s national economy, and helps release the potential of different districts and regions by contributing towards innovation, internationalization and promotion. Innovation Norway offers products and services intended to help boost innovation in business and industry nationwide, foster regional development and promote Norwegian industry and Norway as a tourist destination. Annual budget (2010) NOK 6, 6 billions, 750 employees. See www.innovasjonnorge.no 3. The Industrial Development Corporation of Norway (SIVA) aims to develop strong regional and local industrial clusters through ownership in infrastructure, investment and knowledge networks as well as innovation centres. SIVA owns 44 business parks, 25 knowledge and research parks, 31 incubators and 54 small business centres. 40 employees. See www.siva.no Policy strategies and activities The Government of Norway approved Dec 5. 2008 the Report no 7 2008-2009 to the Stortinget (Parliament) about innovation: “An Innovative and Sustainable Norway”. The importance of the service sector and services innovation was discussed in this report. The policy strategies and instruments discussed are recommended to be the same for the industrial and the service sector. However, the Report addresses the lack of knowledge of the innovation processes and how growth happens in the service sector and which instruments that should be used. The Government suggests an initiative for knowledge development in service sector and services innovation together with the service business associations.

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From Dec. 2009 a “Forum for services innovation” was established, and they have been discussing the status of innovation in the service sector, services innovation, and future policy strategies. An empirical analysis of services innovation in Norway and the challenges for the innovation policy has been conducted. This report will be released in September 2010. It is expected that the Government will discuss service sector policy and instruments in the Budget proposal for 2011 or 2012. Policy Instruments Information about different instruments can be found in Norwegian on the agencies home pages. Evaluation of the Agencies and Instruments are done regularly, but also these evaluations are mainly in Norwegian (abstract may be in English). Date of launch Most of the initiatives are from the 1990s and beginning of 2000s. The Research Council of Norway (RCN) The RCN has four funding schemes and at tax deduction scheme (SkatteFUNN): Research and Largescale Programs, Independent projects (BIP-projects), Infrastructural and Institutional Measures and Networking measures. Under these 4 funding schemes there are the following programs and schemes for the service sector Core Competence and Growth in ICT - VERDIKT Research to place Norway at the forefront of ICT development and the application of ICT-based knowledge to innovation and interaction. The Centres for Research-based Innovation scheme (SFI) aims to establish or strengthen Norwegian research groups working in close alliances with innovative enterprises. The CRI scheme promotes long-term research that fosters innovation and enhances industrial competitiveness. The Board of RCN has decided that they would like to see a CRI in Services innovation, and at the moment two proposals are under evaluation. Independent projects (BIP-projects) are open to all sectors, and it is estimated that more than 50% of the projects include services, and that 1/3 of the annual budget of NOK 800 mill. Goes to the service sector. Course in Innovation Management and Business Models. For the management in companies that has carried out a BIP-project. Date of launch 2009 SkatteFUNN: is a public support scheme that should contribute to increased innovation and creation in Norwegian business. The purpose is for projects that are approved to produce new knowledge, information or experience, which in turn leads to new or better products, services or production methods. SkatteFUNN is a qualification-based and regulated scheme for all taxable companies in Norway. Small and medium-sized enterprises receive a 20% tax deduction on the project costs. All other companies receive 18%. Companies that are not in a taxable position receive the amount as a grant. Innovation Norway represents the first-line service: providing information and advice, processing and 57

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quality-assuring applications and offering opinions in regard to the Research Council of Norway, which has the authority to make decisions. Innovation Norway (IN) IN works with nine strategies areas/sectors, and offers financing schemes (grants, risk loans, low risk loans), competence enhancing programs, networking programs, advisory services and promotional services. Most schemes are open to all sectors, and about 25% of the budget goes to the service sector. Most of this is grants; more than 50% of all grants go to the service sector Of the nine strategic areas, the following three are in services: Travel and Tourism Strategic goal: In 2010, Innovation Norway’s tourism initiative shall contribute towards growth in the tourism industry measured by maintaining the number of commercial overnight stays at the 2009 level and 2% greater value creation, as measured by profitability. This growth should be sustainable. Culture and Experience Norway has extensive culture – but little business! Strengthen the sector in the form of a higher priority on our offices in Norway – and particularly abroad. The grants and attention in IN do not reflect the fact that the sector is one of the largest and quickest growing sectors in the world – and is also big in Norway. Increase the internal knowledge and expertise of the cultural industries Establish clear and offensive IN strategies for prioritized industries (films, music, games, design and architecture) ICT Sector work relating to information and communication technology (ICT) is primarily targeted at internationalization of the Norwegian ICT industry. The ICT initiative’s target groups are small and medium-sized companies with international growth potential and groups of companies, i.e. networks, clusters and sector-oriented projects. In the ICT sector project with high innovation grade and international focus are given priority the following areas: • • •

Mobile technology/wireless technology ICT in Energy and the Environment ICT in services innovation

The information sector is the third largest industry in Norway and is more and more important for the Norwegian economy. Create use of ICT in other industries such as the oil and gas sector contribute to innovation and competitive power. Programs and schemes aimed at the service sector: Design-programme The Design Programme offers businesses design advice and the transfer of professional design skills in regard to business/product design, identity design and packaging design. The objective is to persuade more companies to use professional design in their corporate strategy, thereby increasing their value

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creation and innovative capability. The programme has its own financing scheme. In partnership with the Norwegian Design Council, the Design Programme should raise the international profile of Norwegian design. The cooperation agreement between the Norwegian Design Council and Innovation Norway forms the basis of the Design Programme BIT-programme BIT is a concept that aims to modernize industries by organizing efficient processes both within companies and between companies and the market. Its vision is: common development – intelligent solutions. The programme can contribute to: • • • • • •

Increased value creation via electronic interaction with other companies in business sectors and value chains. Efficient use of information and communications technology in internal and external business processes. Development and innovation in the company's own business processes. Cost-cutting in the value chain. Added value for the goods/product on the market via a higher level of information and services. Increased contact with the market.

Innovation in Tourism Innovation Norway's strategy for the travel and tourism industry provides guidelines for contributing to development via the realization of projects/concepts such as: • • • • •

Encouraging entrepreneurship in the travel and tourism industry. Increasing innovation and skills within the industry. Increasing the value of existing companies via market-oriented product development. Promoting, encouraging the development of and using new technology. Implementing the Norway brand

Tourism Marketing Programme The objective of Innovation Norway's efforts in regard to tourism is to contribute to increased profitability within the tourist industry and to increase international market shares. Our goal is for over 4.5 million foreign visitors to visit Norway in 2010. The travel industry's greatest challenge is to increase knowledge and awareness of Norway as a tourist destination, and we should do this through brand-building and international promotion of Norway's position Marin Value Creation Programme The objective is to increase the value per kilogram produced as well as long-term relationships with customers in the market. MVP aims to strengthen the seafood industry's ability to exploit the competitive advantages of Norwegian quality raw materials and the generally high level of skill in Norway. The programme is founded on the market weakness in regard to market information and skills, which means that the industry is not able to reach its potential for value creation. The programme is based on three fundamental factors: a need in the industry for this type of initiative, a political objective of increasing value creation in the industry and professional justification for public intervention to correct the weakness in the market.

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Reputation Building Programme In order to trigger Norwegian companies' potential for sustainable innovations with international market potential, there is a particular need for focusing more on the market and on reputationbuilding. The Reputation Building Programme should follow up Innovation Norway's secondary objectives of raising the international profile of Norway and Norwegian business, and of organizing the coordinated implementation of action plans through prioritized industries ARENA-programme Arena should strengthen regional business communities' innovative capability as well as their talent for wealth creation by intensifying alliances between business participants, knowledge providers and the public sector. The Arena programme offers financial and specialist support for long-term development of regional business communities. These communities might be represented by business clusters, or by less mature relationships between companies and related knowledge and development organizations. The objective is to stimulate increased innovation in the business communities based on interaction and partnerships between business participants, R&D and education groups and government development organizations. 14 of 23 projects are in the service sector SIVA SIVA’s instruments are independent of sectors, but the infrastructures in Knowledge and Research Parks, Incubators and small business centres are mainly for the knowledge intensive industry.

Portugal Portugal new Business Angels’ Co-Investment Fund (SAFPRI) – Venture Capital vs. Les Miserables http://www.wbaa.biz/viewnews.aspx?id=57) The initiative is aimed at improving framework conditions and access to finance for research and innovation. Innovation has been unanimously acclaimed as the most powerful engine of growth, but as everyone also recognizes, innovation costs money. In 2008, it invested 1 million Euros, which is an increase from 2007 when it invested 412,000 Euros. The national Business Angel association plays a key role in the Portuguese entrepreneurship ecosystem. It adds management knowledge and experience acquired to the technological and scientific environment; it gives direct access to the international network of Business Angels, both European and worldwide; it opens doors for the commercial development of new projects in globalized markets; it invest “Smart Money” in early stage projects. This new service addresses a number if shortcoming in the investment market such as lack of co-investment funds for BA’s, lack of university venture capital funds, lack of regional venture capital funds and lack of exit options in the national market. The Business Angel association is engaged in a number of projects and positive initiatives. For instance, it stimulates: • • • •

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Entrepreneurship Education from Basic to Secondary School Professional Development and Training, Small Business Financing and Resources. Increase of Business Plan Competitions in Universities Innovation Infrastructures: Enterprise Nests, Universities, Laboratories, Tech Parks.


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Growth Area Smart Growth - Improve framework conditions and access to finance for research and innovation has been unanimously acclaimed as the most powerful engine of growth, but as everyone also recognizes, innovation costs money. And for new businesses in Europe, the options are not particularly enthusiastic when looking for money for innovation: •

• •

Public aids? Yes, they do exist, but in spite of some slow improvements in efficiency, for the most they come “à posteriori”, i.e. they reimburse expenses but they do not advance budget for investments and in most countries they take so long that when they come whatever innovation there was is long gone; Traditional loans? No, unless entrepreneurs have strong assets and accept to put them on stake, since as we all know banks play by the old traditional rule that says that “in order to get a bank loan, first you must prove that you don’t need one” Venture Capital? Yes, of course, this is the kind of “smart money” that makes all the sense for new businesses, as it us supposed to bring know-how and business guidance with it, but where to find it in Europe?

Unfortunately, from a realistic point of view, no major improvements – or innovation in services – are to be expected from the first two (potential) sources of financing in Europe within the next years, especially in this after-crisis, high deficits, context. All hopes therefore relay in the third, by now almost mythical, source - the creation of a dynamic VC market in Europe. But how to boost VC in Europe? The answer seems pretty obvious, even is its implementation may not be evident – after all it is not called Venture Capital for nothing. To boost VC, you should reduce the Venture of the investments, and increase the available Capital, to those that dare to practice it, which can – and should – be done by the State, as in the end it may also reap considerable benefits from the successful investments. A situation where all the three possible sources of funding listed above are combined in an optimal way can also be envisaged as a public-private-partnership where banks provide part of the capital, the state provides part of the capital and part of the guarantees required by the banks and Venture Capitalists assume part of the capital, part of the guarantees and enter with in-kind capital under the form of mentoring and knowledge. The reason why it isn’t done more often and at a larger scale remains a mystery, but probably has something to do with the fact that most of Europe still feels kind of uncomfortable with the word “capitalism” and with providing “support to capitalists” – something of a “Les Miserables” complex, that makes each European think that all public money should go for bread for Cosette and that each entrepreneur that is supported is in fact a potential greedy Thénardier. Few countries have inverted this trend, amongst them the UK, Germany, The Netherlands, and now – in its first steps – also Portugal. Action in Portugal has been twofold: the creation of direct co-funding schemes for Private Venture Capital Funds (up to 4M€ per fund) and Business Angels (up to 0,5M€ per each grouping of a minimum of 3 BA’s, and the legislation on tax incentives for Business Angels (more info on: http://www.wbaa.biz/viewnews.aspx?id=57). Both initiatives being recent, and - in particular for the first – with a delayed implementation due to the traditional problems of having old agencies coping with new measures (which raises a whole new discussion on the need for a new breed of public services in Europe), it is yet to early to present concrete success stories. It is however expected that during the mandate of the present Expert Panel an 61

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assessment of first results from these initiatives may be done. However, already at this stage, it can be said that by injecting 25M€ of public money in Business Angels investments until the end of 2012, the measure will allow to more or less double the total of investments made by BA’s over the last years. At European level, the focus should be on changing the “Les Miserábles” culture. For that, radical approach is probably needed. In the UK they have recently advised the Pope to create a prophylactic brand. I wouldn’t be so radical, but would propose the EU lo launch the European Year of the (Venture?) Capitalist. Carris (public transport company) car pooling experiences – car pooling as a low costization experience www.mobcarsharing.pt. Growth Area Sustainable growth - Decouple economic growth from use of resources by decarbonising the economy, renewable sources, modernising transport) Car pooling is a “green labelled” innovative services that is starting to make its way in most European cities. The “green labelling” of car pooling is not unanimous- can more cars in the cities be labelled “green”? But economic studies show that 1 car in car-pooling can replace up to 5 self owned cars that enter the city everyday only to be parked for most of the time, and in that sense they are certainly “green”. Still, progress of car-pooling initiatives, in most cases promoted directly by city authorities has been relatively slow. Several reasons my exist for this, amongst them the fact that “old habits die hard” but what also seems likely is that most of those initiatives may be targeting the wrong initial target audience. Instead of try to compete with car owners, to whom they offer a less flexible comfortable solution, car-pooling should maybe start to implement itself amongst public transport users (or at least part of it) to whom it offers a more comfortable and flexible solution. And while this may not lead to fewer cars in the immediate future, it may do so in the mid-term as the practice becomes more established and captures more audiences. The mobcarsharing service in Portugal is interesting exactly because it is promoted by a bus service provider in the city of Lisbon (Carris). A similar initiative is under study by the Metro operator in Porto. In the first case the car-pooling initiative is being considered as an extension of the trend towards smaller, more flexible bus services and mainly as a pilot experience o the trend towards “selfservices”, with the consequences in reduction of costs. A pooled car can in this way be considered as mini-bus with no driver, and therefore much less running costs (the so called “low costization of services”). This example also shows that importance of having an economic perspective for all initiatives with an economic impact, even the “green ones”, and that is easier achieved when piloted by companies, and not by public services. Information about the Carris car-pooling experience is available at www.mobcarsharing.pt. While the initiative is still at an early stage, first indicators are very positive. More information will be gathered throughout the duration of the Expert Panel in Services innovation and presented at next events. “New Opportunities Programme” – new opportunities against the galloping information syndrome www.novasoportunidades.gov.pt/

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Growth Area Support policies – Exchanges and upgrading of low skilled labour, trans-European training standards) In a world where everything seems to be changing faster, one thing that seems to resist quite well to change is the academic world, university curricula and qualifications in general. The Bologna process has forced many universities in Europe to change their curricula, to shorten the BSC level to 3 year down from 5, but in most countries, including Portugal, they have reacted by promoting “integrated MSC levels” of a further 2 years, and thus maintaining relatively untouched their 5 years curricula. This seems odd in our information age. A week of “The Times” now bears more information than a XVIII century citizen was expected to meet in his entire life. This year alone 4 exabytes (4.0 x 1019) of new information should be generated, which is more than in the last 5.000 years all together. The volume of new information doubles every year, which basically means that for someone who is starting a 5 years degree, half of what they learnt during the first year will be completely out of date by the time they reach their 3rd year. Does it still make sense to resist Bologna under such context? Do traditional university curricula of several years of duration make sense at all, especially for those already inserted in professional lives? Or do we need new ways of enhancing qualifications? Portugal has carried out a relevant exercise in this direction, with the “Novas Oportunidades” (new opportunities) programme – an opportunity for active workers to enhance their academic qualifications in “ad-hoc”, faster way, that takes into account the experience and knowledge acquainted during professional life. Information is available at:- www.novasoportunidades.gov.pt/ including statistic information, that shows a steady progress on qualifications of active workforce (more sensible on those with low level of qualifications), albeit with still a slower pace of correspondent career progress for those with enhanced qualifications.

Romania For Romania, the most problematic targets of the Europe 2020 Strategy are those related to the “smart growth” objective. Our investments in research, development and innovation are very low; increasing both public and private spending on these activities is directly related to the model of development that Romania will embrace after the economic crisis. If we return to a consumption-led growth companies will not feel the pressure to innovate and public money will continue to be spend ineffectively in these domains. Measures • • • • •

The creation of an independent national council on research, comprising business and academic representatives, which would allocate the public money for RDI. Romania's investment in R&D currently amounts to 0.5% of GDP. amplification of assistance to specialists in RDI in making the documentation needed to Access the European funds. the study of ongoing projects package, to assess their direct impact on renewal of production of goods and services. The evaluation is made in pragmatic way and not emotional, which may result in cancelling some of the programmes and replacing them with some new in the field of Durable Development, such as: Environment, Information, 63

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Food and Energy • • • •

• •

Co-opting the private economic environment in developing research programs. Supporting enterprises in developing their research and development programs. Attracting Romanian researchers working abroad to national research programs. Another highly relevant indirect RDI instrument with positive impact on the R&D budgetary funds and also on the private RDI intensity is the new Fiscal Code. It has introduced the flat tax rate of 16% on profits and revenues (from 25%-45% in 2004), and also diminishes scarcely, year by year, the social insurances burden on the labour market (from 49.5% in 2004 to 42% in 2013). The relevance of this measure for the RDI intensity may be translated into more funds left available at the business players for their own decision-making for future investments, within which RDI plays a strategic role. The positive effects will be more and more obvious on the medium and long run. An increased cohesion of the innovative entities from the public and private sectors, through the development of innovation networks, participation to technology platforms and the development of science and technology parks. An increased access of SMEs to information related to research results, to funding and cooperation opportunities, through dedicated support services.

Regarding the promotion of economic growth: • •

Re-thinking of the action plans concerning country’s physical infrastructure and agriculture. Both sectors could benefit from large inflow of EU funds and be sizable contributors towards ensuring a positive rate of growth in 2010 and beyond. the government should focus on specific sectors which provide a basis for future growth. Setting up the appropriate framework and incentives for investments in physical infrastructure and the energy sector should be a priority. This would also be in line with the EU proposals. The poor state of physical infrastructure has negative spill over effects in the economy, imposing large costs on economic agents. Over the last four years, realized infrastructure investments were, on average, around three quarters of the planned expenditures. Exploring alternative financing solutions – such as partnerships with reputable private sector agents or international financing institutions – could boost the country’s investment while creating more jobs. Ensuring complete transparency of the government financial accounts – especially those pertaining to contracts with the private sector and current expenditures. This would enhance authorities’ credibility and the ongoing reforms of the public sector would benefit of a public opinion support. Romania should also raise its capacity to attract EU funds by rapidly creating the necessary mechanisms and institutions. 2010 and 2011 are the ‘peak’ years, when a maximum amount of EU funds are available.

Regarding the aim of enhancing competitiveness, public policy interventions (i.e., public or private initiatives supported by institutional or financial public resources) should be based on specific guidelines. First, public policy interventions should be adjusted to a geographically variable scale/ scope of intervention. The most recent recommendations in the European Union warrant once more the priority of policy adjustment to involve cooperation between neighbouring local authorities or between neighbouring countries, or even between the EU and neighbouring regions. The adoption of the four operational concepts for spatial development as „destination” for public policy initiatives to strengthen competitiveness is consistent with the current model of reporting to the territory the projections of

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development, by identifying a system of axes, hubs and areas as physical support for the development processes. Second, the gradual allocation of the financial assistance should be made according to the difficulties of integration in the area of development, which are sized locally, regionally, nationally and perhaps internationally. The ESPON program recommendations suggest that the new Member States focus structural funds during the first phase on developing significant urban systems and other major agglomerations, a process that will facilitate convergence at European level but may even cause an increase of economic disparities and therefore can only be justified for a limited time. The next phase should include a national program of regional development with emphasis on increasing the second pillar of territorial development. The justification for these plans is based on the analysis of the potential functions and contributions to the positive spatial development of the development areas. •

Increasing the role of interventions in the development of programming capacity in the field of competitive development. The competitiveness consolidation policy is a process that requires continuous learning and real-time action for adjusting to changes in the economic situation and technological development. The integration of the new concept of territorial planning is gradual, long-term, with considerably high learning economies. Expected objectives may come from measures such as mapping the economic activity in the territory or the non-governmental institutional constructions for observation and monitoring. Enhancing the role of complementary financing programs by diversifying funding sources and stimulating private investment initiatives. At the level of the European Union a considerable multiplication of funding programs took place in the last decade, brought on by specific regional and sectoral needs. On the one hand, it is necessary to increase the institutional capacity to maximize the use of these sources. On the other hand, domestic economy should see a similar entrepreneurial effort to revive private initiative for investment programs. Stimulating the attraction of investment towards public intervention measures should be complemented by initiatives of the research community, of the local communities and by sectoral programs.

The objective regarding “sustainable growth” will also need substantial efforts from the Romanian authorities. • •

the creation of a public holding company comprising only the producers of energy from renewable sources, as a mean to increase awareness on this subject and to create positive synergy and coordination effects. the acceleration of investments in the program aimed at rehabilitating buildings in order to increase energy efficiency, by relocating funds from other public investments programs which are less relevant for the Europe 2020 targets (such as “First House”) and which create less spreading out effect in the economy. Faced with a rapid decline in domestic oil and natural gas production, the Government of Romania decided to develop a long-term energy strategy aimed at the efficient use of energy resources. The primary goals were to develop and adopt an appropriate fuel policy for the country that would (1) facilitate decision making for promoting the efficient use of energy resources and (2) formulate least-cost development plans for the energy sector. Additional goals for the new energy strategy included assessing Romania’s comparative advantages with regard to the availability and use of energy resources (both domestic and imported) and of environmental impacts associated with different fuel policy options. 65

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Romania’s renewable energy target for 2020 is 24 percent renewable consumption. In order to meet these goals and set standards for Romanian renewable energy, Romania created a renewable energy law, Law no. 220/2008 and National Action Plan to Promote Renewable Energies-2010. The documents include: • • • •

Incentives for small hydro, solar, wind, geothermal, biomass, biogas, and waste water sludge and gas projects. Incentives are offered for 3 years after completion of small hydro refurbishments to 15 years for new power plants. An outline for a green certificate trading market. Typically one certificate represents 1 MWh of electricity that can be traded. Suppliers must meet the annual mandatory target for green certificates; if they do not fulfil the target, they must pay a counter-value. Priority access for electricity produced by renewable energy sources, as long as such priority does not affect the safety of the National Energy System. Loan guarantees and tax exemptions for renewable energy investments.

Regarding the “inclusive growth” objective, in addition to promoting growth as a means to increasing employment, Romania needs policies targeted at improving the labour supply incentives of some special categories of workers: the youth, older workers, and females. Such measures would include more flexible work arrangements, such as part-time and temporary contracts, improved job search assistance and counselling, and targeted programmes, including job subsidization, where needed. Limiting the scope of the early retirement programs with the objective of increasing the effective retirement age of workers should help to gradually correct the imbalance in the ration between contributors and pension beneficiaries, enhance revenues of the pension fund and increase the replacement rates without resorting to transfers from other public budgets. Financial incentives to encourage workers to stay longer in employment should be considered. Retraining and skills upgrading programs should be made available to older workers and long term unemployed and the performance of the schemes should be monitored, in terms of achieving the objective of bringing people back into work. While the creation of new jobs per se is important, the quality of the human capital they embody is equally central. The distribution by levels of education of the labour force is positively correlated with value added, and hence with the overall competitiveness of an economy. Evidence suggests that in Romania the quality and relevance of education to the needs of the labour market affects participation and exacerbated skills shortages. To address this challenge, the education system is undergoing a comprehensive reform, which has already produced changes, especially in compulsory education. Nevertheless, more needs to be done, in particular by better aligning curricula with the demand for graduates skills. Improving the effectiveness of public spending on education, including by introducing performance related incentives, such as per capita financing, should be part of the reform agenda. Expanding the use of long life learning opportunities should better link the provision of skills to the fast changing sectoral and occupational profile of the demand for labour. • •

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Flexible labour legislation, especially the Labour Code. In 2010, the Romanian private healthcare market developed by around 13% to €373m, according to estimates included in the report “Private healthcare market in Romania 2010. Development forecasts for 2010-2012” by PMR, a research and consulting company. At the same time, the medical subscriptions market could stagnate, because of reductions in the number of company employees, whereas the health insurance market is expected to develop relatively rapidly, driven by individual insurance purchased by those dissatisfied with the


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

deteriorating quality of public healthcare. It is also assumed that clients will be poached from private healthcare providers (Report „ Private healthcare market in Romania 2010. Development forecasts for 2010-2012”). Sustainable solution to the public

Slovenia National Research and Innovation Programme 2011-2020 and the National Higher Education Programme 2011-2020 http://mvzt.gov.si/index.php?id=12266 Date of launch 7July 2010 Council for Science and Technology of the Republic of Slovenia in the debate found that described the design of the National Research and Development Programme in the contemporary economic and socio - political situation is no longer optimal and that the new strategic document in this field ”be the basis for a comprehensive innovation policy of the country, based on the knowledge that increase innovation capacity requires not only investment in research and development, but the harmonious development of the whole environment that encourages creativity and learning, developing new products and services, markets and new sustainable business models ”.It is proposed to extend its design from the only research and development on innovation and the meeting on 7 accepted July National Platform for Research and Innovation Programme 2011-2020. Based on the platform, the Ministry of Higher Education, Science and Technology, together with the Ministry of Economy and other actors responsible for implementing public policy research, development and innovation, drafted a proposal for new research and innovation strategy for Slovenia. Expected in November 2010, followed by a public debate on the document, in accordance with R & D and will then consider the Government and finally the National Assembly.

Switzerland Swiss National Science Foundation (SNSF) Innovation Promotion Agency CTI The Swiss federal system puts the responsibility for the promotion of scientific research on the Swiss National Science Foundation (SNSF) and the Innovation Promotion Agency CTI. The SNSF backs high-quality basic research projects and some applied research. Its €367m budget funds 7,000 researchers, the majority of whom are under 35. It supports basic research in all disciplines, from philosophy and biology to the nanosciences and medicine. The SNSF is also responsible for carrying out the National Research Programmes and for the National Centres of Competence in Research (NCCR). The CTI supports the transfer of knowledge and technology between businesses and universities, as well as promoting the development and application of new technologies. It brings companies and university researchers together by supporting their co-operation in applied R&D. CTI services range from action programmes in informatics to support the formation of high-technology firms. The tools that the CTI provides can also be used by small and medium-sized enterprises. Switzerland has a tradition of not using direct policy intervention. There is no provision of direct financial support for business R&D from government. All public funding instruments are directed towards the academic 67

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partner in science-industry co-operation. (CTI) The main reason for this is that Switzerland has a strong private research base. It comprises both R&D-intensive multinational enterprises, and many innovative SMEs with strong positions in global market niches.

Bulgaria The National Innovation Fund within the Ministry of Economy and Energy, 2006 In 2006 the development of innovation policy in Bulgaria has been pursued through the efforts of the government and the business circles. The basic document for the development of the innovation policy is the National Innovation Strategy, adopted in 2004. According to the Strategy the objectives of the innovation policy in Bulgaria are: to stimulate the R&D for the industry and the cooperation between the R&D departments, universities and companies; to increase the financing for innovation through establishing mechanisms for attracting private investments; to encourage companies to introduce new technologies and to improve their innovation activity; to encourage the establishment of clusters in traditional sectors; to support start-ups and well-functioning companies with the aim to increase their innovative potential; to build up mechanisms for attracting foreign investments to scientific areas etc. By 2006 the functioning of public institutions fundamental to maintaining and enhancing the Bulgarian national innovation potential, have been created or restored (Source: Annual Report on the Bulgarian Innovation Policy, Sofia 2006, Ministry of Economy and Energy). The established innovation policy framework contains the necessary mix of strategic, planning, and programming documents, which cover priority fields of the Bulgarian economy. The innovation strategy measures realized in 2006 were directed at supporting Bulgarian innovative enterprises, consolidating the link between business and science, enhancing the economy’s innovation capacity and building the missing elements of the innovation infrastructure in the country. In 2006 there are further efforts to implement some of the strategy measures and to achieve the strategic goals. Several policy events contributed to the improved governance of the national innovation system. The National Innovation Fund within the Ministry of Economy and Energy is the primary public financial instrument for the implementation of the National Innovation Strategy. In 2006 it has accumulated positive experience in promoting innovation in enterprises and stimulating cooperation between firms and research organizations. Another line of activity implemented in 2006 under the National Innovation Strategy was raising innovation culture. The Ministry of Economy and Energy approved the creation of 4 Centres of Entrepreneurship in Bulgarian Technical Universities. PHARE project for cluster approach. National strategy and an action plan 2007-2013 An important step to innovation development and expansion in Bulgaria is the implementation of PHARE project focusing on the cluster approach and establishing the cluster Model. As part of the project a draft National Strategy and an action plan for creating and developing clusters in Bulgaria in the period 2007-2013 was elaborated.

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In 2006 the Bulgarian Science Fund supported 11 projects over a two-year period under a program for promoting scientific research in small and middle enterprises lunched in 2005. The beneficiaries were Bulgarian universities in partnership with small and middle-sized enterprises. There are some new measures which began in 2008 and 2009 in the field of research and innovation, education, and ICT application and administration. They are aimed at modernising and integrating the Bulgarian research-education network, developing the Bulgarian schools’ computer network (to be completed by 2011), as well as at establishing a test environment for operational compatibility of the public administration geographic information system (GIS) which will be completed in the third quarter of 2009. Despite the measures implemented in the years 2008 and 2009, the analysis of the national innovation system indicates that their scope is insufficient for the development of an effective national innovation system. Furthermore, it showed that research and innovation still fail to be recognised as key factor for economic growth and competitiveness. The steps remain isolated, without a common strategy and they do not lead to a considerable improvement in the country’s innovation potential. The financial resources devoted to R&D are not considered sufficient, in fact in this area Bulgaria is lagging behind the EU average. In Bulgaria R&D is heavily focused on basic research, financed largely by public funds, and carried out mainly by public research institutes and universities.

Conclusions When analyzing the different approaches in different countries, the diversity in instruments is striking, covering each and every element in the scheme above. Also, the intensity of policy schemes differs tremendously, from very restrained, as in Switzerland, to very intensive, as in Germany or Ireland. The degree to which service innovation is tackled specifically differs as well. In about 50% of the countries, service specific policies are in place, or are under development. In the new member states, many of the policy measures aim at a better integration into the European innovation measures, such as framework programs. National innovation schemes of new member states are not well developed yet. When we zoom into the common denominator in the strategies, we see a number of elements: •

When service innovation is part of the strategy, the creative industry is in most cases one of the target sector. When not specifically targeted, the scheme does not have sectoral preferences. Therefore, we may conclude that the creative industry is topical, which is also the case at the European level. Many innovation policy schemes aim at bridging the gap between industry and academia, be it in public private partnerships, institutions as an intermediary between the two, or by voucher scheme’s to lower the threshold of cooperation. In many case, explicit attention is paid to SME’s. Most countries use a combination between regional policy measures (such as only the best in Germany or Pieken in de Delta in the Netherlands). Linkages between regional, national and European measures are not clear from the analysis. There is reason to believe that the linkages are limited, as is confirmed by other analyses, such as of the expert panel in services innovation in the EU. Voucher schemes are applied widely and usually with success. Most countries have growing investments in this instrument. In the Netherlands the scheme was recently abandoned, but only due to budget cuts. 69

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The policy recommendation as proposed in chapter 5 link to these elements, and identify additional room for policy intervention.

3.3

OSI in social networks: Facebook

In order to be more actively involved and participate in the digital revolution on open services innovation, we established a work group within Facebook linking to OISPG group. There are about 500 participants and 300 members in this group. Our study does not focus on detailed analysis of the social networks performance measurements or triggers to participate. Considering the objectives of our study, we found important to join the facebook and share ideas on open service innovation and set challenges and questions we faced during the interviews within our cases. Due to privacy issues we communicated openly but carefully regarding to the process of the study keeping the commercially confidential information for us. The experiment to participate in facebook on open services innovation subject was quite successful for OSI study in terms of information exchange among domain specialists on the ongoing public activities-initiatives. We also posted different ideas and received feedbacks which are considered in our study, we also participated in other initiatives open discussions. See http://www.facebook.com/group.php?gid=36351853660 [66]. We also learnt from the other OISPG facebook members about interesting initiatives on (open) services innovation. This was a good experience to share our experience in such a way. This was a good and valuable experience for us to join the participative innovation process within other enthusiasts in the field. The learnings are expressed in our report in all aspects.

3.4

Case study approach

The goal of the case studies is to get a better understanding of how open service innovation works in practice, and from there to arrive at best practices as well as policy advice at the level of firms and networks of organizations (micro level). The case studies complement literature study as there is hardly any integrated work on open service innovation, yet [67]. The cases have been selected from different countries and application areas. In order to be able to draw conclusion per sector (public, finance, high-tech, healthcare, transport) during the course of the study we extended considerably the number of originally planned cases from 4-5 to 15 and tried to have 4 cases per sector at least. Cases can fall in more than one sector. It is not allowed to draw normative conclusions from a small number of cases, but is does allow to derive patterns. Also, differences between different sectors can be indicated (again, not in a normative way). These patterns can be supported by evidence in the quantitative study. For example, if cases indicate that in high-tech, open innovation takes place in smaller networks than in the public sector; this can be checked in statistical databases. Some of the hypothesis we identified from the literature in this respect can be found in the research approach in the workspace under WP1. A case study combines different sources of information: documentation of the case, publicity on the case if available, and case interviews with different partners in different roles. Those different viewpoints are needed to prevent substantial bias in the material (triangulation). We take the following steps: 1.

Gathering a firm set of documentation on the case and study it to identity interesting issues and interesting people/partners to discuss with

2. Make a first case description and give indicative answers to the questions in the questionnaire

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3. Perform 2-4 interviews with people directly involved. For these interviews, we use a fixed questionnaire to guide the semi-structured interviews. This is different from a telephone survey, which requires a detailed interview protocol, but cannot deliver in-depth insights. 4. After performing all interviews, drawing up a case description according to the template, and have that description sent to all interviewees for approval or correction. In cases-workshops during the study process we combined all case conclusions and derive the best practices from it together. Cases have been selected from proposals from all OSI partners. Case proposals have been evaluated with respect to the following criteria by the team members: • • • • • • • •

Network aspects ICT /service platforms SME involvement Customer/lead user involvement Degree of success / showcase Role of (European) intervention Open innovation involvement Measurable return

From the long list of over 25 cases, 15 cases were selected, being, represented in Table 3.

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4 Cases 4.1 Case summaries Within the framework of OSI study we described and analysed fifteen cases of open service innovation. The table below provides an overview of the name of each case, the OSI partner who introduced it, the partners involved in each case, the sector covered, the brief description of each case and the start and end date. Case Name

Presented by

Partners Involved

Sector

Concept

Start

End

National Pension Registry

Logica

Dutch Government, Ministry of Economic Affairs, Stichting Pensoen Register, Atos Origin, Logica, AFM, pension funds, pension insurance companies, All citizens

public sector, financial services

This case examines the current situation of individual pension plans of Dutch citizens and possibility of making smart financial planning for their pensions having the overview of their pension forecast at this stage. The case also describes the role of open innovation process in this complex multi-partner political/business environment. The citizens are active participants of the process and creation of better services.

2008

ongoing

Mobile Point of Care (MPoC EC) East Cheshire NHS Trust

Intel

iSoft, Motion, Cisco, East Chesire Primary Care Trust

healthcare (Pharmacy), ICT

04/2008

10/2008

Smarter Planet Initiative

IBM

IBM and multiple complimentary vendors and service providers in open consortia (open standardization, industry collaboration and collaborative research)

ICT

2004

ongoing

Collaboratory.nl

Novay

FEI, Royal Philips Electronics, Corus, RoyaM NV, UvA, IBM

high tech, process industry

2005

2009

MeeGo

Intel and Nokia

INTEL, Nokia

ICT

Macclesfield District General Hospital, part of the East NHS Trust, delivers a wide range of clinical services for patients from a large rural and urban population in the North West of England. The hospital introduced a Mobile Point of Care (MPoC) pilot designed to evaluate the business value of using mobile computers to better manage pharmacy workflows in two hospitasl's wards. Its overall aim was to explore how pharmacy services could be enhanced. This case study is about open innovation approaches that IBM has used in the years 2004 to 2010 in the context of its Smarter Planet initiative and pre-cursor innovation initiatives that have helped emerge the Smarter Planet agenda such as IBM’s engagement on Service Science Management and Engineering (SSME), The IBM Innovation Jam and The IBM Global Innovation Outlook (GIO).. Also the case discusses IBM experiences in the Smarter Planet context with instruments such as Public Private Partnerships (PPPs), Venture Capital for Smarter Planet Entrepreneurship and Smarter Planet Research Pilots. The Collaboratory.nl project investigated how technologies for remote operation of laboratory equipment can be integrated with existing GroupWare for enhanced remote collaboration. Several prototypes were developed to test the ideas in real life working conditions. MeeGo is an open source, Linux project which brings together the Moblin project, headed up by INTEL, and Maemo, by Nokia, into a single open source activity

2010

ongoing

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OMT (Online Monitoring Tool)

Logica

Swedish municipalities, inhabitants, Utilities

public sector, utilities, ICT

Mobile Point of Care (MPoC SJ) St Johns Hospital

Intel

Motion, Cisco, St. Johns, NHS Lothian, PCT

healthcare, ICT

Capability Maturity Framework

IVI and Intel

INTEL, IVI

ICT

IZIT

Novay

IZIT as intermediary, all care professionals can be participants

IBOR - Integral Maintenance of Public Space

Logica

Royal Philips Electronics, Microsoft, Vodafone, Logica, Ministry of Defence in The Netherlands

Communicate energy with the aim of creating more energy conscous society. Using Logica's open innovation process the potential of the team were taken care of. Expertise from universities and business knowledge were gathered. By leading the team with sharp aim for creating a more energy conscious society, with energy aware people, the open innovation process delivered its benefits to the project. NHS Lothian investigated how technology can improve healthcare services. It was keen to assess the benefits of using a mobile point of care (MPoC) solution to improve workflow and patient care ST John's hospital and used INTEL's MPoC Value Model as framework within which to quantify the actual benefits of such an implementation.

2005

2010

02/2008

06/2008

The IT Capability Maturity Framework (IT-CMF), is a high-level process capability maturity framework for managing the IT function within an organization. The framework identifies a number of critical IT processes, and describes improvement roadmaps for selected processes. The IT-CMF addresses a continuing structural problem in the IT profession and IT industry around managing the returns from IT investments. This case is concerned with describing how Intel used the results of an Open Innovation consortium to help drive their transformation process.

2009

ongoing

healthcare, ICT

Innovation of health care affects everyone, "care recipient" as well as 'care-provider'. IZIT develops innovative healthcare services using information and communication technology (ICT) for individuals needing care and their carers and care professionals and institutions. IZIT develops health information services and home and remote services to individuals, as well as electronic file and value chain services for professionals and institutions.

2004

ongoing

public sector, ICT, utilities

IBOR (Integral Maintenance Of Public Space) is a service offered to the market to integrate different objects (Smart Lighting, Traffic Systems, Water Management Pumps, Parking Pillars, City Security Pillars etc. etc.) in the public space for several applications. Such applications can be a central maintenance system to overview and management of objects in the public space environment. Each partner involved in IBOR has established open innovation strategy and use their open innovation process, and also expand this with the client processes for business development.

2009

ongoing

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2009

2010

2007

ongoing

(1) Innovation is combinatoric, (2) Failing in the beginning is excellent, (3) Make money scarce and not the goal of your project, (4) motivations of the users to participate in OI is important, (5) new forms of pertnerships are needed to create better services

2007

ongoing

ICT

This case is discussing a case towards SME Incubation with Open IPRs validated In LivingLabs. The partners discuss how to give unused Nokia ideas, unused IPRs and innovations a new lease of life. The Nokia Technopolis Innovation Mill is taking ideas and innovations that are no longer required by Nokia and make them available to SME companies and fresh start-ups across Finland who may be able to turn them into world-class products and services.

2009

ongoing

ICT, transport

SPITS is the Strategic Platform for Intelligent Traffic Systems: SPITS is creating an open, scalable, realtime, distributed, sustainable, secure and affordable platform for cooperative ITS applications, evolving from existing information systems. This is a good example user driven open services Innovation, where users actively participate in this service development.

2008

ongoing

AbelLife

Novay

Service2Media, Fietsvakantiewinkel, Cycletours, SNP Reizen

Tourism, ICT

Blue Cloud Initiative

IBM

IBM and multiple complimentary vendors and service providers in open consortia (open standardization, industry collaboration and collaborative research)

ICT

Dialogues Incubator: Next Generation Bank

Logica

ABN AMRO, Dialogues Incubator, NOVU, Dutch, Province of Utrecht, Seeds.nl

Financial Sector

Innovation Mill

Nokia

Nokia, Technopolis and Tekes

SPITS

Logica

NXP, TomTom N.V, Logica, Catena, GreenCat, Peek Traffic, TASK24, Fourtress and universities TU/e, TUD, UT and UL

Abel is a touristic concept for route navigation for cycling, walking and sailing on your smartphone. It is available on I-phone, Android, Blackberry, Nokia, Windows Mobile, both as an application, download or on memory card. It is smart, based on fundamental research projects in the Netherlands, applying the latest technological possibilities in mobile devices, content aggregation and service configuration. The case examines the open innovation approach that IBM has chosen in infrastructure level cloud computing and also examines how complementary innovation in cloud-services has been jointly triggered on the side of other cloud providers, in collaborative cloud research as well as on the side of complementary service solution providers with a particular focus on start-up creation and SMEs. The case provides detail on multiple open-innovation mechanisms and – in particular - their interplay such as the IBM First of a kind (FOAK) program, the IBM Cloud Labs, the IBM Research Compute Cloud, the support of Open Cloud principles and the fostering of Open Cloud Standards. Also the case explores the related interaction with academia, customers and users and the IBM business partner ecosystem.

Table 3: OSI Case Studies

A summary of the cases is given below.

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Smart Energy (OMT Energy Efficiency with people engagement at the web) Reduced energy consumption is the aim for many people and organizations, but to realize this people need to be given the right tools. OMT is an interactive tool creating a more energy conscious society. Logica together with the utility company Växjö Energi AB, developed OMT together. Logica with its business knowledge around ICT services did understand the demand from the client, and had the knowledge to transfer this into business benefits. Växjö Energi AB working as a leading utility now can transfer decreased sales of energy by offering energy service for its customers. By using Logica open innovation process the potential of the team where taken care of. We made sure connections to expertise from universities and business knowledge where gathered. By leading the team with sharp aim for creating a more energy conscious society, with energy aware people, the open innovation process could deliver its benefits to the project. The results from OMT shows people are getting more interested in their energy consumption, and also decrease the total consumption. Using functionalities for energy visualization and pervasive gaming gives utilities the tool of becoming one of the main players in creating a more energy conscious society. NPR (National Pension registry) At the moment, about 58 million people in Europe are saving about 1, 3 billion Euros in Defined Contribution (DC) related pension schemes, which is enormous amount of money. However, the question is: are 58 million people aware that they are saving their pension in a DC scheme, where the financial results today are of a value of 1, 3 trillion Euros, but that this can e.g. “evaporate” tomorrow when a new financial crisis occurs? a new financial crisis? And what do we do (the EU as an economic entity, Pension funds, the EU parliament, employers, other involved stakeholders) to inform the participants, so that they will be able to make in time and correct financial planning for their lives? Or is it already too late for intervention? These are the main drivers for different member states to think about their national policies on pensions which can have considerable socio-economic impact in the future. The Dutch government being one of the first member states to take realize and go forward to this issue, launched a law on pensions in January 2007. With the setting-up of the new pension law (by 1 January 2007) important steps have been taken in building of communication and transparency concerning pension records. This is a representative case of open service innovation driving towards Single Digital European Market. The citizens are in the centre of this innovation process. They want to be more information aware and choose the services they want. For the EU citizens who are more mobile for living in working in different EU countries, push the demand of these services into Single EU Market. IBOR (Integral Maintenance of Public Space) IBOR (Integral Maintenance of Public Space) is a service offered to integrate different objects (Smart Lighting, Traffic Systems, Water Management Pumps, Parking Pillars, City Security Pillars etc. etc.) in the public space for several applications. Such applications can be a central maintenance system to overview and management of objects in the public space environment. Besides maintenance the service can be initiated for other applications as well. For instance, the service can be used for emergency or calamity applications. The goal of these applications is to improve the quality for emergency services on the benefits of the society and provide better security for citizens. In case of an emergency the objects in the public space will respond on the movement of the 75

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emergency vehicles in time. The result is a logistic path where traffic lights will engage a green passthrough route from where the emergency vehicle started his route up to the end situation. Bridges will stay down and other security city pillars will automatically grant access to the approaching emergency service on its way to the calamity spot. On the spot the street lights will turn on for 100% for a clear vision of the site. Via smart water management the IBOR service will increase the pressure into to the system on site for the fire brigade to extinguish a fire when necessary. The end result is a safer route for emergency services and furthermore IBOR will bring more quality in providing a better service to the public. IBOR can also be used to guide people with smart lighting from a football station to a train station for transport of the visitors. IBOR is there to help crime fighters in case of sever calamities of theft and aggressive insurrection of groups of people in a city by adapting street lights and other objects. The IBOR innovative service need to communicate with objects in the public space via radio frequency networks of telecom operators. Lately the 3G networks of operators do not qualify the requirements for management of objects in the public space environment. Research is needed for alternative RF technologies to improve M2M contact with the objects in the field. MeeGo MeeGo is an open source, Linux project which brings together the Moblin project, headed up by Intel, and Maemo, by Nokia, into a single open source activity. MeeGo integrates the experience and skills of two significant development ecosystems, versed in communications and computing technologies. The MeeGo project believes these two pillars form the technical foundations for next generation platforms and usages in the mobile and device platforms space. MeeGo currently targets platforms such as netbooks/entry-level desktops, handheld computing and communications devices, in-vehicle infotainment devices, connected TVs, and media phones. All of these platforms have common user requirements in communications, application, and internet services in a portable or small form factor. The MeeGo project will continue to expand platform support as new features are incorporated and new form factors emerge in the market. Smarter Planet Initiative This case study is about open innovation approaches that IBM has used in the years 2004 to 2010 in the context of its Smarter Planet initiative and pre-cursor innovation initiatives. In the context of the OSI study it is hence a case study on the intermediate (meso) level of the entire IBM organization and the interplay of open innovation mechanisms at different levels and entities of the organization. The case discusses new mechanisms that raised particular interest in the context of the launch of the Smarter Planet initiative by 2008. These were: 1.

Public Private Partnerships (PPPs)

2. Venture Capital for Smarter Planet Entrepreneurship 3. Smarter Planet Research Pilots and First of a kind projects (FOAKs) Also the cases discuss some precursor activities before 2008 that have helped to shape the Smarter Planet Agenda – namely: 1.

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IBM’s engagement on Service Science Management and Engineering (SSME)


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2. The IBM Innovation Jam 3. The IBM Global Innovation Outlook (GIO). MPoC I (Mobile point of care I: East Cheshire) The Pharmacy at Macclesfield District General Hospital (MDGH) has been using the iPharmacy system provided by iSoft since May 2006 and together with the introduction of an automated dispensing robot have been continuing to modernise Pharmacy services. Phase 2 of the project is to introduce Electronic Medicines Management to the wards to improve the existing process and facilitate near patient care. MDGH have consistently and methodically made IT investments with success. The purpose of this engagement was to determine the business value of pharmacists and technicians using MCA’s (Mobile Clinical Assistants),a tablet-like device, as part of their daily work to manage pharmacy workflows, such as patient drug histories, ward stocking and information access such that better and more informed clinical decisions could be made. This engagement aimed to apply the Healthcare IT (HIT) Economic Model to determine Workflow Optimization, Cost of Care, Staff Satisfaction and Quality of Care values. The hospital introduced a Mobile Point of Care (MPoC) pilot designed to evaluate the business value of using MCAs. This enabled a significant shift of workflows from the pharmacy to the wards but more strikingly there was a 27 per cent reduction in the number of missed doses improving both patient safety and quality of care. MDGH proposes to use the outputs from this study to qualify the value of mobile computing technologies and their effectiveness as part of the care delivery platform. This in turn will inform business planning and future technology investments. OSI Link: This is a tangible example of Services Innovation in the Healthcare arena. The aim would be to build on such an ICT base and expand the level of services available to patients particularly in relation to new services beyond the hospital itself (community/tele-health). The Innovation methodology used during this project was SIFT (Systemic Innovation for Teams), along with an adherence to a Business Value (HIT Economic Model) methodology which has a focus on capturing the socio-economic benefits of applied ICT solutions. CNL (Collaboratory.nl) R&D staff needs to investigate changes that take place at a molecular level (e.g. when steel or polymers are stressed in specific ways) they require access to advanced laboratory equipment. However, in practice this expensive equipment is often not utilized to its maximum capacity. Not only does this failure to fully utilize the equipment have financial consequences, it also has a negative effect on the knowledge levels and motivation of laboratory staff. Technologies continue to progress and laboratory equipment becomes increasingly sophisticated. Needless to say, this technology comes at a price that companies or research departments cannot always realize on their own. In all of these cases a 'virtual' laboratory that uses modern ICT infrastructures and Internet technologies may be the answer. Using such a laboratory, researchers can carry out experiments and consult with each other remotely. In doing so, companies can utilize the equipment and expertise of well-appointed laboratories. This way they don't need to pay for the equipment itself, but rather, for 77

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the privilege of using it. For suppliers of advanced laboratory equipment, such as FEI, this concept can open up completely new markets. In addition, by adopting this approach, a range of new services become possible, such as storage, analysis and comparison of research results. The Collaboratory.nl project investigated how technologies for remote operation of laboratory equipment can be integrated with existing GroupWare for enhanced remote collaboration. Several prototypes were developed to test the ideas in real life working conditions. As a result of the project one of the project participant FEI, a device manufacturer, has further developed the software and is selling two versions of software derived from the project results: one for remote servicing of their instruments, and one for virtual collaboration with their instruments. MPoC I (Mobile point of care I: St. John’s Hospital, Lothian) NHS Lothian was keen to assess the benefits of using a mobile point of care (MPOC) solution to improve workflow and patient care at St John’s Hospital. The pilot highlighted significant improvements in staff productivity, quality of patient care, patient and clinician satisfaction, patient safety and, last but not least, cost of care. Using the Intel Health IT Value Model (HIT VM) with a focus on MPOC St John’s Hospital projected a return on investment of 104% for the project. OSI Link: This is another tangible example of Services Innovation in the Healthcare arena. Again the aim would be to build on such an ICT base and expand the level of services available to patients particularly in relation to new services beyond the hospital itself. The methodology used was SIFT (Systemic Innovation for Teams), along with an adherence to a Business Value (HIT Economic Model) methodology with a focus on capturing the socio-economic benefits of applied ICT solutions. The availability of data to employees who are mobile has significant potential and reapplication in many areas, for this particular capability and in this instance the output is improved business value around workflow optimization but it could just as easily be the provision of new innovative services (meeting possible un-served needs) by following this innovation process. Blue Cloud Initiative This case study is about the open innovation approaches that IBM has used in the years 2007 to 2010 to launch its new global business on cloud computing services. In the context of the OSI study it is hence a case study on the intermediate (meso) level of the entire IBM organization and the interplay of open innovation mechanisms at different levels and entities of the organization. It will be described how customers and external parties were openly involved. The case provides more detail on the following mechanisms: 1.

Open collaboration with academia - the IBM & Google Collaboration and the IBM Cloud Academy

2. The IBM Research Compute Cloud – a Living Lab for Cloud Development 3. The support of Open Cloud principles and the fostering of Open Cloud Standards 4. The engagement in European collaborative research on cloud computing 5. The IBM business partner ecosystem 6. The IBM First of a kind (FOAK) program and the IBM Cloud Labs

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IZIT Care professionals in the region Twente (NL) in 2004 joined forces in the association of ICT Connection Twente (icZt). The goal was making the promise of ICT innovation in healthcare a reality. To this end the program IZIT realized in the period 2004-2007 a laboratory for initiatives in healthcare and technology. In 2008 IZIT transformed into an independent service organization, IZIT.NL, with a compact and flexible office organization that acts as an innovation partner towards governments, healthcare and industry. Innovation of health care affects everyone, "care recipient" as well as 'care-provider'. IZIT develops innovative healthcare services using information and communication technology (ICT) for individuals needing care and care professionals and institutions. IZIT develops health information services and home and remote services to individuals, as well as electronic file and value chain services for professionals and institutions. Capability and Maturity Framework Intel’s IT organization was concerned about improving its efficiency and significantly it’s business value. The IT function was focused on becoming a true catalyst and enabler of overall business transformation and was concerned at how IT can add value to the business. Like most IT organizations, Intel’s IT organization was trying to build capabilities that cut costs, increase revenues, and support business innovation. But, because they were saddled with legacy systems, convoluted processes, and out-of-date expertise, many of them are viewed as business liabilities rather than strategic assets. Despite the emergence of IT governance, enterprise architecture, service management, and a variety of other approaches to enhance the value of IT, IT organizations such as Intel’s have not been able to fully transform their roles in the organization. This case is concerned with describing how Intel used the results of an Open Innovation consortium to help drive their transformation process. ABEL Abel is a touristic concept for route navigation for cycling, walking and sailing on your smartphone. It is available on I-phone, Android, Blackberry, Nokia, Windows Mobile, both as an application, download or on memory card. The idea of Abel is not that it brings you through the shortest route to your destination, but over the most beautiful route, combining it with a personalised touristic guide. Abel tells everything about the points of interest by means of text, pictures, movies and / or audio. Abel is not only technology, but combines technological possibilities with new touristic concepts and business models for hotels and operators. A concept such as Abel requires much more than geo data as provided now by Google or OVI. Detailed information is needed, that is available locally. Not only maps, but also touristic content, describing cultural heritage, nature and other sites of interest. Content that is often hidden in regional archives or personal collections. Making such content available to the interested audience is an important component of the experience of Abel. It is smart, based on fundamental research projects in the Netherlands, applying the latest technological possibilities in mobile devices, content aggregation and service configuration. As it stimulates tourism through biking, walking and sailing it has a high degree of sustainability. Growth was limited by money: bank loans (with partly state guaranteed money) and Ventures Capital 79

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(sometimes co-funded by administration money) always want securities for their part of the money, which are hard to give if the money is spend on service innovation and software (they prefer we spend our money on physic securities like buildings, machines and cars…). So all innovations had to be financed out of own cash flow. Abel was started in 2006 as a spinoff of a number of open innovation research projects at Novay. In those projects we did research into dynamic combination of services, applied to geo-data, in a mobile setting. First demonstrators of an Abel-like service were then developed into commercial services, adapting it to the more stringent needs of technology unaware tourists, working on PDA’s with GPS modules. This became Abel. After the start of Abel, continuous innovation and adaptation was needed (technology and business model) to keep up with the growing possibilities of mobile devices and trends in smartphones, leading to an App version in 2011. Interesting lessons come from open commercialisation of research, continuous adaptation of roadmaps and the limitations due to funding schemes. Intelligent Transport System (SPITS) To realise the targets set by the Dutch government with respect to mobility in 2020, intelligent traffic systems (ITS) play an essential role, since they contribute to minimising traffic congestion, the need of extra roads and infrastructure and optimal fuel consumption. The Netherlands has a unique set of innovative companies which are working on solutions that can help to address these problems and at the same time create sustainable value for the Dutch economy. The whole value chain from chips (NXP, Catena) to consumer products (TomTom) and professional products (GreenCat) with embedded software (Logica, TASK24, Fourtress) as well as infrastructure and back offices (Logica, TomTom). We have TNO and top universities (TU Eindhoven, TU Delft, Universiteit Twente and Universiteit Leiden), all with leading positions in their area and very good knowledge of parts of the proposed solution. These parties now form a unique consortium covering the whole value chain and comprising both a substantial amount of small and medium size enterprises as well as world leaders in this domain. Triggered by the economic crisis, these companies and institutions join forces and roadmaps in the SPITS High Tech Top Project, with the goal to bridge the stalemate between the government and industry in creating an infrastructure for cooperative applications. SPITS is the Strategic Platform for Intelligent Traffic Systems: SPITS will create an open, scalable, real-time, distributed, sustainable, secure and affordable platform for cooperative ITS applications, evolving from existing infotainment systems. All key innovations (as well as industrialization) strengthen the Dutch economy in a domain where strong worldwide growth is expected. SPITS provides • • • •

Better traffic flow and air quality Improved safety and driver assistance Upgradable information Systems An open platform for in-vehicle services

This is a good example of open services Innovation, where users actively participate in this service development. Currently the users can send their comments and experiences on the TomTom services and the idea capturing is generated into new services. This example also shows that the open collaboration with the partners brings better results.

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The Innovation Mill Nokia, Technopolis and Tekes got together in spring 2009 to give unused Nokia ideas, unused IPRs and innovations a new lease of life. The Nokia Technopolis Innovation Mill is taking ideas and innovations that are no longer required by Nokia and make them available to SME companies and fresh start-ups across Finland who may be able to turn them into world-class products and services. The idea is to match ideas with businesses that can make them happen. Working alongside Nokia on the initiative is Technopolis, one of Europe’s largest science and technology park chains, and Tekes, the Finnish agency for funding technology and innovation. The innovations will also receive venture funding of €8million, including €4.5million coming from public funding. Local cities in Finland are also involved and hope to drive ICT in their local regions. The end game is to help more Finnish businesses become competitive on the international stage. Nokia is freely sharing their unused research and development to SME companies across Finland. Given the fact that each year companies like Nokia come up with hundreds or even thousands of concepts and only a fraction ever see further development, the move makes sense on many levels. Beyond giving possible groundbreaking ideas a new lease on life, the project points to a new kind of openness around intellectual property that has the potential to benefit society as a whole. And as we’ve seen before, it’s not always clear where advances will be made, so levelling the playing field in this sense should lead to revolutions in the ways we work together. Speeding up the economy calls for a new degree of openness. Nokia hopes that the Nokia Technopolis Innovation Mill sets an example that companies across other sectors will follow. The current economic climate is just right for a critical evaluation of intellectual property portfolios and the release of the innovations that are more suitable for SMEs and their ecosystems to exploit. The innovations released by Nokia are in areas such as environmental and energy-related solutions, location based services and advertising, near field communication, mobile security, health care applications and future internet services, among others. Thousands of available innovations were evaluated and around one hundred selected to be matched with a company which demonstrates the best ability to exploit them, and which is then granted funding for further development and collaboration. Dialogues Incubator: Next Generation Bank Dialogues Incubator operates in the field of open services innovation. To successfully implement OSI, Dialogues Incubator 1) leverages own intellectual to create a competitive advantage 2) calculates results in financial and non financial metrics 3) facilitates her people in really innovating by having a climate in which failures are okay, if done with best intentions: combinatoric innovation. Case focuses on the broad field of crowdfunding and knowledge valorisation. Two projects are active in this area: iDexpress and Seeds. iDexpress started in 2010; Seeds is to be launched in Q2 2011. Both projects are in a beta phase: open to public, but dynamic in their growth and strategy. Partners may join or stop, depending on the results for the coming period. OSI Link: this case is an example of the difficulties and challenges companies have to overcome in creating joint business value. Aim for both projects is the generation of business and social value for all parties involved. Innovation methodology used during this project is Dialogues Scrum (based upon Scrum methodology by Jeff Sutherland), along with scenario analysis and business model generation. 81

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4.2 The Case Studies We followed the same format for 13 cases, covering all the aspects from the model provided in this document, only two cases have different format but also covering the main aspects of our study questions. We went forward with the customers/interviewees request to conduct this work and publish any information we derived from them. For some of the cases the interviewees preferred not to publish detailed information such as their names, contact details, some firm related details due to possible sensitive issues and in some cases due to nature of the cases as not all the cases have direct customers. All the information published in this document is agreed with the interviewees and customers.

Blue Cloud Initiative OSI partner: IBM Author: Elmar Husmann Version: 08-02-2011 Interviewees: from IBM Research, Governmental Progammes, Technical Relations, Software Group and Global Services Contact: Author General Information This case study is about the open innovation approaches that IBM has used in the years 2007 to 2010 to launch its new global business on cloud computing services. In the context of the OSI study it is hence a case study on the intermediate (meso) level of the entire IBM organization and the interplay of open innovation mechanisms at different levels and entities of the organization. It will be described how customers and external parties were openly involved. Case summary The case describes the IBM cloud initiative in the years 2007 and 2010 from the particular viewpoint of its open service mechanisms. The case provides more detail on 6 of these mechanisms namely: • • • • • •

Open collaboration with academia - the IBM & Google Collaboration and the IBM Cloud Academy The IBM Research Compute Cloud – a Living Lab for Cloud Development The support of Open Cloud principles and the fostering of Open Cloud Standards The engagement in European collaborative research on cloud computing The IBM business partner ecosystem The IBM First of a kind (FOAK) program and the IBM Cloud Labs

The case further describes the different communities addressed by these mechanisms • • • • •

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The academic and research network The IBM employee community – including in particular employees outside core technical R&D domains The open standards and interoperability network – e.g. standards setting organizations The R&D industry alliances and policy supporting networks – e.g. European Technology Platforms The network of competing and/or compliant ICT industry players – for partial collaborations e.g. on open standards or in pre-competitive research


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

A network of pilot customers – e.g. to be integrated in FOAK projects

The integration of these mechanisms and the addressing of these different communities and networks are discussed in the case. In particular it is discussed that this integration is essential for the overall mission of the cloud initiative and that integrating mechanisms like innovation portfolio or innovation pipeline management ensure the interplay of results – such as research or pilot projects, new services or technology assets – generated via the different mechanisms. Overall these mechanisms span different organization entities of IBM such as IBM Research, IBM Software Group, IBM Systems and Technology, IBM Sales and Distribution and Global Technology Services. Here it is of particular importance how the service innovation mechanisms serve to address cloud computing across these organizational entities – e.g. via creating shared communities or technical facilities such as the IBM Research Compute cloud. The Case Cloud Computing has emerged into a key strategic service topic for IBM and has attracted unparalleled IBM global R&D investments in between 2007 and 2010. The first origin of the term “cloud computing” is difficult to define as the analogy of a cloud for the Internet had already been used in the 90ties and as multiple previous technologies such as grid and utility computing, service oriented computing or software as a service influenced the rise of cloud computing. Certainly a main influence came from the launch of the beta version of the Amazon Elastic Cloud (2006) and the subsequent use of the term cloud computing by Google CEO Eric Schmidt in 2007 for Google’s software based services. A good actual definition of cloud computing is provided by the NIST 2 definition from 2009. This has sub-divided cloud computing into layers (SaaS, PaaS and IaaS) and cloud types (public, private, hybrid, community). In November 2007, IBM announced the Blue Cloud Initiative 3 and committed initially about 200 IBM researchers working globally on new IBM cloud offerings and related technologies. A distinct element of this initiative was that it consequently followed open innovation principles and in parallel launched an open collaboration with selected corporations, universities, Internet-based enterprises and government agencies. In 2008, IBM presented a suite of cloud software that can be used to set-up and manage cloud data centres and subsequently launched a series of Cloud Computing Centres around the world with Europe's first cloud computing centre in Dublin, Ireland in March, 2008 with support of the Industrial Development Agency of Ireland (IDA Ireland). The following commercial cloud services were launched by IBM in 2009 to 2010 as offspring of the initiative: • • • •

January 2009 - Lotus Live 4 August 2009 – Smart Business Desktop Cloud 5 October 2009 – Smart Business Storage Cloud 6 November 2009 – Business Analytics Clouds (Blue Insight) 7

2 Peter Mell and Tim Grance, NIST Definition of Cloud Computing, Version 15, 10-7-09 3 http://www-03.ibm.com/press/us/en/pressrelease/22613.wss 4 http://www-03.ibm.com/press/us/en/pressrelease/26504.wss 5 http://www-03.ibm.com/press/us/en/pressrelease/28292.wss 6 http://www-03.ibm.com/press/us/en/pressrelease/28557.wss 83

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March 2010 - Smart Business Development & Testing Cloud 8

November 2010 - Federal Community Cloud (US public services) 9 Complementary to this, IBM developed cloud specific appliances (CloudBurst) for setting up private clouds and a range of consulting solutions – like e.g. the IBM Cloud Strategy Accelerator - for designing and managing customer investment programs in cloud computing (including aspects such as business case planning, technology roadmap and implementation management). The case study will investigate a number of open innovation mechanisms that IBM has applied in the context of the Blue Cloud initiative: 1. Open collaboration with academia - the IBM & Google Collaboration and the IBM Cloud Academy In October 2007 IBM pioneered an academic initiative as a partnership between IBM and Google to provide over 1000 servers from IBM and Google data centers as an open infrastructure cloud (IaaS) for use by the academic community. The initiative supported by the US National Science Foundation (NSF) as part of the CluE Program included an initial group of 10 leading universities such as MIT, Berkeley or Carnegie Mellon by 2007 and was later enlarged to 25 (end of 2008). In particular, the IBM and Google initiative allowed students to gain access to Internet-scale computing facilities as they are applied in industrial cloud computing services. This helped to expose students to Internet-scale workloads and massive parallel computing capabilities for applications such as search, video, audio, 3D Internet, machine learning or mobile computing. Specific classes were taught at participating universities to train students on next generation cloud computing techniques. Similar to a living lab environment – students may propose projects that are then hosted on the IBM and Google cloud environment. Application domains have included clustering of movie data, e-mail mining or data retrieval from biomedical information. To extend this activity, IBM launched in November 2009 the IBM Cloud Academy 10 - a program targeted at secondary schools and higher education institutions to develop cloud computing specific curricula and gain access to open cloud compute facilities. IBM supports the academy with a Lotus Live based collaboration environment. In the context of the academia collaboration, IBM further supports the Virtual Computing Lab – an Apache Software Foundation project 11 - through hard- and software grants, faculty funded research grants, and one time donations. Other industry partners that are supporting the Virtual Computing Lab are Intel, EMC2, SUN and NetApp. 2. The IBM Research Compute Cloud – a Living Lab for Cloud Development In parallel to starting the IBM Google cloud initiative with academia, IBM launched in 2007 the Research Compute Cloud (RC2). RC2 pooled virtualized resources from the global IBM research labs 7 http://www-03.ibm.com/press/us/en/pressrelease/28823.wss 8 http://www-03.ibm.com/press/us/en/pressrelease/29685.wss 9 http://www-03.ibm.com/press/us/en/pressrelease/32911.wss 10 http://www.ibm.com/solutions/education/cloudacademy/us/en/ 11 http://vcl.ncsu.edu/

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into a joint cloud federation. Originally, RC2 was intended in support of the IBM own cloud research and development but it quickly turned into a valuable environment for test-driving specific cloud solutions for customers as well. For this RC2 maintains a catalogue of over 600 templated virtual images representing real live implementations. RC2 has emerged as an IBM living lab for cloud computing innovation that increasingly is bringing together new research technologies with a real live cloud environment. In that way, RC2 has also changed the way IBM research is using and accessing IT for conducting pilots and trials. Whereas RC2 can host research technologies on the cloud it also serves as an environment to research on fundamental cloud service management technologies 12 – e.g. with regard to federation or dynamic image and data placement. However, RC2 is not only available to IBM researchers but it is fully available for all IBM employees as a living lab for cloud computing. So anyone in IBM can use resources from the RC2. The significant success has led in October 2009 to introduce a simple billing of use of RC2 resources. RC2 may be used in engagements with customers but is only applied to trials and tests and may not serve as a production environment. RC2 is linked into the IBM Technology Adoption Program (TAP) – a wider program to allow IBM employees access to innovative technologies and facilitate the transfer from the lab into practical applications. Whereas the RC2 is an open environment only for IBM employees and customers in direct interaction with IBM, it is helping to power another fully open platform – the IBM Research Labs experimental technology site 13 . This site was created to make externally available some of the new early-stage experimental technologies being developed by a community of IBM researchers from around the world and get early user feedback. As a backend technology, RC2 is efficiently provisioning the infrastructure for the technologies being offered. 3. The support of Open Cloud principles and the fostering of Open Cloud Standards IBM also committed itself to support the creation of open standards in the domain of clouds 14 and has supported vendor-backed cloud standardization initiatives like the DMTF Open Clouds Standards Incubator 15 or the SNIA Cloud Technical Working Group 16 . Both DMTF and SNIA represent standardization initiatives that are supported by cloud technology vendors such as HP, EMC, SUN, NetApp or VM Ware. IBM Research is further collaborating with open standards developments that are emerging from the European research community like e.g. the Open Grid Forums’s Open Cloud Computing Interface Working group (OGF – OCCI) 17 . In particular IBM has been supporting transfer and better collaboration in between cloud open standards working groups in order to overcome parallel and silo activities.

12 IBM Research Division cloud computing initiative, IBM Systems Journal, July 2009, Vol. 53, Issue 4 13 http://www.researchlabs.ibm.com/portal/about 14 for a good overview on current cloud standardization initiatives, see http://cloudstandards.org/wiki/index.php?title=Main_Page 15 http://dmtf.org/standards/cloud 16 http://www.snia.org/cloud 17 http://www.ogf.org/gf/group_info/view.php?group=occi-wg 85

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IBM has also supported the Open Cloud Manifesto 18 - a manifesto undersigned by leading cloud technology and service providers that jointly support the use and development of open standards for cloud computing. Open cloud standards are a relatively new topic but it is an important ingredient in the overall open innovation mechanisms. In addition to collaborating on open standards, IBM is also closely working together with leading cloud providers – e.g. Amazon – to make available IBM technology on their proprietary environments 19 and using their de-facto cloud standards. IBM software products for the cloud consequently support a range of standards including open standards and proprietary de-facto standards. That way, IBM retains openness for the different – and partially competing – industrial cloud standards development. Regarding the support of Open Source frameworks for clouds – IBM has not given preference to any particular framework but is interacting with several OS cloud communities via cloud research projects (see next section). 4. The engagement in European collaborative research on cloud computing In parallel to the NSF supported BM and Google initiative on cloud computing, IBM has started under the support of the European Commission’s 7th Research Framework Program (Call 1) in February 2008 its first European large-scale 3 year research project on clouds: RESERVOIR 20 - coordinated by the IBM Haifa Research Lab in Israel. RESERVOIR in particular addressed technological foundations of federated infrastructure clouds and the provisioning of virtualized resources across boundaries – such as cloud-sites and individual service providers. The consortium includes multiple academic and industrial partners (such as SAP, Telefonica and SUN). RESERVOIR has released multiple components as Open Source and contributed to OS cloud frameworks – such as the Open Nebula cloud 21 framework that is supported by multiple European research projects. Also RESERVOIR has supported cloud open standards developments such as contributions to extensions of the DMTF Open Virtualization Format (OVF). In 2010, IBM has launched two new large-scale European research projects on clouds – VISION (coordinated by the IBM Haifa Research Labs) and TCLOUDS (under technical lead of the IBM Zurich Research Labs). Whereas VISION is investigating cloud storage and linking data with semantic information (such as regarding lifetime, regulatory compliance requirements etc.), TCLOUDS is addressing the critical topic of trustworthiness and security of clouds. An example European cloud research scenario from the TCLOUDS project: In the TCLOUDS eHealth scenario, distributed patient monitoring is applied using smart devices (with the industry partners Philips Medical Systems, NL and Hospitale San Raffaele, Italy). It is investigated how a scalable integration platform for the smart devices can be build on a cloud – firstly on a singular commodity cloud, then on a cloud-of-clouds environment. Specifically the project looks at the compliance with regulatory requirements and the technologies to ensure preservation of data security for the sensitive patient data.

18 http://www.opencloudmanifesto.org/ 19 http://aws.amazon.com/solutions/global-solution-providers/ibm/ 20 http://www.reservoir-fp7.eu/ 21 http://www.opennebula.org/

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All three projects have adopted the vision of a federated and open cloud environment (a “cloud-ofclouds”) that is using dynamic placement of data and images across multiple cloud providers. In total, the public private investment in these IBM-led European cloud projects represents approx. 50 Mio Euros. With these contributions to the cloud-of-cloud vision, IBM Research is engaged in the open research community to advance the state-of-the-art on dynamic cloud interoperability – a problem in that context Internet pioneer Vint Cerf has recently stated: "I'm seeing a possibility of inter-cloud problems mirroring the Internet problems we had thirty or forty years ago," 22 On the European research level, IBM Research is engaged in the NESSI 23 European Technology Platform on Software and Services to which these EU cloud research projects are connected. Also, IBM is engaged in the EFII European Future Internet Initiative 24 . Both initiatives bring together an important group of organizations from the ICT industry to jointly collaborate on research challenges – with cloud computing playing a prominent role among them. These initiatives also engage in European policy recommendations on cloud computing. Further initiatives that are specific to policy recommendations and supported by IBM in the cloud context are e.g.DigitalEurope 25 and the Open Forum Europe 26 . 5. The IBM business partner ecosystem A wide ecosystem of external business partners complements IBM cloud offerings in specific domains. IBM developerWorks 27 is a web community platform to link to this ecosystem. The ecosystem is also actively engaged on new opportunities. 6. The IBM First of a kind (FOAK) program and the IBM Clouds Lab As of 2010, IBM Cloud Labs are established in the US, UK, China, India, Korea, Japan, Ireland, South Africa, Brazil, Hong Kong & Singapore. Cloud Labs belong to the IBM Software Group Strategy & Technology and work on a cross-brand level. That way they can leverage the full spectrum of IBM services, software and technology. IBM Cloud Labs maintain a close relation to IBM Research. An important collaboration mechanism in this context is the IBM First-Of-A-Kind program (FOAK) 28 . A FOAK project is the next maturation step from a research project scenarios as described previously. FOAK brings technologies from IBM research into real-world applications. The FOAK approach is not specific to cloud computing however it is particularly well suited. FOAK encourages the leveraging of ideas and assets from research and their combination with real-world customer problems of IBM.

22 http://www.readwriteweb.com/archives/vint_cerf_despite_its_age_the.php 23 http://www.nessi-europe.eu/ 24 http://initiative.future-internet.eu/ 25 http://www.digitaleurope.org/ 26 http://www.openforumeurope.org/ 27 http://www.ibm.com/developerworks/cloud/collaborate.html 28 for an in-depth treatment on FOAKs see the IBM http://www.ibmpressbooks.com/bookstore/product.asp?isbn=0137028148

Press

Book

„Innovation

Passport“: 87

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Cloud Labs can serve as an incubator for FOAK as they bring together multiple technology and business competences. A central element of a FOAK project is that it engages the IBM Industry Relationship Teams and also demands financial sponsoring from the specific Industry practice team. Also it has to undergo a rigid selection and quality testing process by the specific Industry Team and the FOAK Program Management before being approved by the FOAK Board. In return IBM can offer to clients and other external organizations that participate in FOAK - usually those with longstanding previous relationships – the opportunity to test-drive advanced technical solution well before the broader commercialization. FOAK projects are supported by specific contracts between the involved IBM teams, the client(s) and potentially further external partners. IBM cloud infrastructures such as e.g. the RC2 may of course be leveraged in that context. An example of a European FOAK on cloud computing is the collaboration between IBM and Philips on the new Philips service Net TV 29 . The service uses IBM WebSphere Portal Server Technology to integrate content from multiple providers and also targeted advertising partners to deliver personalized online services and content to the TV screen. Hosted in an IBM cloud data center in Warwick (UK) – the solution applies a scalable access to infrastructure resources and allows remote development – e.g. adding services and functional components - by Philips using a thin client interface. The project was supported by the Digital Convergence Group in IBM Research. Portfolio management is one essential component in the FOAK program as not all FOAK projects can be expected to be equally successful. Portfolio management ensures a balanced engagement in opportunities that are of strategic value for IBM. The other essential component is proper pipeline management to create a rich and credible pipeline of opportunities and accelerate the time to market for FOAK assets. A typical market transfer is done e.g. by the IBM development centers in the context of product transfer projects. Participants and Network Players In this case study at the level of a key strategic program in the IBM organization, the interplay of multiple network players can be observed – namely: • • • • • •

The academic and research network The IBM employee community – including in particular employees outside core technical R&D domains The open standards and interoperability network – e.g. standards setting organizations The R&D industry alliances and policy supporting networks – e.g. European Technology Platforms The network of competing and/or compliant ICT industry players – for partial collaborations e.g. on open standards or in pre-competitive research A network of pilot customers – e.g. to be integrated in FOAK projects

Case analysis As it can be seen from the case, in order to fully leverage the multi-billion Euro business opportunity of cloud computing, IBM has consequently applied open innovation mechanisms in 2007 to 2010 to reach out to important network players ranging from competitors to business and research partners, to customers. 29 see IBM Whitepaper, 2009, „ IBM’s Vision of a Smarter Home Enabled by Cloud Technology“

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As the consecutive examples of a cloud research scenario and a FOAK project show, IBM is addressing cloud challenges of different complexity and technology advancements at the same time. As the timeline of commercial cloud offerings indicates, there is a strong push towards commercialization of the best ideas and technologies from the pipeline created by research projects and FOAK projects. The use of shared infrastructure – like the RC2 – provides a further accelerator to this. A parallel and important strand is the pre-competitive collaboration with other industry players – in particular on Open Standards and interoperability. Public institutions and public innovation funding mechanisms – such as the NSF in the US (see the Google IBM collaboration) or the European FP7 program (see the RESERVOIR, VISION and TCLOUDS projects) provides an important stimulus. With respect to further sub dimensions of the case: 1. Firm Level Cloud computing and the Next Generation Data Center is one out of 4 IBM Key Growth Strategies (together with Smarter Planet, Growth Markets, Business Analytics). It is also a cross cutting topic that is e.g. influencing as a key ingredient the Smarter Planet initiative (expected to reach 10 billion $ revenue by 2015) 30 with a 25% CAGR. Success in the Cloud Initiative is hence of strategic importance for IBM. IBM Market Insights indicates that the Total Cloud Market could reach $181 billion by 2015 with 26% CAGR. IBM clients are starting to adopt cloud computing delivery models – with a particular emphasis on private clouds. But the public cloud model is growing and a rise of hybrid cloud models (blending public and private clouds) is expected. According to IDC, cloud computing is still in the early adoption phase but the market is in an important growth phase and technologies (e.g. standards) are emerging and maturing. 2. Network level The IBM innovation network on cloud computing – as indicated previously – includes collaboration with many different players. Some of these networks have been pre-existed before the cloud initiative – but growing specific communities on cloud computing have been sparked from them – e.g. among business partners, academia or customers. Also new players, e.g. technology start-ups are fast growing in the cloud market. 3. Society level The significant economic growth potentials in the cloud computing market as well as the technical potentials of applying cloud technologies in different domains of our society (e.g. in health care) – make it a key technology for our societies. As discussed in the case – mostly at the European example – IBM is closely engaged with policy makers and public institutions on this change. This engagement is done primarily in alliance with ICT industry partners. 4. Service level Overall in the investigated period – 2007 to 2010 that also included the global financial crisis, IBM revenues have been slightly declining whereas the pre-tax income has been steadily rising from 14 to 30 see IBM Investor Briefing, 12th May 2010, presentation SVP sales & distribution – Ginny Rometty 89

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18 billion $ per year in the same time period. This is related to the strategic shift to higher value services and a growing importance of software and software based services. Cloud computing with its spectrum of different offerings from business level services to delivery has an important role in this shift. The fact that IBM has just in 2009-2010 launched 7 major cloud services – not including business consulting and technology integration services – shows the potential of cloud computing to create new service markets. As of 2009 – 42% of the IBM pre-tax income are generated from services and another 42% from software. In particular the software business has demonstrated to be a high margin business. Cloud computing includes a further shift from software to software-based-services as well as new growth opportunities for software itself – e.g. on cloud data center management. Also, the organizational change to cloud computing is further creating service growth opportunities – e.g. in business consulting. Hence new cloud offerings are impacting directly the two most important segments for IBM revenue and profit. 5. Innovation process As discussed in the case, IBM applies a complex set of open innovation mechanisms and processes. As also indicated, several of these – like e.g. the FOAK program, the Technology Adoption Program or DevelopWorks had been initiated prior to the cloud initiative. However, they were each specifically adapted. The same applies for the communities that were involved in the innovation processes. Due to the high level of uncertainty and newness in cloud computing services – a particular emphasis of the processes is on the early interaction with customers – at the levels of research, FOAK and commercial business. A parallel aspect is the strong emphasis on open integration and technology standardization which shows the current state of technical solution diversity of the market. 6. Socio/economic impact Apart from the obvious economic impact of the growing cloud computing market, cloud computing also includes a shift in necessary competences and skills for employees in the ICT market. IBM is addressing this via a strong focus on educational programs, cloud facilities for students and joint development of curricula with academic institutions. Also the inherent flexibility in cloud computing of execution and delivery increases the global competition by geographies for a share in the cloud market. The case shows the interaction of IBM with US and European innovation policy initiatives – such as on the Future Internet or Internet-scale Computing (IBM collaboration with initiatives in other geographies were not treated in the case). 7.

Barriers

Current concerns on cloud computing relate to questions such as lacking standards, security, privacy, regulatory compliance, performance and stability. As discussed in the case, the IBM approach is twofold here: on the one hand these concerns are directly addressed in research projects (see TCLOUDS on trustworthy clouds) as well as further investigated in FOAK projects. These benefit in particular from a close interaction with customers and their particular requirements. Hence, also in cloud research projects – realistic customer cases and requirements gathering is essential.

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On the other hand – IBM is intensively networking with industry players and institutions (such as public institutions, standards bodies etc.) to address some of these issues collaboratively – as they may pose potential barriers to the overall adoption of cloud computing. 8.

Lessons learnt

In a complex service environment – like cloud computing - the open interaction with the presented network players is essential. Open service innovation is however not a singular approach and there is not a primary community to address – but open service innovation is composed by multiple interacting mechanisms and addresses several distinct communities and sub problems. Overall, the consistency of the innovation process – e.g. the portfolio of engagements at different maturity stages and the pipeline into commercialization has to be properly managed. Bibliography see references in footnotes Glossary of terms DMTF Distributed Management Task Force EFII European Future Internet Initiative ETP European Technology Platform FOAK First of a kind project IaaS Infrastructure as a service – a specific form of cloud ICT Information and Communication Technologies Living Lab Specific concept for the interaction of multiple contributors (citizens, industry, public authorities) in the innovation process Lotus Live IBM cloud offering based on the Lotus productivity software family NESSI Networked European Software and Services Initiative NIST US National Institute of Standards and Technology NSF US National Science Foundation OCCI Open Cloud Computing Interface OGF Open Grid Forum Open Standard A technical standard that complies to several characteristics of openness (e.g. openness of the specification) and is typically not owned by a single industrial player OS Open Source OVF Open Virtualization Format RC2 IBM Research Compute Cloud RESERVOIR EU Project on infrastructure level cloud services (www.reservoir-fp7.eu) SNIA Storage Networking Industry Association TAP IBM Technology Adoption Programme TClouds EU Project on trustworthy cloud computing (www.tclouds-project.eu) VISION EU Project on cloud storage (www.visioncloud.eu) Observations The case is particular interesting also from the viewpoint of two aspects: open innovation activities over time and open innovation activities in interaction. Cloud computing has become a strategic priority for IBM within a relatively short time window. It was important in this context to engage the global organization on a wide basis. In particular it can be observed that advanced cloud research has been launched almost in parallel to launching commercial cloud services, public sector- and academic engagements. Also, as the commercial cloud market is still premature – in particular for enterprise or 91

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complex public sector applications – collaborative instruments such as FOAKs have been applied to integrate pilot customers. The case shows clearly that the classical sequential model of innovation does not hold here but that different open innovation mechanisms are applied in parallel and in a networked organization.

Smarter Planet Initiative OSI partner: IBM Author: Elmar Husmann Version: 18-01-2011 Interviewees: from IBM Research, Governmental Progammes and Global Services Contact: Author General Information This case study is about open innovation approaches that IBM has used in the years 2004 to 2010 in the context of its Smarter Planet initiative and pre-cursor innovation initiatives. In the context of the OSI study it is hence a case study on the intermediate (meso) level of the entire IBM organization and the interplay of open innovation mechanisms at different levels and entities of the organization. It will be described how customers and external parties were openly involved but the case does not focus on the details of a particular example (micro level) of such an involvement. Case summary The case describes the IBM Smarter Planet initiative between 2008 and 2010 and three open innovation mechanisms that have been leading to Smarter Planet issues and concepts in between 2004 and 2008. These are: • • •

IBM’s engagement on Service Science Management and Engineering (SSME) The IBM Innovation Jam The IBM Global Innovation Outlook (GIO)

Also, the case discussed new mechanisms that raised particular interest in the context of the launch of the Smarter Planet initiative by 2008. These were: • • •

Public Private Partnerships (PPPs) Venture Capital for Smarter Planet Entrepreneurship Smarter Planet Research Pilots and First of a kind projects (FOAKs)

Whereas the role of FOAKs is also described in the IBM Cloud Initiative, the Smarter Planet case drives particular attention to the following new aspects: • • • •

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Interdisciplinarity (e.g. working with multiple academic disciplines and deriving new curricula as in the SSME initiative) Public-private-partnerships (bringing together different solution and technology providers with public sector organizations on major issues of societal concern and finding new models for operation and financing) Supporting a new industry (help growing a new generation of ICT companies that offer particular advanced solutions on Smarter Planet Issues) Supporting a wider and open debate on the issues (see open mechanisms such as Innovation Jams)


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

The Case On November 6, 2008, IBM CEO Sam Palmisano gave a speech in New York City to the US Council on Foreign Relations 31 . In this speech, he coined the term “smarter planet”. In a time where public attention was primarily on the global financial crisis, Palmisano draw the attention to further issues of global scale that are affecting world sustainability such as: global waste of energy, gridlock of major cities by traffic, antiquated healthcare systems, dying up water supply and inefficiency of global supply chains. Palmisano linked these issues to important trends in the ICT world such as the growing instrumentation (e.g. by using smart tags or sensors) and interconnecting of things (Internet of Things) and the further growth of Internet connectivity and bandwidth. He laid out that ICT technologies would hold significant potentials for addressing these global issues and in fact making the world smarter e.g. by providing more intelligent and dynamic means to guide traffic through cities or to assess energy consumption in real-time and optimize it. The directions that Palmisano provided in 2008 became since then a strategic agenda for IBM and were matched with a major global innovation program and a complementary marketing campaign. From an innovation point of view, its origins may however be traced even before the catchy term “smarter planet” came to life. In particular three open innovation strands were important in this context: 1. IBM’s engagement on Service Science Management and Engineering (SSME) 32 Professor Henry Chesbrough of UC Berkeley raised Service Science to IBM as an issue of interest in 2004. In April 2004, IBM Research organized at the Almaden Research Lab in California a session jointly with Chesbrough that was called “Work in the Era of the Global Extensible Enterprise” which were followed in the same year by IBM organized open conferences on “Architecture of On Demand Business” and in November 2004 “Service Innovations for the 21st Century”. These debates met a lot of initial scepticism from the academic side – in particular as scientific investigation of service business and economics, cognitive science and psychology (e.g. in service marketing) or service computing were already established fields of research. It turned out however that links between these different aspects of service research were weak and that particular innovation to research could spring from bringing these distinct fields together. The SSME initiative became supported by leading universities and was spread worldwide in order to develop new interdisciplinary curricula around Service Science and large-scale Service Systems e.g. in the domains of healthcare or energy, A European Example is the IBM supported Karlsruhe Service Research Institute (KSRI) 33 that was created in 2008. KSRI is nowadays a European hub in Service Research and maintains links to a wide network of global academic partners and many further industrial partners from the ICT industry such as SAP and HP. SSME is aiming to have an impact on global university curricula similar to what Computer Science had in the 80ties. IBM further collaborates with research centres that address wider societal issues via ICT research (e.g. CITRIS 34 of UC Berkeley).

31 http://www.ibm.com/ibm/ideasfromibm/us/smartplanet/20081106/sjp_speech.shtml 32 see e.g. http://en.wikipedia.org/wiki/Service_Science,_Management_and_Engineering 33 www.ksri.kit.edu 34 http://citris-uc.org/ 93

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2. The IBM Innovation Jam 35 IBM has been using Jams – global online collaborative events – since 2001 with its entire workforce of more than 300.000 employees and later opened the Jams also to wider communities outside of IBM. In 2005, IBM had already demonstrated together with the United Nations World Habitat Forum the power of the Jam approach to address global issues collaboratively. In 2006, IBM has started with a series of Innovation Jams. IBM researchers, employees and external experts are invited to join in a virtual brainstorm session. They post their ideas for innovations and then others join in, commenting on the posts and voting for their favorites. 36 In 2006, IBM invested more than $100 million in ideas that resulted from the Jam and created 10 new divisions. Innovation Jams have helped IBM to spot early multiple of the issues that have later led to the Smarter Planet initiative. Issues such as smart energy grids or using location based services for improving global supply chains have been derived from the Jam. In particular Jams – with their diverse open community of contributors – have helped IBM to spot wider societal challenges that could be addressed by ICT rather than specific technological innovation. Hence, the Jam mechanism is helping to contextualize the technology oriented innovation that IBM addresses in its Research Labs. 3. The IBM Global Innovation Outlook Initiative 37 IBM Research has a longstanding yearly publication called the “Global Technology Outlook” (GTO). The GTO addresses ICT technological trends and also provides a tracing of emerging ICT trends over multiple years – e.g. the heritage of cloud computing in previous trends such as grid computing, utility computing or SOA. Complementary to the GTO, IBM has seen the need in 2004 to launch another yearly publication on Innovation: the Global Innovation Outlook (GIO). The idea of the GIO is to address innovation from the perspective of societal challenges (and its interplay with technology) rather than from a technology trends perspective. Hence, it has turned out to be an important complementary initiative to the GTO. Since 2004 the GIO has addressed diverse issues such as economic development in Africa, global water supply or affordable and effective healthcare. The GIO process draws on a series of deep dive sessions. In deep dive sessions, IBM experts from research as well as the IBM business side discuss in locations around the world with invited experts on the GIO topic. Sessions bring together multiple perspectives such as from NGO or government organization representatives, leading researchers and private sector representatives. It is obvious that many issue of the IBM Smarter Planet Initiative have a root in the IBM engagement in SSME, Innovation Jams and the Global Innovation Outlook process. All three have widely used an external – partially open – community for deriving a complementary perspective on ICT innovation that was not primarily technology oriented but oriented by the global societal, sustainability and economic challenges that ICT technologies could help to address. This has turned out to be an increasingly important complementary aspect to the core technology-oriented innovation as previously pursued by IBM Research and the development organization (e.g. the IBM Software Group). It has hence dramatically widened which parts of the IBM organization would engage in Innovation.

35 https://www.collaborationjam.com/ 36 http://venturebeat.com/2008/10/09/ibms-innovation-jam-2008-shows-how-far-crowdsourcing-has-come/ 37 http://www.gio.typepad.com/

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To help the Smarter Planet Initiative grow, IBM has paid particular attention to the interplay of technological innovation with others means to support spreading of technology into innovative Smarter Planet solutions. Most of these are first-of-a-kind. A pre-requisite has been to encourage IBM’s own business units but also customers (e.g. the public sector) and external partners to embark into exploratory projects. As John Kelly, IBM Senior VP for Research has phrased it: "We spend an enormous amount of our resources on exploratory work. A day doesn't go by that someone in sales doesn't see me and my team. It's pretty hard to find a subject where we don't have really deep expertise." 38 At the example of the utilities sector (such as energy or water) - since 2004, IBM has been reducing the amount of standard consulting (e.g. on ERP package implementation) from 80% to 20% and raised in the same time the amount of advanced projects on applying ICT to solve the deeper issues of this industry. In this context three mechanisms should be highlighted: 1. Public Private partnerships Many of the issues addressed by the Smarter Planet Initiative demand the interaction with public authorities and their agencies – e.g. addressing traffic in cities. The idea of public private partnerships (PPP) is to actively overcome some of the usual limitations of public procurement processes that are not particular suited to building first-of-a-kind solutions (due to their usual slow and risk avoiding nature). Also, public ICT operation capabilities would often be exceeded by advanced solutions. An example for such an IBM PPP in the Smarter Planet context is the pilot with the city of Stockholm on an advanced City Road Congestion Charging 39 that drove a 25 percent reduction in car use and 14 percent reduction in emissions from road traffic. PPPs also include new models for financing and operation. 2. Venture capital for smarter planet entrepreneurship – the “Global Entrepreneur Initiative” In April 2010, IBM launched an initiative called the “Global Entrepreneur Initiative” together with the IBM Venture Capital Group 40 . As part of the initiative, IBM developed a competition – called “Smart Camp” aimed at identifying early stage entrepreneurs who are developing business ventures that align with Smarter Planet challenges. Finalist start-ups in the first camp in Dublin, Ireland in November 2010, addressed issues such as water detection for better management of forests or city traffic. Smart Camp finalists receive mentoring, access to industry experts and technology, and deeper partnership opportunities from IBM, venture capital firms and industry partners to help them build out and market their solutions. Winner of the 2010 competition was a start-up on smart parking solutions for cities called Streetline 41 3. Smarter planet research pilots and first of a kind projects (FOAKs) Also in the context of the Smarter Planet Initiative – as already discussed in more detail in the Cloud Computing Case for the OSI Study – the instruments of FOAKs and the engagement in research pilots has been important. An example for this is the EDISON 42 project of IBM Zurich Labs. EDISON 38 http://money.cnn.com/2009/04/20/technology/obrien_ibm.fortune/index.htm 39 http://asmarterplanet.com/blog/2009/09/lessons-from-stockholm-congestion-charging-and-the-intelligent-transportationsystems-conference.html 40 http://www-304.ibm.com/businesscenter/venturedevelopment/us/en/ 41 http://www.streetlinenetworks.com/ 42 http://www.zurich.ibm.com/news/09/edison.html 95

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investigates together with the Danish Energy Provider DONG, Siemens, the Danish Energy Association and other partners a system for optimizing smart grids to the needs of electrical vehicle charging. Participants and Network Players In this case study, the interplay of multiple network players can be observed – namely: • • • • •

The academic and research network – with a particular focus on moving beyond the boundaries of an individual domain and bringing disciplines together in order to address wider societal issues (see SSME, research pilots) The IBM employee community and the wider IBM network of business partners and experts – with a particular role to help identify issues (see Innovation Jam, GIO) Small sized businesses and start-ups (see Venture Capital) Governmental representatives and agencies (see PPP, GIO, Innovation Jam) Specific other industry players (e.g. Health Care, Energy)

Case analysis As it can be seen from the case, Smarter Planet addresses very challenging issues that can only be tackled by a wide collaboration of players from the ICT industry with many more participants – such as specific industry players (e.g. energy), technical solution providers (e.g. smart meters) and public sector representatives. With respect to further sub dimensions of the case 1. Firm Level Smarter Planet belongs to the 4 IBM Key Growth Strategies. It is closely linked also to the IBM strategy on Cloud Computing – but is wider in scope and technological solutions. IBM expects to reach 10$ billion $ revenue by 2015. In the 2009 annual report from IBM it is estimated that the market addressed by IBM will grow by 40% over the 2010-2020 decade from Smarter Planet opportunities (including e.g. smarter healthcare or smart transportation). As of 2011, Smarter Planet remains a major driver behind IBM innovation and is – as indicated in the case – closely linked to open innovation approaches that span the entire company (such as FOAKs, Innovation Jam or the GIO). 2. Network Level Smarter Planet topics demand by definition global networking and cannot be addressed by a singular player. Hence, the Smarter Planet initiative follows consequently open innovation principles. Here, IBM seeks to act as a key player and hub in the network. Also IBM has been focusing on those aspects that promise the highest delivery of value – such as integration, key solution provisioning or coordination. 3. Society level Smarter Planet topics are of societal concern – mostly they are societal challenges of long-term perspective that can only see a gradual improvement over time. However, IBM has had a lot of encouraging feedback from public decision makers, NGOs and other societal influencers since the official start of the Initiative in 2008. The open innovation instruments that IBM is applying in this context help to conduct this wider society level debate.

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4. Service level As expressed in point 1 – Smarter Planet has a significant business value for IBM, however the case does not indicate that, in contrast to the Cloud Case, Smarter Planet has yet resulted in a new range of distinct new services offered by IBM. Rather Smarter Planet is impacting different existing service lines and business of IBM (such as e.g. the Business with the Health Care Sector or with the Public Sector). However, the first pilots and FOAKs indicate that Smarter Planet projects are very large and complex and need to cross multiple service- and product lines of IBM. So the challenge of Smarter Planet for the IBM service delivery is to improve globally integrated delivery capabilities. Also, a particular challenge is the exploratory nature of these projects and the deeper collaboration with IBM research. Financing and operation are particular challenging aspects as well and the increasing attention to PPPs is addressing this. 5. Innovation process Historically, the ICT industry has been among the industries most depending on innovation and IBM has regularly been classified as among the top 10 innovative companies globally. An important transition for IBM has been the rising importance of services. However, the ICT industry also has seen a commoditization and standardization of services. So, it has remained strategically important for IBM to remain at the forefront of both ICT technology and services. Smarter Planet represents a further shift towards services that are not standardized but that are actually delivering unique and innovative solutions. This further shift towards highly value adding and innovation-driving services is impacting the whole organization. Ultimately this is also were the importance of open innovation truly plays out. Complementary to this are mechanisms in the organization that seeks to standardize and package the most interesting of these solutions. 6. Socio/economic impact All issues addressed in the Smarter Planet Initiative are of major socio economic relevance. As indicated at the example of the Stockholm Road Congestion – a singular city case has resulted here already in a 14% percent reduction of local emission from cars. The specific impact has however to be expressed and calculated on a case-by-case basis. 7. Barriers The described innovation process challenges apply not only to IBM but also to other partners that are involved. E.g. for a public organization it is difficult to invest in an exploratory project rather than into a defined implementation. PPPs, Financing and Venture Capital are hence important complementary instruments in the initiative. Also the discussion with public sector leaders needs to continue on organizational aspects such as new forms of organizing PPP, new funding models and innovationoriented procurement. Bibliography see references in footnotes Glossary of terms CITRIS EDISON FOAK

University of California Berkeley – Center for Information Technology Research in the Interest of Society EU Project on electrical car charging optimization First of a kind project 97

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GTO GIO ICT Jam KSRI NGO PPP SSME

IBM Global Technology Outlook IBM Global Innovation Outlook Information and Communication Technologies Large online collaboration event in multiple phases – that is used e.g. for idea generation Karlsruhe Service Research Institute Non governmental organization Public Private Partnership Service Science Management and Engineering

Observations Smarter Planet is a fundamental strategic initiative for IBM. It builds on the increasing pervasiveness of ICT and the further development of ICT as a key enabler for new types of services and the transformation of existing service systems. From an innovation perspective, the case demonstrates the particular need for engaging with the wide group of stakeholders that is involved in complex service systems. In this case, innovation from the technological side as e.g. driven by IBM Research is interacting with innovation that is created in the architecture and application of technology. Whereas in a sequential innovation model these would be distinct phases, this case shows that they effectively run in parallel. So the desired innovation on the service side– in this case widely using open innovation mechanisms - strongly impacts the technological innovation. And increasingly the progress in understanding of complex service needs and requirements becomes a driver for technological innovation. This is deeply linked to new forms of partnerships (such as PPPs) – effectively producing a long-term breeding ground for service innovations. IBM promotes that this should as well be reflect in academia and curricula (see SSME).

OMT: Energy Efficiency with people engagement at web OSI partner: Logica Version: 21-05-2010 Authors: Martin Magnusson, Gohar Sargsyan Main interviewee/customer contact: Magnus Ericsson, Director Marketing at Växjö Energi AB Case summary Reduced energy consumption is the aim for many people and organizations, but to realize this people need to be given the right tools. OMT is an interactive tool creating a more energy conscious society. Logica together with the utility company Växjö Energi AB, developed OMT together. Logica with its business knowledge around ICT services did understand the demand from the client, and had the knowledge to transfer this into business benefits. Växjö Energi AB working as a leading utility, now can transfer decreased sales of energy by offering energy service for its customers. By using Logica open innovation process the potential of the team where taken care of. We made sure connections to expertise from universities and business knowledge where gathered. By leading the team with sharp aim for creating a more energy conscious society, with energy aware people, the open innovation process could deliver its benefits to the project.

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The results from OMT shows people are getting more interested in their energy consumption, and also decrease the total consumption. Using functionalities for energy visualization and pervasive gaming gives utilities the tool of becoming one of the main players in creating a more energy conscious society. Introduction The dire trends are familiar: Demand for fossil fuels is rising. Energy prices are highly volatile. And climate change is emerging at the top of the political agenda. More than ever, utilities, energy producers and their customers all face an era of unprecedented challenges. The city of Växjö have been named as The Greenest City in Europe, and working together with the inhabitants to create the sustainable city, they aim for 5 % electricity reduction by making people engaged in energy consumption. The enormity of these challenges, from combating climate change to improving energy security, cries out for an alternative energy vision for the future. It demands a new way of thinking, not just by utilities, energy producers and their customers, but by governments and policy-makers as well. In Växjö the sustainability is a question concerning everyone, from bottom to the top. Of course, reducing energy consumption in Växjö will require relentless, systematic and widespread behavioral changes. Everyone will need to be much more intelligent in the way we consume energy. But easier said than done. Changes only take place if people are equipped with access to information and communication technology that allow them to make intelligent decisions. Växjö energi decided to equip their customer with this information in a user friendly web baseds tool, called EnergiKollen. The engagement was undertaken with the following partners: Logica

Logica is a business and technology service company, employing 39,000 people across 36 countries. We deliver business consulting, systems integration and outsourcing across all industries and business functions. We create value by successfully integrating people, business and technology to create effective, sustainable business ecosystems. Our people apply insight to create innovative answers to your business needs.

Veab

Växjö Energi AB (VEAB), a 121-year old energy company owned and operated by the municipality of Växjö in southern Sweden, is enjoying extremely positive public reception to its Online Monitoring Tool.

Participants Växjö Energi AB • • • •

Their role was to feed Logica with information regarding end user behavior, concerning energy consumption. Setting up metering data infrastructure. Arrange user groups, for testing new customer interaction models. Involvement and evaluation of results from energy efficiency and socio economics value, done by KTH Royal institute of technology.

Logica • •

Development of ICT solution. Integrations with source systems. User experience expertise, how people using the web. 99

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Smart metering expertise.

Case analysis 1. Firm level Since the tool was introduced about one and a half years ago, 25% of private households have used the tool. Those using OMT are four times more energy efficient than those who don’t use OMT. VEAB also sells energy services that help private households with their heating system. The contract, which costs about $10 US a month, includes a check-up of the household’s heating system once every three years. Energy services are a growing market for utilities, explains an engineer at VEAB and director of energy services. “From the number of hits we’re getting and the declining trends in energy usage, we’re finding that EnergiKollen (VEAB’s term for OMT) is generating a lot of benefits for our customers and our business. In the four months since VEAB introduced the concept to businesses, about 100 business customers have signed contracts, equivalent to 10% of the total number of businesses in the area. And the numbers are growing fast. Is the company concerned about declining sales with people cutting down their energy consumption? “Not at all,” “If we sell less energy, we don’t have to build more infrastructure and we can use the infrastructure we have more effectively and profitably.” In the future, VEAB is looking at increasing the amount of renewable energy sources – in keeping with Växjö being designated as the greenest city in Europe, according to the BBC. Currently, 95% of its energy source for district heating and electricity comes from biofuels. 2. Network level When bringing energy efficiency into people households, you need understanding in people behaviour. Instead of starting from available technique, this innovative project started from peoples every day situation. People tend to think of climate and energy efficiency as something they are forced to, and they feel lack of control. In order to create something closely matched to peoples everyday life, a study of demand side management (DSM) where done. Here it was pointed out several matters to take into consideration, with the aim of creating interest and joy regarding energy consumption. Also in this project, it involved KTH the royal institute of technology. When using the solution Växjö aimed at energy savings of 5 % for the entire city. The results have so far not been achieved, but also the results at about 2,5 – 3 % savings is great when comparing to other energy efficiency projects, if calculating €/kWh savings. 3. Societal level Energy efficiency is not about technique, it is about connection people and technique. Sometimes there is mentioned that smart meters should make energy efficiency, but the fact is that smart meters can feed services creating energy efficiency. In this project OMT where used in order to affect an entire city and its electricity consumption. We looked at an easy understandable web site, explaining something which is hard to understand, this is what can reach a large amount of people. In order to get people involved OMT has a pervasive gaming functionality, this gives the possibility for people to get active in energy savings, and to compete against, friends, family or neighbours. It gives people the incentive to elaborate with its energy consumption.

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4. Innovation process Logica used its open innovation process, and also expanded this with the client processes for business development. This clear work progress made it possible to gather needed knowledge for creating something new for the public market. When developing tools for end users you need the understanding, i.e. information, about triggers making people act in a specific way. When information have been collected, and user groups put together, Logica made an model based user interaction workshop, with the aim of developing the user interaction interface needed to make people interested in energy consumption. Since the release Logica working continuously with new functionalities, as a demand from market, clients and technique development. Since the implementation in Växjö several other installations have been done. The functionality is not protected, and Logica are working with making the solution available for a wider market. 5. Barriers • When making innovative solutions, using technique people have low knowledge about, it is hard to actually get the understanding in the first step. Later when people have discusses their energy consumption with neighbours etc. they also start to adopt to a more energy conscious society. • Market transformation takes time. When utilities installing smart meters, it often takes some years until they get the understanding and knowledge in how to build energy services and make businesses out of this. 6. Lessons learnt This Web-based system is an important part of the work towards the stated goal, save 5 % of electricity in Växjö, The Greenest City in Europe. Activities to make people log on to EnergiKollen was difficult in the beginning, but customers have started getting used to this tool. Energy savings of 550 MWh/Year is the results from Växjö, and the results are getting better and better for every month, as more customers finding the benefits of using EnergiKollen. Customers are now better able to understand what happens with electricity consumption if they change their behaviour or if they invite friends for a three-course dinner. The reactions from users are very positive, which indicates great potential for the future of EnergiKollen. Two different types of competitions can be used in EnergiKollen. Lessons learnt from these competitions are that it is difficult to get the information out to people and to get them to log on to EnergiKollen and enter the competitions. That people’s energy meter can be read automatically every day is something new and this makes it hard for people to understand how the competition works. In the competitions people have saved energy, the results for the top five people in each competition have varied from 45 % to 10 % of saved energy. Competitors responded well to participation. After competitions a questionnaire has been sent to those who took part. The results of the questionnaires showed that reaching the result were easy, and those who took part in one competition would gladly take part in more competitions and would also like to compete against neighbours and friends. The measures taken by people are often small measures such as less lighting, smart usage of computers and trying to be more aware of electricity consumption. This model of competition is arranged by Växjö Energi, who selects the people to be included in the different teams. One competition in this form has been held. The competition was between members 101

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of companies and politicians in Växjö. Each member put together a team consisting of employees living in Växjö. Five teams with 9-15 employees took part; each team had a leader to coach them. The winning team from Växjöhem with 9 people lowered their electricity consumption by 47,4%. The Other teams also showed great savings. This saving is compared to a reference period. The team leader of the winning team focused on individual talks with all competitors, in order to create interest, curiosity and the feeling of control. This competition was an excellent example of what individuals can achieve together, if they are given the right means towards sustainable behaviour. The competitions are a different method for creating energy efficiency. They did not only involve the competitors, the rest of the families were also involved. The competitors were motivated by their team leader, as well as by the rest of the family. Many of those who achieved greater results had children, who were engaged, and were lead into the competition as something exciting. In some cases friends of family members were also engaged. This proved that competitions engage people, and also spread discussions about energy between people. However, you need to make it interesting and fun, that’s what EnergiKollen is all about! Bibliography Description of the metering system and test results from the first step of metering http://www.concerto-sesac.eu/IMG/pdf/Demand_side_management_in_valle_broar_-_Vaxjo__Martin_Magnusson.pdf CONCERTO initiative Sesac (Sustainable Energy Systems in Advanced Cities) Deliverable 2.1 a - How to create energy efficient behaviour in the city of Växjö+ Ref No: TREN/05/FP6EN/S07.43335/006183, 31/10/2008 Glossary of terms DSM Demand side management OMT Online monitoring tool EnergiKollen OMT Observations Data collected and analyzed for presenting results are done from > 10 000 metering points, and gives a good observation of the impact of OMT solution. The open innovative process and its results show that good knowledge and close collaboration with expertise is needed if new business areas should be developed. The difficult part of using this technique in the society is non technical, it is the connection and interaction models making people use this service.

IBOR: Integral Maintenance for Public Space OSI partner: Logica Author: Gohar Sargsyan, Jan Cornelis den Ouden Version: 01-02-2011 Interviewees: Jan Cornelis den Ouden, proposition owner of IBOR and other stakeholders involved Contact: Authors

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Case summary IBOR (Integral Maintenance Of Public Space) is a service offered to the market to integrate different objects (Smart Lighting, Traffic Systems, Water Management Pumps, Parking Pillars, City Security Pillars etc. etc.) in the public space for several applications. Such applications can be a central maintenance system to overview and management of objects in the public space environment. Besides maintenance the service can be initiated for other applications as well. For instance the service can be used for emergency or calamity applications. The goal of these applications is to improve the quality for emergency services. In case of an emergency the objects in the public space will respond on the movement of the emergency vehicles in time. The result is a logistic path where traffic lights will engage a green pass-through route from where the emergency vehicle started his route up to the end situation. Bridges will stay down and other security city pillars will automatically grant access to the approaching emergency service on its way to the calamity spot. On the spot the street lights will turn on for 100% for a clear vision of the site. Via smart water management the IBOR service will increase the pressure into to the system on site for the fire brigade to extinguish a fire when necessary. The end result is a safer route for emergency services and furthermore IBOR will bring more quality in providing a better service to the public. IBOR can also be used to guide people with smart lighting from a football station to a train station for transport of the visitors. IBOR is there to help crime fighters in case of sever calamities of theft and aggressive insurrection of groups of people in a city by adapting street lights and other objects. The IBOR service need to communicate with objects in the public space via radio frequency networks of telecom operators. Lately the 3G networks of operators do not qualify the requirements for management of objects in the public space environment. Research is needed for alternative RF technologies to improve M2M contact with the objects in the field. Introduction Companies involved in the projects are: Royal Philips Electronics of the Netherlands is a diversified Health and Well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity “. Microsoft is introducing with the azure platform service of Microsoft cloud computing in the market. Cloud computing is an excellent service model (from a technical and businesswise view) for the IBOR proposition. Vodafone is a worldwide telecom operator specialized in M2M services for emergency services. With Vodafone R&D department we would like to investigate new technologies to improve quality of the RF spectrum for communication with public objects. Logica is the leading partner of IBOR. As trusted innovation partner and lead partner in this project, Logica enables its clients to accelerate a secure public space management system and services. Logica is the solution provider and the integrator.

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Participants Royal Philips Electronics for delivering lighting hardware from pole to lamps and middleware software to manage objects. Besides lighting Philips is involved in the project in other management of objects as well for instance cameras. The role is particularly in offering new lamp pole systems for influencing people behaviour or specified technology needed for emergency services assistance. Microsoft is participating for the IBOR service in cloud computing and Microsoft’s surface technology. Vodafone participates in new RF technologies to communicate with objects in the public space arena. Logica develops the platform for IBOR as well as doing the integration and interfacing the different objects in the public space environment. The Case analysis 1. Firm level questions All the participants involved invested in kind and in cash in this project. Each partner invested in research and development with their unique expertise particularly in the area of ICT, Lighting and Controls and communications. Most of the partners have considerable experience in open service innovation within ICT and Lighting and RF telecommunications. All partners were highly motivated and engaged in open innovation to make the developments possible. This cooperation developed useful skills and experience in open service innovation in the areas mentioned above. The innovation leads to employment growth because the lighting industry is focusing on traditional business (production of lamps and lamp modules). IBOR brings more added values into the value chain because it offers services on top of the traditional business of the participants in this project. Added value in the sense of integration of services like traffic congestion variables having influence the brightness of lights as an example. The people involved in the companies are: • • • •

Philips - R&D Lighting and control division for about 15 employees Logica- R&D and business development units for about 15 employees. Vodafone- R&D UK and sales organization the Netherlands for about 10 people Microsoft- R&D Cloud computing Redmond USA and Sales organization Netherlands for about 15 employees.

On core group level 5 people are continuously involved. 2. Network Level There are four organizations involved in this network. In this innovation network Logica, Philips, Vodafone and Microsoft. There is no role involvement of the knowledge institutes currently. The innovation network is largely considered on large scale industry partners. Logica has already long-term relations with the innovation partners mentioned in previous paragraphs.

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The innovation service IBOR has started in the Netherlands and all companies will have the end focus on the world. After the business cases and services offered to customers are determined in the Netherlands we are all planning to role the innovation out over the word because all participants have an international coverage. For a long time all partners are collaborating with each other on different innovation as well as the IBOR innovation. The dominant nature of our service innovation is bringing more added value service within the public space environment for instance the IBOR services are for operators most of the time being used for a couple of hours per day, per month or per week. Microsoft’s cloud computing services fits excellently as a business model into these new innovative services in the public space environment. Because the cloud computing business models of Microsoft is particularly based on a pay per use model. 3. Societal level For the organizations the impact for these new kinds of services delivered to customers will effectuate: • •

Added value new innovative service for customers. So for the companies involved the IBOR service will bring more turnover value; Extending existing business with new business development so that the integration of services offered to the customers will effectuate more internal departments involved.

The IBOR services will offer cities and other governmental entities (societies) as a whole more integrated services from a technical point of view but also from a governance point of view. Having IBOR in place will mean for the society benefits: for example faster line of service from the emergency services, more influence on public space objects to be fit to their needs, more efficiency on the technical infrastructure and also on the governance infrastructure regarding cost savings. 4. Service level All parties involved in this project have experience in service innovation driven by ICT. The IBOR services, as explained, will offer more added value on cost saving, efficiency and society value. So for the inhabitants of municipals live will improve because users can influence objects in public space. For instance elderly people, disabled groups and other beneficiaries of the public space will feel safer if they can influence lighting systems at times when they feel they would more light when they have insecure feelings about their environment. The emergency services with IBOR will have a better and less stressful feeling when they are moving with their vehicles on cross-overs. Not only will it benefit a much more speedy way to their destination it will also prevent accidents on cross-over. From a cost savings point of view governmental organizations can adjust and leverage their lighting infrastructure when users do not need too much light! In this case costs can be saved dramatically on energy and on maintenance. 5. Innovation Process Each partner involved in IBOR has established open innovation strategy and use their open innovation process, and also expand this with the client processes for business development. This clear work progress made it possible to gather needed knowledge for creating something new for the public 105

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market. When developing tools for end users in public space you need the understanding, i.e. information, about triggers making people act in a specific way. When information have been collected, and user groups put together, Logica together with the IBOR partners made an model based user’s demand and society behaviour with the aim of developing a secure public space management system to the benefits of the society. Since the release Logica working continuously with new functionalities, as a demand from market, clients and technique development. 6. Barriers Currently there are no universities or science organizations in this field involved. However we are currently setting up a corporation with knowledge institutions. The original offer has been transformed into more complex service offer due to the customer needs, which is a limitation on the service offering. 7. Lessons Learnt We started this case with Lighting and the added value around services based on lighting technology. However customers (municipals and governmental organisations) wanted a more integral approach of other objects as well. Not only from a technical approach but as from a governance approach. If we apply short-term customer orientation approach, then the current customers only want to pay if the service is based on the integration of public space assets to improve quality and effectuate cost leverage on managing the public space environment. Besides particular customer offerings, we will keep developing the original service offering (smart lighting) to have more open approach to the market and not to have limited customer views. Bibliography Number of workshops with clients in 2009, 2010 and 2011 Glossary of terms IBOR

the Dutch version of Integral Maintenance of Public Space

Observations As stated earlier, IBOR started with lighting project/proposition and the added value around services based on Lighting technology. This case shows by applying open innovation in multiple areas the partners of IBOR came up with another solution, more integral solution to the customer’s and the society needs. The solution became more complex which contained number of factors and areas to consider being successful. The project is ongoing and we believe that the first pilot on this public space management will give us positive results as we constantly apply our open innovation approach.

NPR: National Pension Registry OSI partner: Logica Authors: Gohar Sargsyan, Michel Vonk Version: 03-09-2010 Main Interviewees and customer contact: (1)Francine Giskes, chair of Stichting Pensoen Register, (2)Edward Cox, Ir. Edward Chr. W.J. Cox, Sector manager Zorg Achmea IT Contact: Authors

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Case summary At the moment, about 58 million people in Europe are saving about 1,3 billion Euros in Defined Contribution (DC) related pension schemes, which is enormous amount of money. However, the question is: are 58 million people aware that they are saving their pension in a DC scheme, where the financial results today are of a value of 1,3 trillion Euros, but that this can e.g. “evaporate” tomorrow when there occurs a new financial crisis? And what do we do (the EU as an economic entity, Pension funds, the EU parliament, employers, other involved stakeholders) to inform the participants, so that they will be able to make in time and correct financial planning for their lives? Or is it already too late for intervention? These are the main drivers for different member states to think about their national policies on pensions which can have considerable socio-economic impact in the future. The Dutch government being one of the first member states to take realize and go forward to this issue, launched a law on pensions in January 2007. With the setting-up of the new pension law (by 1 January 2007) important steps have been taken in building of communication and transparency concerning pension records. In 2010 www.mijnpensoenoverzicht.nl website was launched where the citizens of NL could see the overview of their pensions. This is a still ongoing programme. Introduction The new pension law in 1 January 2007 has been adopted in The Netherlands in building of communication and transparency concerning pension records. In an amendment on the new pension law has been stipulated that all pension executants together with National pension registry and SVB should set up at the pension registry the latest on 1 January 2011 it should be operational. The main objective of the pension registry is that all citizens or all people with BSN (Social Security Number) in The Netherlands can get quick and free access to their pensions records for the information on how much is their pension entitlements (and AOW) are at that moment and where it is kept. The Foundation pension registry is responsible for the development and the operational management of the pension registry. The pension funds and the pension insurers must look after swiftly available and correct data concerning pension records by active and inactive participant to the pension registry. Participants The Dutch Government : The initiator of this pension registry The Ministry of Finance in the Netherlands: It is occupied with the national budget, taxation and financial economic policy, including supervision of financial markets. Ministry of Social Affairs and Employment in The Netherlands : (Ministerie van Sociale Zaken en Werkgelegenheid; SZW) is the Dutch ministry of social affairs: it is occupied with employment, relations between employers and employees, the system of social security, and emancipation. Stichting Nationaal Pensioen register: Foundation of National Pension Registry established by the Dutch government and mandated as a government. Pension funds All the pension funds in The Netherlands are part of the system. A pension fund is any plan, fund, or scheme which provides retirement income to employees or results in a deferral of income. Pension 107

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funds are important shareholders of listed and private companies. They are especially important to the stock market where large institutional investors like the Ontario Teachers' Pension Plan dominate. The largest 300 pension funds collectively hold about $6 trillion in assets. In January 2008, The Economist reported that Morgan Stanley estimates that pension funds worldwide hold over US$20 trillion in assets, the largest for any category of investor ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or private equity. Pension Insurance companies All the insurance companies which insure pensions of citizens or residents: Nationale Nederlanden Van Lanschot Bankiers ASR Verzekeringen ABN Amro Interpolis Reaal Nationaal Spaarfonds Theodoor Gilissen Paerel Leven Legal & General Conservatrix RVS Delta Lloyd Zwitserleven Aegon OHRA De Goudse Verzekeringen De Amersfoortse Onderlinge s'Gravenhage AFM (Authority of financial Markets) is the regulatory body The Netherlands Authority for the Financial Markets (the 'Authority') has been responsible for supervising the operation of the financial markets since 1 March 2002. This means that AFM supervises the conduct of the entire financial market sector: savings, investment, insurance and loans. By supervising the conduct of the financial markets, AFM aims to make a contribution to the efficient operation of these markets. Atos Origin NL Atos Origin is an international information technology services company. Atos Origin, the biggest IT service delivery company in Europe (5.5 billion EUR) operates in 40 countries worldwide, with over 50,000 employees. Atos Origin provides IT services such as consulting, systems integration and managed operations as well as services such as hi-tech transactional payment services. It has a client base of international companies across all traditional market sectors.

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Logica Logica is a business and technology service company employing 39000 people across 36 countries. Logica delivers business consulting, systems integration and outsourcing across all industries and business functions. Logica creates value by successfully integrating people, business and technology to create effective sustainable business ecosystems. Logica people apply insight to create innovative answers to the clients’ business needs. Participants The Dutch Government: initiative taker, implementation of law Stichting Nationaal Pensioen register (Foundation of National Pension Registry) responsibility of realization of the initiative Atos Origin is implementing the first phase of the ICT platform Logica delivery of professional support on ICT/project management and testing Pension funds: delivering correct, complete and actual pension data Pension Insurance companies: delivering correct, complete and actual pension data AFM (Authority of financial Markets) is checking • all communications done by pension registry, • ways of communication, • the level of comprehension by the citizens as a result of the communication, • controlling the delivery process by pension funds and insurance companies, • quality assurance. All Citizens/Society who have BSN (burger service numbers) will have access to pension registry (as of Jan 2011). Case analysis 1. Firm level This is not an R&D project. This is industrial project by the government. Investment of this programme is being done by pension funds in different phases. According to the law each pension fund should send a budget based on the number of their active participants. The Government sends the bill (for example, in one of the stages it was 0.80 EUR per participant) and the pension funds pay that bill. No cost saving in an economic level, because it is a foundation and the executors of the work based on planning. However, the idea is to have considerable costs saving in the future at a social level. All the parties involved are highly knowledgeable in their roles and have granted their roles based on selection criteria sent by the government and the technical standards. 2. Network level 600 pension funds, 20 insurance companies, all the citizens with BSN, which is nearly complete population, 15-16 million. Growth: at the moment the pension registry covers only the 1st and the 2nd pillar pensions which are social security and occupational pensions. In the phase 2, it will also cover pillar 3 – individual pension. In phase 3, life events will be incorporates.

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Geography: This is a Dutch National programme, which will be used all over the world. People who moved to other countries from the NL, they can have access to their pension records. The first steps of going into European market is done, however, it is still at a discussion stage. There is strong demand on transparency of the pension records of the EU individuals while moving work based from one country to another. In 2009 Logica introduced the NPR to the European Commission DG MARKT and DG social Security. As a result of these meetings there is an ongoing interest by the EC to look at the Dutch example for the other EU countries. After the first phase of the development, the EC will support in organizing an event for show case of the Dutch pension registry inviting all the member states and ask their attention to follow this example based on their individual situation. Sector: Financial markets, public sector 3. Society level The drivers for the government to participate in this service is •

To prevent the poverty of the nation. The group that will retire at most within the upcoming 20 years based on their current behaviour

The drivers for the users are • •

Better financial planning for their social benefits now and in the future. Free service

The societal impact of this service is better social security for the EU individuals. The NPR: the Dutch pension funds are not motivated to pay for the registry as there is no ROI for them. For the European open pension system, there are number of barriers, such as • •

Different country rules – the build up of pension can be considerably different and more or less financially attractive systems (where to do better pension shopping) Politically different member states protect more or less their citizens from their future poverty

4. Service level The Dutch Government has considerable experience in user driven ICT based service innovation (e.g. GBA, OV ship card, etc). Number of other open innovation programmes were initiated or supported by the Dutch government, such as Services Innovation and ICT in financial sector and 5. Innovation process The parties involved have considerable experience in open services innovation. The parties involved have complementary skills for the success of this initiation. The services innovation is in complex environment, within multiple and multidisciplinary stakeholders. On the one hand it is challenging to balance the different innovation processes, on the other hand these different open innovation strategies are complementary to reach this complex solution. It is worthy note that this is typical user centric open innovation case, with active participation of the users. 6. Socio/economic impact At this stage 58 million people participate in DC scheme, and the consequence is that about 80% of all the participants leave the choices they have to make in a DC scheme to e.g. the Pension funds (e.g. they choose for a lifetime related DC option. This is the case for most of the companies, including Logica.

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These people reply on governmental safeguards like AFM, DNB that they will prevent or prohibit the major “accidents” in pensions. However, the Ice-safe affair proved that they all were wrong. To prevent people to make wrong choice, pension registry can help people to make their own choices on financial/pension planning based on their income and lifetime planning. The socio-economic impact indeed is huge preventing the EU citizens from poverty. 7. Barriers In EU and NL: • •

Political: no “gain” to be expected for governments (F, I, Eastern Europe) as it will become clear that pension arrangements for people that will retire in 10-25 years will be substantially lower that today. Pension funds and Insures: the register will make it easier to distinguish between “good” pension funds / insurers and “bad” ones. Meant: how profitable they were in accumulating your pension money to a more or less high pension capital on your retirement data (65?). Note: in DC schemes, the pension capital on your retirement date is used to buy yourself a lifetime, e.g. monthly payout. The higher your pension capital became, the higher your pay out (you pension) will be. Technical: inquiry on pension data must be totally secure AND (most of all) strictly private. Therefore a system of unique identification for each inhabitant must be realized first (in NL: the BSN) and governmental regulated security added up (in NL: DigID). Furthermore, it will be a good idea to regulate on “data communication standards”, which will guarantee that data communication will be the same for ALL (by law) delivering parties. In NL, this was an extensive project phase in the development of the PR, done by SPR. SPR was therefore mandated by de NL government to decide on the standards that was needed. Development portal: on the PCs of all inhabitants, with all kinds of internet browsers installed, people will have to be able to contact the portal of the PR. Therefore the construction of the internet portal was deliberately limited in the (mostly graphical) possibilities of a modern user interface. So no special effects or so was to be used. Open innovation process: Applying Open innovation in multidisciplinary environment is difficult. The small insurance companies are not easy to accept the model because for them it is too expensive.

8. Lessons learnt Dutch level: • Incorporate the delivery of pension data to the PR in law, because the resistance of the (smaller) pension funds is relatively high for doing so. (too expensive) • Quality of data of redeemed pension schemes (Dutch: slapers). • Possibility of summarizing of the pension data as of very different pension-schemes. (In the Netherlands, we administrate the most complex pension products in the world!) • Equalability of “look alike” data pension data (homonyms, synonyms) demands strong regulation. In the Netherlands, before the PR was introduced, therefore the UPO was introduced (UPO = Uniform Pensioen Overzicht, English: Uniform Pension Report) • Social security Pension (AOW), which accounts for all Dutch inhabitants (under certain conditions), was inadequate. Restructuring of the administration for 16 – 17 million inhabitants is a major project for NL and virtually be almost impossible for big EU countries. So, start here in time!!! 111

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The critical success factors of an online PR are: completeness, correctness and understandability of presented pension data for the end-user (e.g.: you and me). Also, from a technical point of view, very limited access time for the inquiry of the most actual pension data is essential, for the common internet user will not wait longer for it than (say) 5 – 10 seconds. Last point: Stimulate the use of the PR by introducing very good campaigns at the time the PR will be ready for use.

EU level: • The EU member states should move quickly towards pension registries and in the future also into a single market on pensions. For the upcoming years reaching an objective of individual EU countries pension registries are more realistic. However, at a certain point, a single EU system will be needed for EU citizens, especially the ones who travel and work within different EU countries during their lifetime. Bibliography • Presentation 02.06.2009 (“plenaire presentatie Francine Giskes 2 juni”) of chair SPR • http://europa.eu/rapid/pressReleasesAction.do?reference=MEMO/10/302, EC Green Paper on Pensions in EU, July 7, 2010 • Mijn Pensoen Register: MyPension Registry https://www.mijnpensioenoverzicht.nl/registerweb/introductie?cid=92440 Glossary of terms UPO AOW OV DC SPR NPR

Uniform Pensioen Overzicht, ENG: Uniform Pension Report Algemene ouderdomswet, ENG: Social security Pension openbaar vervoer, ENG: public transport Defined Contribution Stichting Pensoen Register Natialale Pensoen Register

Observations • Giving information to participants of National Pention Registry is relevant and should be maintained (in e.g. the Netherlands) or increased (Eastern Europe), but will not be enough. • Participating in a DC scheme implies that 58 million people can understand a complex pension product. However as a consequence about 80% of all the participants leave the choices they have to make in a DC scheme to e.g. the Pension funds and not making choice themselves. They simply relay on governmental safeguards like AFM, DNB that real “accidents” in pensions will be prohibited. The Ice-safe affair proved that all were wrong. So what we should do for preventing this enormous number of EU citizens making the wrong choices. When an employer offers a DC scheme to his employees (participants), they can have at least a moral obligation to prevent their employees for future poverty. At the moment, very few employers act in that way by giving employees enough attention on the matter (they have no legal obligation to do so). • This all leads to the conclusion that more guidance on the DC topic is needed in Europe, which led in 2010 to a green paper. This green paper is produced by EC DG Employment, Social Affairs and Inclusion. It may be followed by a white paper, an official set of proposals that is used as a vehicle for their development into law. • There were vivid discussions with several EU panels on the topic. Discussions are elaborated on the challenges of EU National, then Single European Pension Registry. There are remarkably a lot of comments on countries of Eastern Europe (Poland University, Czech National Bank, Croatia, and Latvia) and the UK. These countries are either emerging countries

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concerning pensions (and therefore on a DC basis) or are subject to massive pension reform (the UK is rapidly changing from DB to DC).

Mobile Point of Care East Cheshire OSI partner: Intel Author: Stephen McGuirk, Tony Corrigan Version: 19-08-2010 Main Interviewee and customer contact: Diane Slater, Pharmacy Project Manager Case summary The Pharmacy at Macclesfield District General Hospital (MDGH) has been using the iPharmacy system provided by iSoft since May 2006 and together with the introduction of an automated dispensing robot have been continuing to modernise Pharmacy services. Phase 2 of the project is to introduce Electronic Medicines Management to the wards to improve the existing process and facilitate near patient care. MDGH have consistently and methodically made IT investments with success. The purpose of this engagement was to determine the business value of pharmacists and technicians using MCA’s (Mobile Clinical Assistants),a tablet-like device, as part of their daily work to manage pharmacy workflows, such as patient drug histories, ward stocking and information access such that better and more informed clinical decisions could be made. This engagement aimed to apply the Healthcare IT (HIT) Economic Model to determine Workflow Optimization, Cost of Care, Staff Satisfaction and Quality of Care values. The hospital introduced a Mobile Point of Care (MPoC) pilot designed to evaluate the business value of using MCAs. This enabled a significant shift of workflows from the pharmacy to the wards but more strikingly there was a 27 per cent reduction in the number of missed doses improving both patient safety and quality of care. MDGH proposes to use the outputs from this study to qualify the value of mobile computing technologies and their effectiveness as part of the care delivery platform. This in turn will inform business planning and future technology investments. OSI Link: This is a tangible example of Services Innovation in the Healthcare arena. The aim would be to build on such an ICT base and expand the level of services available to patients particularly in relation to new services beyond the hospital itself (community/tele-health). The Innovation methodology used during this project was SIFT (Systemic Innovation for Teams), along with an adherence to a Business Value (HIT Economic Model) methodology which has a focus on capturing the socio-economic benefits of applied ICT solutions. Introduction The engagement was undertaken with the following partners: Motion Computing

Motion Computing, headquartered in Austin, Texas, produces slate tablet PCs for mobile professionals in industries including healthcare, government, and field force automation. Motion is a mobile computing and wireless communications leader, combining world-class innovation and industry experience so individuals can use 113

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computing technology in new ways and places. The company’s enhanced line of tablet PCs and accessories are designed to increase productivity for on-the-go users while providing computing security, power and versatility. iSOFT

iSOFT is one of the world’s largest providers of healthcare IT solutions. iSOFT design, build and deliver industry-leading software systems that serve the entire health sector. Over 13,000 provider organisations in over 40 countries across five continents use iSOFT solutions to manage patient information and drive improvements in core processes. iSOFT (based in the UK) became part of the IBA Health Group (based in Australia) following a merger completed in October 2007.

Cisco Systems

Cisco was founded in 1984 by a group of computer scientists from Stanford University. Since the company's inception, Cisco engineers have been prominent in advancing the development of IP- the basic language to communicate over the Internet and in private networks.

Macclesfield PCT

Macclesfield District General Hospital, part of the East Cheshire National Health Service (NHS) Trust, delivers a wide range of clinical services for patients from a large rural and urban population in the North West of England. The pharmacy department was keen to use the MCAs to gain experience in business value modelling as well as developing an understanding of how the MCAs could complement their traditional data collection methods. The pilot focused specifically on three pharmacy workflows in the wards and the dispensary: • • •

Ward discharges Medicine requests for in-patients Medicine management

Participants East Cheshire Pharmacy • •

Role (s) in project: Project Management, Pharmacists, Deputy Chief Technician Involved: Oversight of project, change management, integration and alignment of workflows, Health informatics, data collation, administration of medications on ward and implementation of workflows, Administration of medications and implementation of workflows

Intel • •

Role in Project: Business Value Specialists Involved: Implementation of Intel Health IT Value Model, collation and analysis of data, publication of results

iSOFT • •

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Role in Project: Business Process Engineering, Software Support Involved: Definition of workflows for pharmacy and dispensing, Implementation of workflows through software development & customisation


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Motion Computing • •

Role in Project: Device Specialist Involved: Responsible for device requirements in the pharmacy

Cisco • •

Role in Project: Network Specialist Involved: Responsible for implementation of wireless network in the pharmacy and wards

Case analysis 1. Firm Level All of the partners invested in kind and in cash in the project. Each brought to bear significant product R&D particularly in the areas of mobile devices and wireless networks. Each also brought specialist consultancy to bear in the areas of network mapping, device ergonomics, business process mapping, software development and benefits realization. The partners had limited experience in open service innovation within healthcare but had a wealth of expertise which was applicable to this engagement. During the engagement, it was possible to develop an appropriate set of skills with respect to open service innovation, beginning with Systemic Innovation for teams (SIFT) and Healthcare IT Business Value (HITVM) workshops. While the partners had worked together previously, this was the first alignment of capabilities with open service innovation in a healthcare context. The hospital was keen to ensure that there was representation from all levels of the organisation; executives, clinicians, consultants and IT. The innovation initiative was led by the Pharmacy department which had a track record of investment in IT and business planning. The workshops and scoping involved teams of approximately 14. The core team was approximately 5. The innovation did not lead to employment growth however it did run parallel to an increased resourcing (and productivity) within the department. The innovation has not led to a higher demand for skilled employees, as this area is already experiencing high skill levels, There is a significant substitution of staff with capital. The capital investments are freeing up resources to focus on clinical tasks while the capital investments manage an increasing proportion of the administrative tasks. 2. Network Level There were four organisations party to this innovation: Intel, the East Cheshire PCT, Cisco and iSoft. There was no role determined for knowledge institutes. 50% of the innovation network could rightly be considered large companies. While the PCT is part of the United Kingdom NHS, this was a local initiative. iSOFT are a medium sized company. There has been an increased in small-medium sized companies who have expressed interest in joining / sharing the benefits of the innovation network. These are pretty evenly split between other PCTs and healthcare service providers. Innovation partners tend to be selected on a case-by-case basis. The dominant focus of the innovation has been the United Kingdom. The innovation network involves collaboration with companies outside of our market sector. The network is made up of at least 50% of companies outside of our market sector. The service developed is not in itself new to the market. Benefits Realisation frameworks have existed for some time. However the application of a standardized methodology for defining and 115

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measuring innovation is somewhat novel. The dominant feature of the service innovation is a process model for aligning IT investments and outcomes in a healthcare context. 3. Societal Level The innovation typically enables health professionals to focus their efforts on clinical activities rather than administrative ones. There are significant benefits to this including the quality of care that they can deliver, an increased time spent working on activities core to their area of expertise and more time with patients. These benefits manifest themselves as increased productivity, but because most of the changes focus on the availability of data to mobile workers, it is usual to see unplanned benefits to downstream services. In the case of a hospital this may be seen as more regular processing of laboratory results, improved pharmacy inventory management and reduction in medical materials. There is no specific benefit in the case of the East Cheshire study to increased inclusion; however some of the related telehealth initiatives would have this effect. By placing technology in the home patients benefit from increased levels of care and empowerment from the ability to manage their own treatment. From a European and OSI perspective this is where huge service potential exists. The innovation could lead to a more sustainable society which is more inclusive of patient needs and care pathways. The application of the innovation enables clinicians to treat more patients, more effectively. This is against a backdrop of rising patient numbers and decreasing healthcare budgets. Left unchecked this has severe implications for the cohesion of societies. 4. Service Level Our role in service delivery is primarily around service creation and service exploration where we direct the process model towards the hospitals organizational thinking and catalyse new implementation projects. We also play a role in the governance of service implementations and the collation of formal and informal data to validate the process innovations. The network is managed by an innovation manager, who is typically from Intel. This individual will coordinate the other organisations and structure the engagement in order to achieve the stated objectives. The main innovation service drivers for our organisation are closely aligned with those of the health organisations we work with; that is improved productivity, quality of care and cost optimization. We encapsulate this as ‘demonstrating the value of IT/ICT investments’. The barriers to open innovation centres are around qualifying opportunities such that they are aligned with our service innovation mandate, while remaining affordable and demonstrating a scalable data point. It is important that each engagement builds on the standard engagement / process model and that the results can be used as an indicator as to the likely impact of other initiatives. The mobile point of care (MPoC) and use of mobile clinical assistants (MCAs) at Macclesfield District General Hospital met its immediate objectives by clearly demonstrating significant improvements in the three main workflow areas it measured; ward discharges, inpatient requests and medicine management. There was a 40 percent increase in the number of discharges assessed on the ward while the number of actual discharges completed on the ward increased from 12 percent to 35 percent.

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The overall cost of processing a discharge also fell from an average of £19.47 to £11.52, a 69 per cent reduction. This financial saving could contribute to supporting the additional role of the medical technical officer (MTO) on the ward. Cheshire ICT Service is encouraged by the results and feels that the pilot demonstrates a much needed shift from IT driven to business driven technology initiatives. Overall, the MPoC was widely considered to be a success and will be used by the hospital as a foundation to explore how IT can offer further opportunities to gain greater efficiencies in patient care. 5. Innovation Process Open service innovation is embraced as it enables us to apply our model to a variety of different health providers, health suppliers while being flexible enough to accommodate local and environmental constraints. The process model has been adapted for use is health sectors such as Primary Care Trusts, Rural Clinics and Telehealth in both mature and emerging markets. The improvements to service quality are measured along a variety of value axis, however the most dominant ones related to employee productivity, quality of care and cost optimization. The innovation process is facilitated by two key elements: •

Systemic Innovation for Teams (SIFT) is applied by project participants to real world problems during workshops. SIFT helps to build both a common understanding of the problem space amongst the network and also practical deliverables that inform the solution. The engagement with East Cheshire also provided the teams with the ability to integrate the innovation tools for routine deliberate innovation and prototypes to develop solutions. See supporting document describing SIFT. Health IT Value Model (HIT VM) has been developed as a framework to measure the value of IT investments, such that the results are quantified in terms that the rest of the organisation can understand. A series of health specific value drivers (e.g. Quality of Care, Cost Optimisation, and Clinical Outcomes) and Key Performance Indicators (e.g. Length of Stay, Cost of Materials, Number of Vaccinations) are agreed between stakeholders and used as a means of measuring project outcomes. See supporting document describing the HIT VM.

The relationship between members of the innovation network varies from engagement to engagement. In the case of East Cheshire, the initiative was lead jointly by Intel and the hospital, with Cisco and iSOFT having supporting roles. In general Intel will share the lead with the end-user although in some cases it will report into a loose consortium with other partners. The dominant type of partnership is a loose consortium between organisations within the market sector. The dominant nature of the collaboration is around service implementation; however this is evolving towards more idea sharing and knowledge generation, now that the model has matured. Increasingly other organisations within the innovation network are adopting the service innovation concept and applying it to their other innovation networks. Partners in the innovation networks tend to be durable, given that each individual engagement lasts up to a year. The target market has had a relatively limited number of players meaning that there is a lot of familiarity amongst each other. Not with-standing that, the network is flexible and supportive of new partners on an ad-hoc basis. 6. 117

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Barriers Some barriers to the realization and adoption of services innovation are noted here: •

Services Innovation is managed somewhat reactively. Innovation requests are made by Sales and Marketing groups to the Innovation Manager. Resources are assigned to specific requests. There is merit in developing a funding model that allows the innovation process to be viewed as R&D rather than as a sales and marketing activity. The main barrier is in identifying opportunities where the process innovation can be applied. This is typically as a result of the time it can take to educate the end-user to the opportunities afforded by the innovation network and for them to obtain internal buy-in. Beyond that, as a cost recovery organisation, each engagement must be funded which places a barrier on the opportunities that will be auctioned. The barriers to collaborative innovation are typically the time it takes to align all parties on the objectives; however these barriers can be overcome.

7. Lessons Learnt • The organizational innovation has improved the perception of the group. The number of employees has not increased however there is a greater depth of knowledge which has been shared amongst other market sectors such as education. • The important collaboration driver is that all parties to the network have clearly defined roles and responsibilities and a shared understanding of the outputs and how those outputs should be applied. It is important that all initiatives are scalable and transferrable and our collaboration partners should share those goals Bibliography The Value of Healthcare IT, http://www.intel.com/healthcare/hit/providers/hit_value_model_whitepaper.pdf Measuring ITSuccess at the Bottom Line at http://www.intel.com/technology/techresearch/itresearch/locations.htm David Sward’s Measuring the Business Value of Information Technology (Intel Press, 2006). http://www.intel.com/intelpress/sum_bvm.htm For more information about the mobile clinical assistant, please visit www.intel.cm/healthcare/ps/mca For more information about i.Pharmacy from iSOFT please visit www.isoftplc.com Glossary of terms SIFT Systemic Innovation for Teams HITVM Healthcare for IT Value Model MPOC Mobile Point of Care

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Observations The Pharmacy department had just completed a large investment in a ‘dispensing robot’ and are now well versed in developing business cases. They lacked knowledge around benefits realization however. A good deal of the early work involved educating the pharmacy staff around data collection methods and identification of key data points (or key performance indicators). The interviews were conducted in a variety of formal and informal settings depending on the availability of the interviewee. Several interviews were augmented with ‘on-the-ward’ observations which enriched the context of the data point being collected. Interviewees were randomly selected from the pharmacy staff. This study was limited in size which may have impacted the reported results, however since a larger deployment has since been undertaken which is showing similar results.

Mobile Point of Care: MPoC St Johns Hospital, Lothian OSI partner: Intel Author: Stephen McGuirk, Tony Corrigan Version: 19-08-2010 Main Interviewee and customer contact: Marina Copping, Clinical Nurse Advocate Case summary NHS Lothian was keen to assess the benefits of using a mobile point of care (MPOC) solution to improve workflow and patient care at St John’s Hospital. The pilot highlighted significant improvements in staff productivity, quality of patient care, patient and clinician satisfaction, patient safety and, last but not least, cost of care. Using the Intel Health IT Value Model (HIT VM) with a focus on MPOC St John’s Hospital projected a return on investment of 104% for the project. OSI Link: This is another tangible example of Services Innovation in the Healthcare arena. Again the aim would be to build on such an ICT base and expand the level of services available to patients particularly in relation to new services beyond the hospital itself. The methodology used was SIFT (Systemic Innovation for Teams), along with an adherence to a Business Value (HIT Economic Model) methodology with a focus on capturing the socio-economic benefits of applied ICT solutions. The availability of data to employees who are mobile has significant potential and reapplication in many areas, for this particular capability and in this instance the output is improved business value around workflow optimization but it could just as easily be the provision of new innovative services (meeting possible un-served needs) by following this innovation process. Introduction NHS Lothian provides a comprehensive range of primary, community-based and acute hospital services for the second largest residential population in Scotland – approximately 800,000 people in Edinburgh, Midlothian, East Lothian and West Lothian. It invests around GBP 1 billion a year in healthcare services, which are aimed at preventing ill health wherever possible, and are provided by local health centres and hospitals. Through an innovative programme of modernisation, it is 119

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developing into a single integrated health system. Tackling inequalities in access to health services is a major priority for NHS Lothian, as is engaging with patients, staff and local communities to ensure that their views are the driving force behind the continuing improvement of its services. The engagement was undertaken with the following partners: Motion Computing

Motion Computing, headquartered in Austin, Texas, produces slate tablet PCs for mobile professionals in industries including healthcare, government, and field force automation. Motion is a mobile computing and wireless communications leader, combining world-class innovation and industry experience so individuals can use computing technology in new ways and places. The company’s enhanced line of tablet PCs and accessories are designed to increase productivity for on-the-go users while providing computing security, power and versatility.

iSOFT

iSOFT is one of the world’s largest providers of healthcare IT solutions. iSOFT design, build and deliver industry-leading software systems that serve the entire health sector. Over 13,000 provider organisations in over 40 countries across five continents use iSOFT solutions to manage patient information and drive improvements in core processes. iSOFT (based in the UK) became part of the IBA Health Group (based in Australia) following a merger completed in October 2007.

Cisco Systems

Cisco was founded in 1984 by a group of computer scientists from Stanford University. Since the company's inception, Cisco engineers have been prominent in advancing the development of IP- the basic language to communicate over the Internet and in private networks.

Participants St Johns Lothian • •

Role (s) in project: IT Services, Clinical Advocacy, Clinical Consultancy Involved: Oversight of IT programme of works, ICT procurement and deployment, advocate for Technology Introduction, Infomatics, project management, change management, integration and alignment of workflows, Business Process Reengineering, advocacy and role modelling, Implementation of workflows

Intel • •

Role in Project: Business Value Specialist Involved: Implementation of Intel Health IT Value Model, collation and analysis of data, publication of results

iSOFT • •

Role in Project: Business Process Engineering, Software Support Involved: Definition of workflows for pharmacy and dispensing, Implementation of workflows through software development & customisation

Motion Computing • •

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Role in Project: Device Specialist Involved: Responsible for device requirements in the pharmacy


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Cisco • •

Role in Project: Network Specialist Involved: Responsible for implementation of wireless network in the pharmacy and wards

Case analysis 1. Firm Level All of the partners invested in kind and in cash in the project. Each brought to bear significant product R&D particularly in the areas of mobile devices and wireless networks. Each also brought specialist consultancy to bear in the areas of network mapping, device ergonomics, business process mapping, software development and benefits realization. The partners had limited experience in open service innovation within healthcare but had a wealth of expertise which was applicable to this engagement. During the engagement, it was possible to develop an appropriate set of skills with respect to open service innovation, beginning with Systemic Innovation for teams (SIFT) and Healthcare IT Business Value (HITVM) workshops. While the partners had worked together previously, this was only the second alignment of capabilities with open service innovation in a healthcare context. The hospital was keen to ensure that there was representation from all levels of the organisation; executives, clinicians, consultants and IT, however the project started off quite badly as it was perceived as an IT project and as such exclusively a technical implementation. Initial workshops were only attended by IT who had limited clinical knowledge and none of workflows or the potential for innovation in the application of technology. It wasn’t until such time as the clinical health advocate became involved from the hospital that a greater executive and clinician focus was brought to bear. This resulted in some political complexities which were resolved by engaging in a series of highly focused workshops with selected interested groups and then compiling a consensus view as to value drivers and key performance indicators. The overall number of involved personnel was eight. 2. Network Level There were four organisations party to this innovation: Intel, the St.Johns Lothian PCT, Cisco and iSoft. There was no role determined for knowledge institutes. 50% of the innovation network could rightly be considered large companies. While the PCT is part of the NHS, this was a local initiative. iSOFT are a medium sized company. There has been an increased in small-medium sized companies who have expressed interest in joining / sharing the benefits of the innovation network. These are pretty evenly split between other PCTs and healthcare service providers. The project has also been well promoted within Scotland and the findings are being reviewed within the Edinburgh region of the United Kingdom and further afield to determine the potential for using this project as a national best practice. The innovation network involves collaboration with companies outside of our market sector. The network is made up of at least 50% of companies outside of our market sector. The service developed is not in itself new to the market. Benefits Realisation frameworks have existed for some time. However the application of a standardized methodology for defining and measuring innovation is somewhat novel. The dominant feature of the service innovation is a process model for aligning IT investments and outcomes in a healthcare context.

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Open service innovation is embraced as it enables us to apply the model to a variety of different health providers, health suppliers while being flexible enough to accommodate local and environmental constraints. The process model has been adapted for use is health sectors such as Primary Care Trusts, Rural Clinics and Telehealth in both mature and emerging markets. The improvements to service quality are measured along a variety of value axis, however the most dominant ones related to employee productivity, quality of care and cost optimization. Our role in service delivery is primarily around service creation and service exploration where we direct the process model towards the hospitals organizational thinking and catalyse new implementation projects. We also play a role in the governance of service implementations and the collation of formal and informal data to validate the process innovations. The network is managed by an innovation manager, who is typically from Intel. This individual will coordinate the other organisations and structure the engagement in order to achieve the stated objectives. 3. Societal Level The main innovation service drivers for our organisation are closely aligned with those of the health organisations we work with; that is improved productivity, quality of care and cost optimization. We encapsulate this as ‘demonstrating the value of IT investments’. This project spent time aligning with the Scottish Government’s Better health, Better Care so that the benefits could be realized across a larger geographical and societal area. There is no specific benefit in the case of the St.Johns Lothian study to increased inclusion; however some of the related tele-health initiatives would have this effect. By placing technology in the home patients benefit from increased levels of care and empowerment from the ability to manage their own treatment. The innovation could lead to a more sustainable society which is more inclusive of patient needs and care pathways. The application of the innovation enables clinicians to treat more patients, more effectively. This is against a backdrop of rising patient numbers and decreasing healthcare budgets. Left unchecked this has severe implications for the cohesion of societies. 4. Service Level Our role in service delivery is primarily around service creation and service exploration where we direct the process model towards the hospitals organizational thinking and catalyse new implementation projects. We also play a role in the governance of service implementations and the collation of formal and informal data to validate the process innovations. The dominant nature of the collaboration is around service implementation; however this is evolving towards more idea sharing and knowledge generation, now that the model has matured. Increasingly other organisations within the innovation network are adopting the service innovation and applying it to their other innovation networks. The main innovation service drivers for our organisation are closely aligned with those of the health organisations we work with; that is improved productivity, quality of care and cost optimization. We encapsulate this as ‘demonstrating the value of IT investments’.

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The barriers to open innovation centres around qualifying opportunities such that they are aligned with our service innovation mandate, while remaining affordable and demonstrating a scalable data point. It is important that each engagement builds on the standard engagement / process model and that the results can be used as an indicator as to the likely impact of other initiatives. The mobile point of care (MPoC) and use of mobile clinical assistants (MCAs) at St Johns met its immediate objectives by clearly demonstrating significant improvements in the three main workflow areas it measured; ward rounds, pharmacy and ward discharges. The innovation typically enables health professionals to focus their efforts on clinical activities rather than administrative ones. There are significant benefits to this including the quality of care that they can deliver, an increased time spend working on activities core to their area of expertise and more time with patients. These benefits manifest themselves as increased productivity, but because most of the changes focus on the availability of data to mobile workers, it is usual to see unplanned benefits to downstream services. In the case of a hospital this may be seen as more regular processing of laboratory results, improved pharmacy inventory management and reduction in medical materials. St.John’s Hospital has highlighted how a mobile point of care (MPOC) solution can optimise workflow. The benefits include: • • •

Increasing the productivity of ward teams, pharmacists and clinicians improving the quality of patient care Increasing patient and employee satisfaction Improving patient safety.

Real-time access to patient data allows clinicians to perform ‘complete episodes of care’ at the bedside, enabling them to spend more time with patients and less time on administrative tasks. So impressed were NHS Lothian with the benefits highlighted in St John’s Hospital that the MCA program is now being deployed across all three hospitals in the Group – Royal Infirmary Edinburgh, Royal Hospital for Sick Children and Western General. 5. Innovation Process Open service innovation is embraced as it enables us to apply the model to a variety of different health providers, health suppliers while being flexible enough to accommodate local and environmental constraints. The process model has been adapted for use is health sectors such as Primary Care Trusts, Rural Clinics and Telehealth in both mature and emerging markets. The improvements to service quality are measured along a variety of value axis, however the most dominant ones related to employee productivity, quality of care and cost optimization. The innovation process is facilitated by two key elements: •

Systemic Innovation for Teams (SIFT) is applied by project participants to real world problems during workshops. SIFT helps to build both a common understanding of the problem space amongst the network and also practical deliverables that inform the solution. The engagement with Lothian also provided the teams with the ability to integrate the innovation tools for routine deliberate innovation and prototypes to develop solutions. See supporting document describing SIFT. Health IT Value Model (HIT VM) has been developed as a framework to measure the value of IT investments, such that the results are quantified in terms that the rest of the organisation can understand. A series of health specific value drivers (e.g. Quality of Care, Cost 123

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Optimisation, and Clinical Outcomes) and Key Performance Indicators (e.g. Length of Stay, Cost of Materials, Number of Vaccinations) are agreed between stakeholders and used as a means of measuring project outcomes. See supporting document describing the HIT VM. The relationship between members of the innovation network varies from engagement to engagement. In the case of Lothian, the initiative was lead jointly by Intel and the hospital, with Cisco and iSOFT having supporting roles. In general Intel will share the lead with the end-user although in some cases it will report into a loose consortium with other partners. The dominant type of partnership is a loose consortium between organisations within the market sector. The dominant nature of the collaboration is around service implementation; however this is evolving towards more idea sharing and knowledge generation, now that the model has matured. Increasingly other organisations within the innovation network are adopting the service innovation and applying it to their other innovation networks. Partners in the innovation networks tend to be durable, given that each individual engagement lasts up to a year. The target market has had a relatively limited number of players meaning that there is a lot of familiarity amongst each other. Notwithstanding that, the network is flexible and supportive of new partners on an ad-hoc basis. 6. Barriers Some barriers to the realization and adoption of services innovation are noted here: •

The barriers to open innovation centre on qualifying opportunities such that they are aligned with our service innovation mandate, while remaining affordable and demonstrating a scalable data point. It is important that each engagement builds on the standard engagement / process model and that the results can be used as an indicator as to the likely impact of other initiatives. Services Innovation is managed somewhat reactively. Innovation requests are made by Sales and Marketing groups to the Innovation Manager. Resources are assigned to specific requests. There is merit in developing a funding model that allows the innovation process to be viewed as R&D rather than as a sales and marketing activity. The main barrier is in identifying opportunities where the process innovation can be applied. This is typically as a result of the time it can take to educate the end-user to the opportunities afforded by the innovation network and for them to obtain internal buy-in. Beyond that, as a cost recovery organisation, each engagement must be funded which places a barrier on the opportunities that will be auctioned. The barriers to collaborative innovation are typically the time it takes to align all parties on the objectives,

7. Lessons Learnt • The organizational innovation has improved the perception of the group. The number of employees has not increased however there is a greater depth of knowledge which has been shared amongst other market sector such as education. • The important collaboration driver is that all parties to the network have clearly defined roles and responsibilities and a shared understanding of the outputs and how those outputs should be applied. It is important that all initiatives are scalable and transferrable and our collaboration partners should share those goals. • The innovation typically enables health professionals to focus their efforts on clinical activities rather than administrative ones. There are significant benefits to this including the quality of

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• • •

• •

care that they can deliver, an increased time spent working on activities core to their area of expertise and more time with patients. These benefits manifest themselves as increased productivity, but because most of the changes focus on the availability of data to mobile workers, it is usual to see unplanned benefits to downstream services. In the case of a hospital this may be seen as more regular processing of laboratory results, improved pharmacy inventory management and reduction in medical materials. The experiences over the past three years have been hugely positive and the MCA devices have become a core component of a clinician’s working day. The wireless network and mobile computing are now pervasive around St Johns. Clinicians are using the devices on the wards to make clinical decisions; decisions that are based on real-time data. This means quicker interventions and better patient care. MPOC has freed up support staff on the wards to focus on patient care rather than administrative tasks. Doctors and nurses no longer need to rely on the availability of support staff on the ward when they need to find data; it’s all in their hands. The MCAs allow consultants to view PACs images while on the ward in a sufficient level of detail to help with clinical decision making. The use of the MCA has expanded and as a result it is now supporting ECS TRAC and TRAC IDS applications, Microsoft Office, statistical recording, personal folders, viewing patient records, researching medicine information websites and reviewing pharmacy documentation. In the near future the MCAs will also support ward ordering. Clinicians are now seeing more patients, more frequently. Statistical records demonstrate through an increased number of interventions. The MPOC solution also helps bring NHS Lothian closer to realising the Scottish Government’s vision for a healthier Scotland – Better health, better care. Modernising the NHS through better use of technology is a major part of the plans laid out in the Government’s proposal – specifically reducing the amount of paper and increasing the use by clinicians of secure IT to access the right information in the right place at the right time. Also, NHS Lothian believes the MPOC solution will play a key role in supporting the Productive ward initiative laid out by the NHS Institute.

Bibliography The Value of Healthcare IT, http://www.intel.com/healthcare/hit/providers/hit_value_model_whitepaper.pdf Measuring ITSuccess at the Bottom Line at http://www.intel.com/technology/techresearch/itresearch/locations.htm and David Sward’s Measuring the Business Value of Information Technology (Intel Press, 2006). http://www.intel.com/intelpress/sum_bvm.htm For more information about the mobile clinical assistant, please visit www.intel.cm/healthcare/ps/mca For more information about i.Pharmacy from iSOFT please visit www.isoftplc.com Glossary of terms SIFT Systemic Innovation for Teams HITVM Healthcare for IT Value Model MPOC Mobile Point of Care Observations The initial scoping was poor resulting in challenges in engaging hospital executives and clinicians. This was overcome with the help of the clinical health advocate. A good deal of effort was spent engaging 125

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with executives and clinical consultants in order to scope the project. A particular effort was expended with front-end staff (doctors and nurses) who were using the MCA devices. This resulted in the project being the most successful IT project in recent memory for the hospital. The value drivers and key performance indicators were a challenge to hospital staff who had not used these types of benefits realization mechanisms before. This meant that Intel had to identify and articulate potential outcomes based on our prior experiences. The interviews were conducted in a variety of formal and informal settings depending on the availability of the interviewee. In all cases interviews were recorded as the hospital was particularly sensitive about being represented accurately. Several interviews were augmented with ‘on-the-ward’ observations which enriched the context of the data point being collected. Interviewees were selected to ensure that both positive and negative views were incorporated into the study. This study was limited in size which may have impacted the reported results, however since then a larger deployment has since been undertaken which is showing even better results (an increase in ROI from 104 to 153%) .

Capability Maturity Framework OSI partner: IVI Author: Prof. Brian Donnellan Version: 30-09-2010 Main Interviewee and Contact: Jim Kenneally, Senior Researcher Case summary Intel’s IT organization was concerned about improving its efficiency and significantly it’s business value. The IT function was focused on becoming a true catalyst and enabler of overall business transformation and was concerned at how IT can add value to the business. Like most IT organizations, Intel’s IT organization was trying to build capabilities that cut costs, increase revenues, and support business innovation. But, because they were saddled with legacy systems, convoluted processes, and out-of-date expertise, many of them are viewed as business liabilities rather than strategic assets. Despite the emergence of IT governance, enterprise architecture, service management, and a variety of other approaches to enhance the value of IT, IT organizations such as Intel’s have not been able to fully transform their roles in the organization. This case is concerned with describing how Intel used the results of an Open Innovation consortium to help drive their transformation process. Introduction Companies involved in the project are: Intel: Intel Corporation designs, manufactures, and sells integrated circuits for computing and communications industries worldwide. It offers microprocessor products used in notebooks, netbooks, desktops, servers, workstations, storage products, embedded applications, communications products, consumer electronics devices, and handhelds. The company also offers system on chip products that integrate its core processing functionalities with other system components, such as graphics, audio,

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and video, onto a single chip. It also provides chipset products that send data between the microprocessor and input, display, and storage devices, such as keyboard, mouse, monitor, hard drive, and CD or DVD drives; motherboards that has connectors for attaching devices to the bus, and products designed for desktop, server, and workstation platforms; and wired and wireless connectivity products, including network adapters and embedded wireless cards used to translate and transmit data across networks. In addition, Intel offers NAND flash memory products primarily used in portable memory storage devices, digital camera memory cards, and solid-state drives; network processors used in networking equipment to manage and direct data moving across networks and the Internet; software products, including operating systems, middleware, and tools used to develop, run, and manage various enterprise, consumer, embedded, and handheld devices, as well as software development tools that enable the creation of applications; and healthcare products designed to connect people and information to improve patient care and safety. Further, it offers platforms that include a microprocessor, chipset, and enabling software. Intel sells its products primarily to original equipment manufacturers, original design manufacturers, PC and network communications products users, and other manufacturers of industrial and communications equipment. The company was founded in 1968 and is based in Santa Clara, California. Innovation Value Institute (IVI): The Innovation Value Institute is an Open Innovation consortium that researches and develops unifying frameworks and road-maps for IT and Business executives to create more value from IT and better deliver IT enabled innovation whilst validating that these frameworks/tools have a broad applicability across differing industries and contexts. To address the need for an over-arching IT business value framework, IVI, under the core themes of IT Value and IT Innovation, advances methodologies, tools and practices that will allow organisations to optimally manage their IT capability to answer the needs of improved IT value delivery and IT driven innovation. Initially, IVI focuses on extending the development and dissemination of the IT Capability Maturity Framework (IT-CMF). The IVI, through its consortium, facilitates a collaborative community of like-minded peers committed to investigating, advancing and disseminating the frameworks, tools and best practices associated with managing IT Value and IT enabled Innovation. The IVI is a subcontractor in the project. Participants Semiconductor Manufacturer: Intel Corp • •

Role in project: IT Group is active members of the IVI Open Innovation consortium. Involved: senior Intel IT staff

Open Innovation Consortium: IVI • •

Role in project: development, deployment and support of the CMF Involved: IVI researchers

Case analysis 1. Firm level Intel IT significantly improved its strategic planning process. One of the key tools used by Intel IT to improve the IT capability was the IT Capability Maturity Framework. This was initially used to perform a baseline assessment of Intel IT capability and then used to identify key process areas for focused improvement. The IT-CMF assessment acted effectively as a GPS Indicator to provide relative 127

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positioning of Intel’s IT capability relative to the IT-CMF and other firms whose information was contained in the IVI database. The IT-CMF uses four macro-processes and associated strategies to help redefine an organization’s business contribution through the application of the CMF: • • • •

Managing the IT budget, where the goal was to create a sustainable economic model through careful cost management, Managing IT assets and value chain, where the goal was to develop IT as a corporate core competency; Managing IT for business value, where the goal was to optimize the business value of IT; Managing IT like a business, where the goal was to run IT like a market-driven service organization, running IT as efficiently and effectively as possible in support of Intel’s goals.

By simultaneously addressing all four strategies, in conjunction with other improvement efforts Intel IT improved its efficiency and significantly increased IT’s business value. By leveraging the shared knowledge created by the consortium Intel IT was able to accelerate its progress and in particular a specific enterprise architecture assessment followed up by improvement actions recommended from the collective best practices resulted in a 19% improvement in Enterprise Architecture capability after one year. 2. Network level The IVI Open Innovation consortium is comprised of over 50 organizations (commercial, public service, academic) engaged in developing a new blueprint for how to manage IT. At the network level, the nature of the work is: • • • • •

Distributed (resources, tools intelligence, contribution) Co-created (users are producers, designers) Collaborative (peer-to-peer, team based) Using shared platforms (commons, milieu, forums), and Cumulative (modular, evolutionary)

3. Society level There are significant societal contributions being made by the IVI Open Innovation consortium: • • •

A new approach to managing Sustainable ICT is being developed and deployed to combat global warming New approaches to the education of current and aspiring CIOs are being developed The CMF is being deployed to tackle societal challenges in Health Informatics, E-Government and

4. Service level The consortium members are actively engaged in developing new services based on the application of the CMF. In this context, services are activities that produce value by providing solutions to customer problems. Services, in this case, may create changes in the customer’s application of its IT assets. Arising from this work, services can also be embedded in a manufacturing process, as manufacturers procure inputs, such as inventory management and logistics services, from service providers, rather than perform these functions themselves.

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5. Innovation process Innovation in Information systems as a discipline has been considered to have certain failings in its effort to impact on practice. There have numerous research studies identifying failures in IS in its attempts to achieve desired outcomes and disappointments in assessments of return on investment. The analyses in these studies yield recommendations that operate at a high level of abstraction and lack the detail and specificity to lead to action-oriented solutions. Examples of such recommendations include: • • • • •

“Commitment of senior management is critical” “End-user must be identified and involved in the development process” “Lack of clarity in the project specification can lead to lead to expensive misunderstandings subsequently” “Organizations must learn lessons from previous projects undertaken” “Training must address the needs of users, as well as those operating and maintaining the system”

Such findings, while offered in a constructive spirit of helpfulness and concern for continuous improvement, do little to advance either (i) the capability of practitioners to achieve their goals or (ii) the theoretical knowledge underpinning Information System academic research. One of the requirements for a more helpful approach is a greater sensitivity to the contextual complexity of the organizational problem-solving environment where IS practitioners work. Engaged scholarship is a participative form of research for obtaining the views of key stakeholders to understand a complex problem. By exploiting differences between these viewpoints, he argues that engaged scholarship produces knowledge that is more penetrating and insightful than when researchers work alone. Engaged scholarship has a number of facets; a form of inquiry where researchers involve others and leverage their different perspectives to learn about a problem domain; a relationship involving negotiation, mutual respect, and collaboration to produce a learning community and an identity of how scholars view their relationships with their communities and their subject matter. We believe that the operating model used to develop the IT-CMF corresponds to an application of engaged scholarship in Open Innovation. 6. Socio economic impact A new framework for managing IT resources is being developed that will have application across a broad range of end-user contexts (commercial, public service and academic). 7. Barriers/Challenges Some challenges are being met (and overcome) in the development of the CMF: • •

Strong and committed industry leadership was required to ensure the successful launch of the IVI Open Innovation. The provision of a supportive, funded, environment by the hosting academic institution and government agencies were also critical.

8. Lessons learnt • The development of clear and succinct IP management structures early in the development process is important. in order to manage research: 129

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Academic researchers must expand their role: knowledge brokers in industry, as well as knowledge generators.

Bibliography • • • • • • • • • • • • •

Curley, Martin & Kenneally, Jim (2010) The IT-CMF: A Rationale for a new CIO level Framework, Innovation Value Institute Working Paper Curley, Martin (2008) Making the Most of IT, EFMD Global Focus Vol 2, Issue 1 Curley, Martin 2008 Introducing an IT Capability Maturity Framework, Lecture Notes in Business Information Processing, Volume 12, Springer Curley, Martin & Westerman, George (MIT) (2008), Building an IT driven Innovation Infrastructure and Environment, Management Information Systems Quarterly Executive, Q1 2008 Curley, Martin & Kenneally, Jim, (2008), Methodologies and Metrics to improve the yield of IT using the IT-CMF™, – An Intel Case Study. IEEE Equity Proceedings, Amsterdam, The Netherlands Curley, Martin & Baldwin, Esther,(2007) Managing IT Innovation for Business Value, Intel Press November 2007 Curley, Martin & Westerman, George (MIT) (2007), IT enabled Innovation at Intel, MIT Sloan CISR Research Briefing Curley, Martin (2007) , the IT Capability Maturity Framework V1.0, Innovation Value Institute, National University of Ireland Curley, Martin (2007), Introducing the IT Capability Maturity Framework, Proceedings of the International Conference of Enterprise Information Systems Curley, Martin (2007), The IT Transformation at Intel, Management Information Systems Quarterly Executive, Q1 2007 Curley, Martin (2006), Overview- An IT Value based Capability Maturity Framework, MIT Sloan CISR Research Briefings. Curley, Martin (2006), An IT Value based Capability Maturity Framework, IVI –National University of Ireland, Maynooth WP0601. Curley, Martin (2004), Managing IT for Business Value, Intel Press (Oregon)

Observations The application of the CMF in Intel has contributed significantly to the ongoing development of the IT function in Intel. This is graphically illustrated in figure 1 below where a 25% capability improvement was achieved after 2 years with the IT_CMF being one of the tools which helped guide the improvements.

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AbelLife OSI partner: Novay Author: René van Buuren and Wil Janssen Version: 09-02-2011 Main Interviewee and Contact: Fred van Schoonhoven, Director AbelLife Case summary Abel is a touristic concept for route navigation for cycling, walking and sailing on your smartphone. It is available on I-phone, Android, Blackberry, Nokia, Windows Mobile, both as an application, download or on memory card. The idea of Abel is not that it brings you through the shortest route to your destination, but over the most beautiful route, combining it with a personalised touristic guide. Abel tells everything about the points of interest by means of text, pictures, movies and / or audio. Abel is not only technology, but combines technological possibilities with new touristic concepts and business models for hotels and operators.

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Abel is named after Abel Tasman, a famous Dutch explorer (discovered Tasmanie and New Zealand). With Abel you are an explorer and you will discover the diamond of an area. A concept such as Abel requires much more than geo data as provided now by Google or OVI. Detailed information is needed, that is available locally, not only maps, but also touristic content, describing cultural heritage, nature and other sites of interest: content that is often hidden in regional archives or personal collections. Making such content available to the interested audience is an important component of the experience of Abel. First Abel Adventures company made money by selling hiking and cycling holidays which uses Abel software. Now we make money by selling Apps. Abel combines smart, sustainable and inclusive growth aspects. It is smart, based on fundamental research projects in the Netherlands, applying the latest technological possibilities in mobile devices, content aggregation and service configuration. As it stimulates tourism through biking, walking and sailing it has a high degree of sustainability. To make the sustainability complete we compensate the CO2 footprint of travel by car through www.greenseats.nl. Our growth has always been limited by money. Loans of banks (with partly state guaranteed money) and Ventures Capital (sometimes co-funded by administration money) always want securities for their part of the money, which are hard to give if the money is spend on service innovation and software (they prefer we spend our money on physic securities like buildings, machines and cars…). So all our innovations had to be financed out of our own cash flow. Participants/Stakeholders Abel Adventures BV (company). Originating from open innovation consortium consisting in 2004 of Novay (Innovation mediator), Regional Bureau of Tourism Twente, Foundation of 40 local hotels and Hospitality Concepts Company. Open innovation consortium was co-financed by the province (Overijssel). Case analysis 1. Firm level Novay: spin-off opportunity AbelLife: new business, business growth HC: new business line, business growth Within the firms, there was a shortage on technology skills. Entrepreneurship was widely available. One of the crucial things is that role of entrepreneurship within the company, not outside. Rest can be hired or bought. Always focus on creating content and creating brand; Always a business model that makes money. Constantly changing business model

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Entrepreneurs 2. Network level Network has two roles: providing complementary knowledge as well as access to finance for early innovation phases (creation, development). In the later innovation stages the role moved to implementation partner. Region and Abel Company invest in creating content (project) Region, resellers and Abel Company earn by selling to consumers (continuity): strong distribution. 3. Innovation process Innovation process was initially guided by research projects, open collaborative setting. Later this moved to customer driven innovation and technology driven innovation. The latter based on the technology roadmaps of the main vendors and adoption by a wider audience. First Abel Adventures company made money by selling hiking and cycling holidays which uses Abel software. Now they make money by selling Apps. This is a business model innovation as well as a technological innovation. 4. Socio economic impact Abel is a proven concept. It has been operational for four years now and is available in the Netherlands, Germany and Austria. Trips are sold by tour operators like Fietsvakantiewinkel, SNP, Cycletours, TUI. Our latest steps are Apps and boat routes. These are promoted by partners who share in the revenue of the routes sold. The biggest online tour operators but also individual hotels are promotion partners in this concept. Role of end-users is crucial, just as crucial as technology. 5. Barriers Growth has always been limited by money. Loans of banks (with partly state guaranteed money) and Ventures Capital (sometimes co-funded by administration money) always want securities for their part of the money, which are hard to give if the money is spend on service innovation and software (they prefer Abel spends our money on physic securities like buildings, machines and cars…). So all our innovations had to be financed out of our own cash flow. Tenderers really don’t know… Ask for Open source, Free, Continuity is not important, Innovation is a goal. Public funded competitors (research institutes wins tender). Funding of innovation: Till 2010 all innovation funded with our own cash flow. Banks and private equity always wants securities. Their procedures demand securities (partly ‘state guaranteed’ doesn’t matter). Software, Marketing, Content (service innovation) is not a security. Private equity always wants low risk and high gain. Always searching for securities. Even if they are mostly public funded, they still act if it’s their own money.

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6. • • • • • •

Lessons learnt Different role/partners of open innovation in different stages of innovation Funding of service is difficult Entrepreneurship should be inside the company, knowledge can be outside From research to SME is possible Success is listening to the consumer and continuity of the product Trouble is funding of service innovation and lack of knowledge in tenders

Bibliography www.abellife.nl

Collaboratory.nl OSI partner: Novay Author: René van Buuren and Wil Janssen Version: 20-08-2010 Main Interviewee: Dr. P. Schlossmacher Contact: Authors Case summary R&D staff needs to investigate changes that take place at a molecular level (e.g. when steel or polymers are stressed in specific ways) they require access to advanced laboratory equipment. However, in practice this expensive equipment is often not utilized to its maximum capacity. Not only does this failure to fully utilize the equipment have financial consequences, it also has a negative effect on the knowledge levels and motivation of laboratory staff. Technologies continue to progress and laboratory equipment becomes increasingly sophisticated. Needless to say, this technology comes at a price that companies or research departments cannot always realize on their own. In all of these cases a 'virtual' laboratory that uses modern ICT infrastructures and Internet technologies may be the answer. Using such a laboratory, researchers can carry out experiments and consult with each other remotely. In doing so, companies can utilize the equipment and expertise of well-appointed laboratories. This way they don't need to pay for the equipment itself, but rather, for the privilege of using it. For suppliers of advanced laboratory equipment, such as FEI, this concept can open up completely new markets. In addition, by adopting this approach, a range of new services become possible, such as storage, analysis and comparison of research results. The Collaboratory.nl project investigated how technologies for remote operation of laboratory equipment can be integrated with existing GroupWare for enhanced remote collaboration. Several prototypes were developed to test the ideas in real life working conditions. As a result of the project one of the project participant FEI, a device manufacturer, has further developed the software and is selling two versions of software derived from the project results: one for remote servicing of their instruments, and one for virtual collaboration with their instruments.

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Introduction Companies involved in the project are: FEI is a leading diversified scientific instruments company. It is a premier provider of electron and ion-beam microscopes and tools for nanoscale applications across many industries: industrial and academic materials research, life sciences, semiconductors, data storage, natural resources and more Royal Philips Electronics of the Netherlands is a diversified Health and Well-being company, focused on improving people’s lives through timely innovations. As a world leader in healthcare, lifestyle and lighting, Philips integrates technologies and design into people-centric solutions, based on fundamental customer insights and the brand promise of “sense and simplicity Corus is Europe's second largest steel producer with main steelmaking operations in UK and the Netherlands. Royal DSM N.V. creates solutions that nourish, protect and improve performance. Its end markets include human and animal nutrition and health, personal care, pharmaceuticals, automotive, coatings and paint, electrical and electronics, life protection and housing. Novay connects companies, knowledge partners and government organizations in an open network to realize groundbreaking ICT innovations, which have an impact on people, society and the economy. As a Technological Top Institute, Novay is independent and driven to achieve solutions that go beyond the latest fads. University of Amsterdam and IBM are subcontractors in the project. Participants Instrument Manufacturer: FEI • •

Role in project: device specialist, responsible for device requirements in the virtual laboratory Involved: head R&D NL and a researcher new services

Material analysis departments: Philips, Corus, DSM • •

Role in project: Material analysis expertise, User Requirements for virtual laboratory, Testing Involved: heads of analysis departments from each company, and an analysis/device expert from each company

Knowledge institutes: Novay (Telematica Instituut), University of Amsterdam (UvA) • • • •

Role Novay: innovation intermediary, Knowledge experts ICT, project management, prototype development Involved: Researchers and project managers Role UvA: Security research and analysis Involved: researchers

Software developer: IBM, Novay • • • •

Role Novay; architecture design, prototype, software development Involved: application engineers Role IBM: as a subcontractor responsible for methodological software development Involved: architects and software developers 135

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Case analysis 1. Firm level All of the industrial partners have invested in kind and in cash in the project. All of the partners have significant product R&D departments and corresponding annual budgets. Being product-oriented companies, this service innovation project was new type innovation project for them. In general service innovation does not take a big piece of their company R&D budget. The industrial partners had little experience in open service innovation with ICT, but were all academically trained. They have developed many skills with respect to open service innovation during the course of the project. Also the knowledge about state-of-the-art ICT has increased. Moreover, they did not work together before, and the project turned out to provide a valuable exchange of professional knowledge as well. Initial trials showed that with the virtual laboratory the costs for an analysis job could be significantly reduced. FEI has invested in the professional software development after the project. They have released two software products: remote servicing, and virtual collaboration. By contract, all partners have the right to use these software products for free for a 2-year period. The knowledge institute Novay receives license fees by FEI. With the remote services, FEI has taken a lead position compared to their competitors. As a result the largest one-time-sale (13 instruments) was related to the fact that the instruments could be remotely used and serviced. By means of this innovation, FEI has decreased the costs for servicing, and the software has become an important marketing tool to attract new customers and distinguish themselves from competitors. 2. Network level FEI company has a broad international innovation network. The collaboratory project took place in a Dutch innovation setting. In the Netherlands FEI participates in several national public-private research programs. FEI company participates in projects with knowledge institutes as well as with business partners and clients. The collaboratory project is an application drive innovation project for FEI. Parallel, FEI participated in a national research program with same theme but more scientifically oriented focus. The innovation network of FEI constitutes many organizations outside their own sector. Being international companies all companies have extensive national innovation networks in the countries were they are located. 3. Society level The drivers for participating in this project can be formulated as follows: • •

FEI; selling more instruments with the addition of virtual services (competitive edge) Philips, DSM, Corus: Potential cost savings with respect to analysis resources and instruments. Extension of the analysis service portfolio for customers by using knowledge and instruments of third parties.

The societal impact of this virtual lab lays in the use in academia and for educational purposes.

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Barrier: The creation of a consortium turned out to be very difficult in the phase where only academia and industry were involved. With the arrival of the innovation intermediary Novay the creation of the consortium got some pace. A sound project plan was created with fewer participants. Also the experience of leading multi-party consortia and the ICT knowledge of the innovation intermediary were key to the success of the project. 4. Service level All industrial partners in the project had little experience with service innovation driven by ICT, being either an instrument manufacturer or a material analysis department. Through this innovation project all partners have experienced a change in their service offering. By means of instrument and expertise of the other partners, the material analysis partners could offer their clients a wider range of material analysis services FEI has started a complete new range of services based on the results of the project: remote servicing and remote collaboration for their instrument portfolio. The remote service was a spin-off (catalytic) result of the project. 5. Innovation process The industry partners all have institutionalized R&D processes in their organizations. The experience with R&D processes was clearly noticeable in the realistic expectations by supervisors of the project and the time it would take to achieve them. Working on a service innovation was new to most of the industrial partners, which can explained from the industrial and product oriented company profiles. None of the project partners operated in the same market sector. The project has benefited greatly from this and resulted in an open exchange of knowledge. The project itself was managed and executed by an innovation intermediary. During the trials in the project it became clear that a virtual laboratory would significantly change the way of working of material analysts. Working in a virtual laboratory required a better preparation and isolation form colleagues during the analysis. However, it turned out that the quality increased when other experts where involved, and the total time of analysis decreased because experts and clients where simultaneously present during the analysis. 6. Socio economic impact New business model for FEI (instrument manufacturer) distinguishing itself with its competitors leading to new business. Potential usage for educational purposes. Potential usage in large international e-science infrastructures. 7. Barriers Some barriers for the realization and adoption of the virtual laboratory can be mentioned. •

Construction of the consortium. Forming and leading a multi-party collaboration is a skill that requires experience.

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Security is an important organizational issue in the virtual laboratory for all parties involved (clients, analysis service providers, instrument providers). This issue has stalled the adoption of the virtual lab software considerably. This is caused by IT policies of companies.

8. Lessons learnt • Stimulation through subsidy by the government helped this consortium to realize an innovation, which was not in the core of their businesses. • Involvement of clients-of-clients in an earlier stage could have facilitated the adoption process, and avoided the heavy security choices in the design. • The principle of networked innovation, i.e. by means of an innovation-intermediary with expert ICT knowledge, worked very well in this consortium that never innovated together, and also worked on something outside their own expertise. • An engineering approach to service design delivers. • Technology development, requirements gathering, user tests and business modelling aspects have to be considered simultaneously. Each field has their specific methods and techniques, and there are gaps between these different methods and aspects. Service development can benefit significantly from better and integrated service engineering techniques. Bibliography • www.collaboratory.nl • Annual report FEI 2009 and FEI website www.fei.com • https://doc.novay.nl/dsweb/View/Collection-10344; project results of the Collaboratory.nl project • Transcripts of recent interview with Peter Schlossmacher for the KnowHow magazine, the Netherlands Glossary of terms Virtual laboratory: A collaborative environment based on Internet technologies where people can collaborate and perform material analysis independent of their location. Networked innovation: ICT drive innovation that involves connecting organisations, knowledge and resources in collaborative structures and consortia with the specific aim to deliver individual and collective value: networked innovation, business models, collaboration, and material analysis. (Analysis) Instrument: Any devices that is used to analyse material structures and properties. Service engineering: The application of technology, methods and tools to develop new services or to improve existing service systems. Observations Novay played a leading role in the Collaboratory.nl project. Novay’s case analysts have been part of this project. Therefore, many observations in this case analysis are derived from the project results and discussions known to the case. From the project consortium, the company FEI has developed the results of the project into a commercial service. The main impact of the innovation therefore lies with them. Recently the impact of the open service innovation was discussed in an interview with Peter Schlossmacher from FEI. This has been taken to supplement the facts that were already known to the case analysts.

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Although a new service was developed and launched the companies involved in the innovation are not typical service companies. Therefore it may not be possible to fully extrapolate the results and impact for the service sector.

IZIT....... OSI partner: Novay Author: René van Buuren and Wil Janssen Version: 02-11-2010 Main Interviewee and Customer contact: R. Heerbaart, Director IZIT Case summary Care professionals in the region Twente (NL) in 2004 joined forces in the association of ICT Connection Twente (icZt). The goal was making the promise of ICT innovation in healthcare a reality. To this end the program IZIT realized in the period 2004-2007 a laboratory for initiatives in healthcare and technology. In 2008 IZIT transformed into an independent service organization, IZIT.NL, with a compact and flexible office organization that acts as an innovation partner towards governments, healthcare and industry. Innovation of health care affects everyone, "care recipient" as well as 'care-provider'. IZIT develops innovative healthcare services using information and communication technology (ICT) for individuals needing care and care professionals and institutions. IZIT develops health information services and home and remote services to individuals, as well as electronic file and value chain services for professionals and institutions. Introduction There is not one specific project that we like to emphasis in this case analysis. IZIT manages a set of innovation projects within their network complying with their mission: helping care professionals and care organizations with electronic information exchange. Typically IZIT helps with the generation of ideas and problem formulation, with the design of new services and the outsourcing of the implementation process. On behalf of the stakeholders of IZIT, IZIT takes care of contracts and invoices of software and service suppliers. IZIT is going through a transition period at the moment, and is changing their business model significantly. 2011 will have stronger focus on generic services that support the primary health processes, also IZIT re-launches with a new set of key stakeholders. Reasons for this will become clear below Participants/Stakeholders IZIT is a regional innovation intermediary for information exchange services in the health sector with a focus on the east of Twente, and the Achterhoek. In principal IZIT sees all care professionals as potential beneficiaries of their services, thus general practitioners, physiotherapist, specialists, hospitals and so on. Caregivers are not seen as key stakeholders. Typically in the organizational setting IZIT has contact with the higher administrative level, and ICT managers. 139

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IZIT maintains close contact with national care initiatives and governmental bodies. Also, IZIT is involved in a network of sister organizations in different regions of the Netherlands. Case analysis 1. Firm level Since IZIT is a small intermediary organization specific firm level questions related to the impact of open service innovation don’t apply. Most firm specific statements have been processed in the other sections. 2. Network level IZIT operates in a regional network of health professionals and health organizations (see introduction). From the beginning the ambition of IZIT was to both manage the network and act as a contractor for specific health service implementations. IZIT learned that these two different types of activities have to be mixed as little as possible, because new service development may only be relevant for a small part of the network. Learning: As an intermediary don’t mix networking and projects to strongly. Also the approached of IZIT changed from the organization of events, to limited sessions with a group focused on the development and/or design of a specific health service. Learning: The organization of events gives a limited sustainability for an intermediary. In the end people want to solve problems, not only talk and hear about them. 3. Service level As an innovation intermediary IZIT offers several different services: • • • • •

Network service; organizing collaboration in the health sector Maintaining contact with national health organization and initiatives (Used to): Charting processes in the heath sector to better align information exchange Closing of contracts for stakeholders Design and ‘enforcement’ of a reference architecture linking health services, health processes and ICT infrastructures

Charting processes has been our core theme in the period 2004-2010. This approach turned out to be less successful than expected. IZIT blames this on an incorrect basic assumption. IZIT started in 2004 with the assumption that all care professionals recognized the need for a specialized health information exchange services. Although the need for technical information exchange solution was recognized, care professionals were reluctant to discuss and share health information: leave this to us. Care professionals did not see a direct benefit, which resulted in limited support and contribution. Looking back, IZIT observes they wanted too much too fast, without a clear business proposition for care professionals and without a well-accepted position in the health sector. Recently this top-down approach changed to a hands-on supporting approach. IZIT focuses on supporting information exchange services that do not directly interfere with the primary health processes. An example is an electronic referral service of a patient to a hospital by a general

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practitioner. The service included an automatic summary of the diagnostic results in the hospital to the GP, which normally doesn’t happen. Patients were happy: faster and electronic scheduling. GP’s were happy, more involved, effect of referral visible. Hospitals were more efficient and were confronted with fewer errors. Because of this success more care professionals want to be included, new service ideas arise that build on top of this basic service. Starting small, and outside the primary process made IZIT more successful, better known, and invited care professionals to think about new possibilities on top of something small that worked. Thus no grand design approach. The impact of the reference-architecture is quite significant. CEO’s and directors of health organizations have formally adopted the architecture as a guideline for their organization. ICT manager are adhering to these guidelines step by step. Despite the success stories IZIT is facing a strong head wind and has to change its business model. IZIT sees some reasons for this: • • •

Services aimed at process optimization are not well visible to the primary processes. You only miss it when it doesn’t work. To little pain felt. At the moment things work more or less ok. However, the status quo will not hold for the future. Fragmentation in the health sector. It is not clear who benefits from health services, and who has to pay the bill.

4. Innovation process IZIT guides the innovation processes for the development of information exchange services in the regional health sector. IZIT itself as an organization has no internal innovation processes. The employees of IZIT have complementary skills that cover relationship management, social behaviour, health organizational management, technology and project management. These skills enable IZIT to select and guide new ideas for health service when they pop-up. There is no structural process that captures new ideas. 5. Socio economic impact Potentially the socio economics benefits of next generation health services are enormous. Only with more efficient ICT support we can maintain the level of health care with an aging population and an increasing pressure on costs. Next generation information exchange service will facilitate coordination in the health chain, reduce the number of errors, and put the patient more in control. 6. Barriers The impact of an innovation intermediary is strongly influenced by the adoption of care professionals. The following barriers are currently experienced: • • •

The visibility of process optimization is limited which makes it more difficult to realize service necessary for the future, if this time the pain is not felt enough. Fragmentation of the health care sector. Not clear who benefits and who pays. Complex cases have to be discussed with a variety of people, from CEO’s to specialist, to ICT managers to nurses. 141

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Problems and operations of today overshadow the problems of tomorrow

7. • • • •

Lessons learnt Don’t mess with the primary process of health professionals to soon Think big start small As an intermediary don’t mix networking and projects to strongly. The organization of events gives a limited sustainability for an intermediary. In the end people want to solve problems, not only talk and hear about them. As an intermediary think well about what your assets are. Don’t give away things to easily

Bibliography • www.izit.nl • Interview transcripts with Renie Heerbaart, director of IZIT.

MeeGo ....... OSI partner: Intel and Nokia Author: Stephen McGuirk Version: 15-09-2010 Interviewees: Different stakeholders and participants Contact: Author Case summary MeeGo is an open source, Linux project which brings together the Moblin project, headed up by Intel, and Maemo, by Nokia, into a single open source activity. MeeGo integrates the experience and skills of two significant development ecosystems, versed in communications and computing technologies. The MeeGo project believes these two pillars form the technical foundations for next generation platforms and usages in the mobile and device platforms space. MeeGo currently targets platforms such as netbooks/entry-level desktops, handheld computing and communications devices, in-vehicle infotainment devices, connected TVs, and media phones. All of these platforms have common user requirements in communications, application, and internet services in a portable or small form factor. The MeeGo project will continue to expand platform support as new features are incorporated and new form factors emerge in the market. Introduction Intel Corporation and Nokia are merging their popular Moblin and Maemo software platforms to create a unified Linux-based platform that will run on multiple hardware platforms across a wide range of computing devices, including pocket-able mobile computers, netbooks, tablets, media phones, connected TVs and in-vehicle infotainment systems. Called MeeGo, the open software platform will accelerate industry innovation and time-to-market for a wealth of new Internet-based applications and services and exciting user experiences. MeeGo-based devices from Nokia and other manufacturers are expected to be launched in 2010. The engagement was undertaken with the following partners:

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Intel

Intel Corporation is a technology company, and the world's largest semiconductor chip maker, based on revenue. It is the inventor of the x86 series of microprocessors, the processors found in most personal computers. Intel was founded on July 18, 1968, as Integrated Electronics Corporation (though a common misconception is that "Intel" is from the word intelligence) and is based in Santa Clara, California, USA. Intel also makes motherboard chipsets, network interface controllers and integrated circuits, flash memory, graphic chips, embedded processors, and other devices related to communications and computing. Founded by semiconductor pioneers Robert Noyce and Gordon Moore, and widely associated with the executive leadership and vision of Andrew Grove, Intel combines advanced chip design capability with a leading-edge manufacturing capability. Originally known primarily to engineers and technologists, Intel's "Intel Inside" advertising campaign of the 1990s made it and its Pentium processor household names.

Nokia

Nokia Corporation is a Finnish multinational communications corporation that is headquartered in Keilaniemi, Espoo, a city neighbouring Finland's capital Helsinki. Nokia is engaged in the manufacturing of mobile devices and in converging Internet and communications industries, with over 123,000 employees in 120 countries, sales in more than 150 countries and global annual revenue of EUR 41 billion and operating profit of €1.2 billion as of 2009. Nokia offers Internet services such as applications, games, music, maps, media and messaging through its Ovi platform. Nokia's subsidiary Nokia Siemens Networks produces telecommunications network equipment, solutions and services.

Linux Foundation

The MeeGo software platform will be hosted by the Linux Foundation as a fully open source project, encouraging community participation in line with the best practices of the open source development model.

Participants • Intel • Nokia • Linux Foundation Case analysis 1. Firm Level All of the partners invested in kind and in cash in the project. Each brought to bear significant product R&D particularly in the areas of internet service platforms, software technology and mobility. Each also brought specialist consultancy to bear in the areas of performance optimization, standardization, based on best practice, project organisation and optimization of the Linux stack. The partners brought limited experience in open service innovation but had a wealth of expertise which was applicable to this engagement. The partners have worked together of various initiatives in the past, but this was the first occasion where this project team had worked together on an open service innovation project. It was important that each partner was well represented and that there was adequate contribution from all levels of the organisations; executives, researchers, technicians and IT. 143

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The innovation is expected to lead to significant employment opportunities within developer communities. New business models are also being developed and applied on the basis of the Meego research and technology platform. As mobile technologies become increasingly pervasive, there is an increased demand for higher skilled employees and this is supported by the Meego initiative. 2. Network Level There were three organisations party to this innovation: Intel, Nokia and the Linux. There was no role determined for knowledge institutes. 66% of the innovation network could rightly be considered large companies. The Linux Foundation is the non-profit consortium dedicated to fostering the growth of Linux. There has been an increased in software developers, small-medium sized companies and large companies who have expressed interest in joining / sharing the benefits of the innovation network. These span all industry sectors, but are weighted in the telecoms and digital media sectors. Innovation partners tend to be selected on a case-by-case basis as the business need determines. The Meego initiative is multinational. The innovation network involves collaboration with companies outside of our market sector. The network is made up of at least 66% of companies outside of our market sector. The services developed are new at this scale and with this level of support in the market. The combination of communications and computing technologies forms the foundation for the evolution of new platforms and usages in mobile and device platforms space. 3. Societal Level The innovation typically enables software developers to develop mobile solutions for the Meego platform through the Meego Software Developers Kit (SDK). Developers typically engage with the MeeGo community through blogs, mail-lists, wikis etc, with the purpose of sharing experiences and learning from each other. This is enabling software developers to fast-track their education and apply their expertise meaningfully and efficiently to MeeGo products. The MeeGo SDK minimises the time spent on repetitive or standardized programming tasks and allows effort to be focused on value adding functions and features. As the toolkit evolves, the community is contributing additional capabilities to the toolkit, increasing its value. This also serves as a positive feedback loop and reward mechanism for the participants. 4. Service Level At the service level, Intel has contributed expertise in mobile applications and platforms. Our role in service delivery is primarily around service creation and service exploration where we direct the process model towards the MeeGo consortiums organizational thinking and help catalyse new implementation projects. We also play a role in the governance of service implementations and support MeeGo projects and the developer community. The network is managed by an innovation manager, who is typically from Intel. This individual coordinates with the other organisations and structures the engagement in order to achieve the stated objectives.

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The main innovation service drivers for our organisation are closely aligned with those of the other organisations in the consortium, that is deliver the technical foundations for next generation platforms and usages in the mobile and device platforms space. The work that Intel has done has largely been funded internally. The benefit to the organisation is influencing technology platforms of the future and developing a positive relationship across the mobile platform and application ecosystem. The barriers to open innovation centres around ensuring that the initiative maintains its momentum and that there are opportunities for the developer community to continue contributing. It is important that each engagement pushes the MeeGo initiative forward and helps to establish a standard engagement / process model that can be used as a baseline for future projects. Ultimately end user participation and commercial viability will determine the success of the venture. 5. Innovation Process Open service innovation is embraced as it enables us to apply the model to a variety of different technology providers; developers, handset manufacturers, etc, while being flexible enough to accommodate the constraints of different markets. The improvements to service quality are measured along a variety of value axis, however the most dominant ones related to developer productivity, quality of platform and cost optimization. It could be argued that a “Connect + Develop” (as used by Procter & Gamble) innovation model was implemented in this instance. That is, an external connection made with industry players (Nokia and Linux Foundation), to develop new services and commercial opportunities. This approach also has similarities with the “Innocentive” Innovation model which facilitates the bringing together in an online arena of solution seekers (Nokia, Intel) and solution solvers (developer and engineering communities) with a view to creating customer focused services and applications. A third strategic model aligned with this case example is Blue Ocean Strategy (Kim & Mauborgne 2005), whereby the intention to target “uncontested marketplaces” and meet “un-served consumer needs” through value innovation and technical solutions is a desired outcome from the collaboration. In general Intel shares the MeeGo lead with the other partners while there are clear areas of competence and expertise. The dominant type of partnership is a loose consortium between organisations within the market sector. The dominant nature of the collaboration is around service creation, idea sharing and knowledge generation with a strong focus on implementation. Increasingly other organisations within the innovation network are adopting the service innovation and applying it to their other innovation networks. Partners in the innovation networks tend to be durable, given the scale of the MeeGo initiative. The target market has had a relatively limited number of players to date, meaning that there is a lot of familiarity amongst each other. Not with-standing that, the network is flexible and supportive of new partners on an ad-hoc basis.

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6. Barriers Some barriers to the realization and adoption of services innovation are noted here: • • •

The consortium has different individual working styles. It has been a challenge to channel efforts and establish a common working framework. Services Innovation has helped to provide this framework. The main barrier is in identifying opportunities where the process innovation can be applied. This is typically as a result of the time it can take to establish commonality between platforms, applications and end-users. The barriers to collaborative innovation are typically the time it takes to align all parties on the objectives, along with effort and resource commitment from partners; however these barriers can be overcome.

7. Lessons Learnt • The organizational innovation has improved the perception of the group. There is a greater depth of knowledge which has been shared amongst other market sector such as education. • The important collaboration driver is that all parties to the network have clearly defined roles and responsibilities and a shared understanding of the outputs and how those outputs should be applied. It is important that all initiatives are scalable and transferrable and our collaboration partners should share those goals

Dialogues Incubator: the Next Generation Bank OSI partner: Logica Author: Gohar Sargsyan, Jaspar Roos Version: 02-11-2010 Main Interviewee and customer contact: Jaspar Roos, Chief Inspiration Officer-Business Development Manager, Dialogues Incubator, corporate venturing group of ABN AMRO Contact: Authors Case summary Dialogues Incubator operates in the field of open services innovation. To successfully implement OSI, Dialogues Incubator 1) leverages own intellectual to create a competitive advantage 2) calculates results in financial and non financial metrics 3) facilitates her people in really innovating by having a climate in which failures are okay, if done with best intentions: combinatoric innovation. Case focuses on the broad field of crowdfunding and knowledge valorisation. Two projects are active in this area: iDexpress and Seeds. iDexpress started in 2010; Seeds is to be launched in Q2 2011. Both projects are in a beta phase: open to public, but dynamic in their growth and strategy. Partners may join or stop, depending on the results for the coming period. OSI Link: this case is an example of the difficulties and challenges companies have to overcome in creating joint business value. Aim for both projects is the generation of business and social value for all parties involved. Innovation methodology used during this project is Dialogues Scrum (based upon Scrum methodology by Jeff Sutherland), along with scenario analysis and business model generation.

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Introduction Bringing ideas to life Part of the ABN AMRO Bank since August 2007, the Incubator has been conceived to create value in a rapidly moving society, with the 21st century edge that it requires. Dialogues Incubator is a combination of corporate venturing with open innovation research. “Dialogues” stands for business cooperation, innovation and sustainable responsibility. Dialogues Incubator matches real ABN AMRO expertise, human and intellectual capital and actual market needs to provide solutions to real people, business and social issues. The Incubator team is dedicated to capturing the essence of the transient economic and social environment and does so with a fresh perspective, commitment and entrepreneurial spirit. Goal is to utilize potential at hand to launch a multitude of new companies that will help a different sort of economy grow: one that is genuinely sustainable: socially, environmentally and economically. Development in the Dialogues Incubator is a collaborative, action-learning approach that maximizes value for people, profitability and environment. Example ventures are and have been Artstart (trading art and education art buyers), Associates (freelancers platform), Dialogues Technology (agile ICT development) and BrightboxHR (best practice HR solutions for corporates). For this case study, Dialogues Incubator focuses on her knowledge and financial valorisation joint venture initiatives iDexpress and Seeds. iDexpress puts inventions of inventors, researchers and corporate product development groups on the market by actively bringing these parties into contact with investors and companies (matchmaking). Next, iDexpress can put research questions to its own inventor’s network for the benefit of organizations that do not have a solution for their business challenges. iDespress has been active on the market since Q1 2010. Seeds is a to be launched online crowdfunding platform where new ventures with a funding need between € 35,000 and € 150,000 are introduced to a large group of informal investors. These informal investors have the possibility to participate in one of these ventures, by making an investment with a minimum of € 20. Participants ABN AMRO Bank

ABN AMRO is a large bank, headquartered in Amsterdam, the Netherlands. ABN AMRO has large commercial and consumer operations in several countries. Role as network partner

Dialogues Incubator

Dialogues Incubator is a subsidiary of ABN AMRO Bank, focused on open innovation. Role as facilitator, physical location for team, business development knowledge, connection to crowdfunding, ICT related issues

NOVU

NOVU is the Dutch organization of inventors, product developers and researchers and based in Utrecht in the centre of the Netherlands. The organization looks after the interests of its members in the widest possible sense. Members include company employees as well as individual inventors whose main activity is inventing. At the moment there are over 1.000 members. Partner in iDexpress. One of the objectives of NOVU is networking among the individual members. 147

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Role: adding network and specific knowledge on patents and inventions Dutch

Dutch is part of the Dutch group, which includes the joint activities of consultancy firm Dutch, the scientific part Decide and D-W&S Interim management. Dutch provides advice and implements it. Approach is characterised by close collaboration, equality and a commitment to results. Services are focused on the most important business issues of today: value creation, risk management and/or cost optimisation. Partner in iDexpress. Role: getting things done. Leveraging own network, supplying FTE

Province of Utrecht

Provinces do the work too small for the State and too big for the municipalities. The Province of Utrecht consists of 29 municipalities. Provinces solve regional problems and create jobs and value for her inhabitants. Partner in iDexpress. Role: financial aid to the project, connections to other parties

Seeds Dialogues Incubator

Dialogues Incubator is a subsidiary of ABN AMRO Bank, focused on open innovation. Role as facilitator, physical location for team, business development knowledge, connection to crowdfunding, ICT related issues

Several partners

SME’s to be crowdfunded, Dutch Government, several legal branches, cannot be disclosed yet

Case analysis 1. Firm Level Dialogues Incubator operates in the field of open innovation. The productivity growth achieved with open service innovation is estimated 5-10%. The open service innovation efforts are contributed to the variety of services and new forms of revenues. Open service innovation creates new markets. Within the firm the knowledge is explored by the knowledge exchange and leveraging intellectual capital. Within the firm there is no full understanding of the need to innovate breakthrough manner. Skill development within the organisation is aligned with business and agile development. The innovation is organised via incubator, open innovation lab and corporate venturing group. The team consists of 40 people. Dialogues Incubator is focusing on people/employee on broader perspective: highly analytical, but also creative, which are difficult to find. 2. Network Level Dialogues Incubator innovation network consists of more than 50 national and international organisations, 40% of them are knowledge institute, 40% medium to large corportates and s20% SMEs. 80% of the companies are outside of the financial/banking sector. In the last 5 years it can be noted approximately 60% growth in the organisations of DI innovation network. DI develops long

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term relations with innovation partners also selects partners from the inside innovation network per case basis. With some we have established a trust relation like, TCS, Holland Financial Centre, IBM, Maastricht University, IIP Create, University of Amsterdam and Mediaguild. 3. Society level The main collaboration drivers to participate in open innovation are he dialogues. To understand trends and societal changes actions are needed instead of wait and see. Integration of new company, not invented here, no integration of innovation in corporate strategy, if any. Crowdfunding and facilitating the valorisation process gave Dialogues Incubator a lot of insight. Clients who know the projects of DI (Crowdfunding, Time of Bank, etc) do view ABN AMRO as more entrepreneurial. The users are involved at all the stages of innovation from process design, service offering to the usability of the platform. Users/customers generally do not know ABN AMRO is such an innovative company. Next ABN AMRO is very reluctant to open up her innovation projects to the public. This is a paradox. However, there this is slowly changing. 4. Service Level Services developed within Dialogues Incubator are mostly new to the market, always new to the company. The nature of service innovation within DI is the business model. Open innovation led to more flexible service offering: agile development is now more and more the standard. `The delivery speed, what a client gets is what he has requested` is the dominant improvement strategy in service delivery. Equal partnership is the strategy of the innovation partnership. The nature of partnership is creating common values, knowledge generation & sharing, joint venturing. 5. Socio-economic Impact DI creates and implements the innovation. It is not interested in only creating, but more practical and also learning from implementation. The main incentives for innovation for Dialogues Incubator are venturing, worthwhile research and generating better world. Main innovation drivers are finding new markets and revenues, exploring new business models to understand new economic models. However, in corporate dynamics and changing strategy prevent open innovation to flourish in DI. 6. Innovation Process There is a R&D department annex corporate venturing group within Dialogues House, which is the main implementator/organiser of open service innovation process for DI. Innovation process as indicated above goes from creation to implementation involving all relevant stakeholders inside and outside of the organisation. Innovation process barriers: It is a traditional company, so innovation mostly falls under the not invented here scenarios. Users are involved at all the stages of the innovation process. 7. Barriers • Open innovation is challenging because it involves many actors in the openness. This means having to deal with corporate politics and changing strategy during the project. This may also include different roles in the project as insights evolve during the project, not all beforehand. A good SWOT and stakeholder analysis can solve part of the puzzle, although part of it is emergent. Solution for this is to create flexibility in the process. Last solution is to think of networked innovation.

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• • • •

A service is unprotecting able. The combination of the actors and intellectual capital create lasting value. It takes time to figure out what combination and people work best together. Agile development and trust in each other can overcome this barrier. If you want to succeed in service innovation, probably the best way to succeed is or to create a perfect client experience or to go into markets no one has gone before. This increases the failure rate, but will be one of the most interesting times of your life. Starting up takes time and money, most of the time more than expected and appreciated. Overcoming this can only be done with a strong vision, supported by managing boards and strong personal skills of all individuals involved, IPR can be a challenge for the creative mind, better to regulate appropriately from the start.

8. Lessons learnt • Innovation is combinatoric (Paul Iske). Innovation Is based on new combinations of knowledge, ideas and people with diverse backgrounds. The process can successfully be stimulated by creating connections between people and organizations, which will start a dialogue based on serendipity. • Failing in the beginning is excellent, because this gives the opportunity to rethink the business model and improve your service. Thing big, start small and accelerate fast. • Make money scarce and not the goal of your project. Scarcity will let you focus and different (also non financial) goals will give your project team an opportunity to explore different means to generate results Bibliography About scrum: http://scrum.jeffsutherland.com For more information on intellectual capital, one of the many platforms: http://www.intellectualcapital.nl For more information on Dialogues Incubator, white papers and information on above mentioned initiatives: http://www.dialoguesincubator.nl Glossary of terms Intellectual capital: intellectual capital is usually divided into Customer Capital, Human Capital and Structural Capital (L. Edvisson and P. Sullivan). Crowd funding: crowd funding is an upcoming and growing trend, where a significant number of people combine financial resources to help a new project or venture to get started. Combinatoric Innovation: combinatoric innovation is the process of discovering new ways of value creation by combining and applying previously disconnected intellectual capital from two or more sources. Observations As both projects have just started/launched (<18 months), it is difficult to measure concrete financial and non financial results. Due to different stakeholders, financial information and partly partner information could not be disclosed. Last but not least, the financial sector has been going through a very turbulent time. Corporate dynamics and (un)desired connection to strategy have been more intruding than normal changes in the environment would have been. We expect that this case study has advanced the quest for successful service innovation by adding serendipity, daring to be different (and possibly fail) and focus on intellectual capital to the chess board.

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Intelligent Transport Systems (ITS) SPITS OSI partner: Logica Author: Gohar Sargsyan, Wim Wendt, Chris Bannink Version: 30-09-2010 Interviewees: Wim Wendt, ITS cluster manager; Chris Bannink, principal consultant/project manager SPITS - Logica Business Consulting and experts from SPITS partners/stakeholders involved Contact: Authors Case description To realise the targets set by the Dutch government with respect to mobility in 2020, intelligent traffic systems (ITS) play an essential role, since they contribute to minimising traffic congestion, the need of extra roads and infrastructure and optimal fuel consumption. The Netherlands has a unique set of innovative companies which are working on solutions that can help to address these problems and at the same time create sustainable value for the Dutch economy. The whole value chain from chips (NXP, Catena) to consumer products (TomTom) and professional products (GreenCat) with embedded software (Logica, TASK24, Fourtress) as well as infrastructure and back offices (Logica, TomTom). We have TNO and top universities (TU Eindhoven, TU Delft, Universiteit Twente and Universiteit Leiden), all with leading positions in their area and very good knowledge of parts of the proposed solution. These parties now form a unique consortium covering the whole value chain and comprising both a substantial amount of small and medium size enterprises as well as world leaders in this domain. Triggered by the economic crisis, these companies and institutions join forces and roadmaps in the SPITS High Tech Top Project, with the goal to bridge the stalemate between the government and industry in creating an infrastructure for cooperative applications. SPITS is the Strategic Platform for Intelligent Traffic Systems: SPITS will create an open, scalable, real-time, distributed, sustainable, secure and affordable platform for cooperative ITS applications, evolving from existing infotainment systems. All key innovations (as well as industrialization) strengthen the Dutch economy in a domain where strong worldwide growth is expected. SPITS is a unique opportunity for The Netherlands to set the worldwide pace for new automotive products markets and opportunities. Starting from knowledge on existing Onboard Units (e.g. navigation systems, car radios), combined with knowledge developed in European and other programs, SPITS aims to: •

• • •

Build the next generation Onboard Units that are open and easily configurable for OEM specific requirements. They will also be (hardware) upgradeable, which will allow innovation during the lifetime of the system (i.e. lifetime of the car) and lead to faster adoption of new technologies. Adapt existing Roadside Units to support cooperative technology and to supply local information about all traffic Build the next generation of Back Offices, that can offer services to either Onboard Units or Roadside Units, and that can realise remote service life cycle management In order for cooperative systems to have impact, a minimal penetration rate of these systems is crucial: 151

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It is our vision that the best strategy to achieve cooperative driving, is to open existing onboard infotainment units sold in the automotive sector for ITS purposes. The (hardware) upgradeable approach by nature covers both short and medium term innovation and is set up such that solutions can be introduced step by step. SPITS is deeply embedded into the HTAS “Driving Guidance” focus area and the Point One roadmap on Transport, Logistics and Security and Nano-electronics. By accelerating and combining innovation activities in the consortium, SPITS’ unique open and upgradeable platform will: • • •

Make large scale intelligent traffic solutions possible in the near future; Have a huge impact on society in traffic mobility, safety and environment; Give The Netherlands a worldwide competitive edge in the fast growing automotive area of

Intelligent traffic systems Although strongly affected by the downturn, all companies have strong positions in their markets and will, enabled by SPITS, be able to capitalize on this program when the economy recovers; •

Create a new “innovation ecosystem” where Dutch companies are leading in the full value chain.

Results and Goals The goal of this project is to show proof of the following principles: • • • • • • • •

An open OBU platform with hardware and software upgradeability, including the unified HMI concept for the head-unit display; Software defined radio and digital radio and its application into an open OBU platform, for the efficient implementation of multi channel radios; Demonstration of the feasibility of E-Horizon type of ADAS applications and incremental map updates in the open OBU platform; The next generation RSU communicating with open OBU platform supporting a so-called local dynamic map (digital representation of the road and traffic situation); The cooperation of multi-vendor service providers for ITS and consumer services; Show alignment with European initiatives: demonstrate interoperability with the current CVIS/ SAFESPOT applications (parking zones reservation, traffic flow, optimised street lights, …); Applications and services for the consumer and society oriented domains, spanning the back office, RSUs and OBU.

Examples of these applications and services are given in Annex D. The next picture gives an overview where a distinction is made between integration of already partly existing services (using an open platform available to all) and new (not-existing) services. By developing the next generation car radio and communication chips, NXP aims at maintaining its number 1 position in car infotainment systems when these evolve into intelligent car systems. Because this project designs a future open architecture and associated applications and ICs, NXP is ensured that their next generation chips are designed for the future. Also the relationship with a party like TomTom is a reason for NXP to join the project. Reversely, the project profits from NXP’s presence since main challenges for success are integration, miniaturization, high volume production (to drive down cost) and the link to car entertainment for fast adoption. NXP wants to deepen its system insight in ITS, applying radio as a channel next to GSM and Car2X technologies.

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TomTom N.V. (AEX: TOM2) is the world's leading provider of location and navigation solutions. Headquartered in the Netherlands it employs over 3000 employees worldwide. More than 40 million people daily use its solutions, be it in the form of dedicated portable navigation devices (PNDs), indash car systems or tracking and tracing solutions for fleet management. In addition, hundreds of millions of people use TomTom's digital maps on the internet or mobile phone. In 2009, TomTom reported 1.5 billion in revenues and a 340 million net cash flow from operating activities. More information about TomTom can be found on www.TomTom.com. Last year, TomTom broke through the automotive industry by offering attractive and affordable navigation systems into the dash of the car. Combined with our best maps, IQ Routes and HD Traffic service, TomTom is now establishing itself as the authority on traffic information. To ensure we remain at the forefront of innovation, we are participating in the SPITS project that is researching sustainable and efficient mobility - this is at the heart of what we do. TomTom's knowledge will provide added value to the SPITS consortium, which is working on affordable, open in-car concepts For Logica, intelligent traffic systems are a high growth area. As a trusted innovation partner, Logica enables its clients to accelerate the large scale deployment of intelligent transport systems and services to drive seamless and sustainable mobility across all transport modes. With this project a platform will be created by which Logica can bring a number of its applications to the market. Also, the knowledge of such a platform will enable Logica to maintain their position in delivering expertise to its customers with respect to design of a back office, overall architecture and system integration, security aspects together with their knowledge on business models. Another objective for Logica is to work on a proof of concept with large potential customers. Mobility solutions are one of the strategic focus areas of TNO: TNO aims to be the innovation and test centre for cooperative systems and services in Europe. TNO also has a societal task with respect to mobility in The Netherlands and is strategically investing in this theme. Using co-operative systems created with several innovative development tools, TNO has a unique set of expertise to do so. This project and the resulting demo application for ‘first generation CCC and C-ACC’ will enable TNO to deliver on its vision. This will be further supported by large scale field tests like InterTraffic 2010 and the worldwide Grand Cooperative Driving Challenge in 2011. The project benefits from TNO’s expertise in a selected number of fields, like in- car data fusion, in- car and road side world models, effect ( simulation) studies of traffic management, HMI-design and effects, and cooperative business models.* For Catena, co-operation in this project with important players in the automotive industry and universities means a connection to the RFCMOS in 65 nm technology of NXP, opportunities with TomTom to make demonstrators for radio technology design-ins and WiFi/WiMax applications and have access to knowledge of the universities and TNO. GreenCat is developing a new range of innovative future-proof board computers. Different communication channels, a modular approach to logistics and links to (truck-specific) navigation are key. The goals of the SPITS project fully support the vision of GreenCat, part of the Groeneveld Group to provide state of the art solutions for the entire logistic value chain. * Peek Traffic is leading in multimodal traffic solutions on the roadside. SPITS will enable Peek Traffic to integrate the solutions designed in e.g. CVIS and SAFESPOT in an overall open architecture. Also the possibility to use the further miniaturized communication solutions (by NXP) will help Peek Traffic to retain their European position. 153

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TASK24 have worked with several of the consortium partners. The flexibility they can offer in SW development, combined with their competencies is key to these partners. This project provides them with an architecture that is ideal to maintain and improve their competences. Moreover, it will offer them the opportunity to become independent IP vendors in this field. Today Fourtress is working on the technological developments of tomorrow. We develop innovative high quality distinguished technical services and products together with our customers. Fourtress – ‘a place called tomorrow’ – delivers sensible and useful contributions to technical developments every single day, developments which contribute to a world which is cleverer, more comfortable, safer and cleaner. And therefore also a much more enjoyable and healthier place to be for all of us. The company enjoys an open structure where success and knowledge are shared. Where employees know exactly what we stand for. Whereby the work results in satisfaction and reaps appreciation. Where we ensure our customers are more than satisfied. This method of working ensures we provide an active contribution to relevant social problems. For the universities (TU/e, TUD*, UT and UL), the interest in the consortium is that it enables them to perform specific research in core areas together with the industry. As such the consortium will strengthen the relation and cooperation between universities and companies. It might lead to new products and systems that might spin off into new start-up companies. SPITS provides • • • •

Better traffic flow and air quality Improved safety and driver assistance Upgradable information Systems An open platform for in-vehicle services

Website: https://spits-project.com/

Innovation Mill OSI partner: Nokia Authors: Timo Ali-Vehma, Veli Pekka Niitamo Version: 30-09-2010 Interviewees: Different stakeholders and participants involved Contact: Authors Innovation Mill: Towards SME Incubation with Open IPRs validated In LivingLabs Nokia, Technopolis and Tekes got together in spring 2009 to give unused Nokia ideas, unused IPRs and innovations a new lease of life. The Nokia Technopolis Innovation Mill is taking ideas and innovations that are no longer required by Nokia and make them available to SME companies and fresh start-ups across Finland who may be able to turn them into world-class products and services. The idea is to match ideas with businesses that can make them happen. Working alongside Nokia on the initiative is Technopolis, one of Europe’s largest science and technology park chains, and Tekes, the Finnish agency for funding technology and innovation.

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The innovations will also receive venture funding of €8million, including €4.5million coming from public funding. Local cities in Finland are also involved and hope to drive ICT in their local regions. The end game is to help more Finnish businesses become competitive on the international stage. Nokia is freely sharing their unused research and development to SME companies across Finland. Given the fact that each year companies like Nokia come up with hundreds or even thousands of concepts and only a fraction ever see further development, the move makes sense on many levels. Beyond giving possible groundbreaking ideas a new lease on life, the project points to a new kind of openness around intellectual property that has the potential to benefit society as a whole. And as we’ve seen before, it’s not always clear where advances will be made, so levelling the playing field in this sense should lead to revolutions in the ways we work together. Speeding up the economy calls for a new degree of openness. Nokia hopes that the Nokia Technopolis Innovation Mill sets an example that companies across other sectors will follow. The current economic climate is just right for a critical evaluation of intellectual property portfolios and the release of the innovations that are more suitable for SMEs and their ecosystems to exploit. The innovations released by Nokia are in areas such as environmental and energy-related solutions, location based services and advertising, near field communication, mobile security, health care applications and future internet services, among others. Thousands of available innovations were evaluated and around one hundred selected to be matched with a company which demonstrates the best ability to exploit them, and which is then granted funding for further development and collaboration. Nokia Technopolis Innovation Mill Breeds first four New Start-ups in autumn 2009 Technopolis announced that 4 new companies have been created through the Nokia Technopolis Innovation Mill IPR spinout platform. Two companies are public – There Corporation and Sports Tracking Technologies Ltd – which will be presented as Open Service Innovation SME spin-outs from Nokia. In addition, There Corporation announced a major venture capital round. There Corporation was formed in May 2009 by the management team of the Nokia Smart Home program to commercialize technology developed over a number of years at Nokia. All the related development, results, materials, deals and know-how have been transferred from Nokia to There Corporation with a licensing deal between the companies. At the same time, the Comsel team was merged with the company, bringing smart metering and energy efficiency know-how to the There Corporation. The first pilot solutions are expected to be released in the beginning of 2010 where premarket testing took place in several European LivingLabs. There corporation will focus on energy saving and efficiency. The energy saving solutions of the company is based on the ThereGate – which was formerly known as the Nokia Home Control Center or HCC. Main partners of There Corporation in the first stage are energy utilities, energy meter manufacturers, service providers in the energy and real estate segments. Kaj Rönnlund, CEO of There Corporation, sees the combination of the mobile and platform technology know-how of the Nokia Smart Home team and the experience of energy grid and metering of the Comsel team as a unique and strong basis to start developing new generation energy solutions. “We are gate openers for our customers enhancing the value of their client offerings.” There corporation is financed by the current management team and the Power Fund II by VNT Management, which manages two funds, Power Fund I and Power Fund II, with a focus on clean 155

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technology. Assets under management of these funds are €80 million. “There Corporation’s groundbreaking solution and extensive knowledge background in the smart grid market, which is estimated to be worth over €40 billion by 2020,makes it an interesting company to invest in.“ says Veijo Karppinen, chairman of VNT. The total funding of There corporation is €4,5 million. There corporation provides the platform combining Smart Metering, Smart Home and Smart Grid solutions. This allows our partners to offer sustainable future proof solutions and services to their clients. The company focuses to start with on next generation smart metering to improve energy efficiency. The solution will also provide better service and control for end users. Many other ThereGate compatible appliances and applications will be provided by other SME companies. The first solution projects in this field have already been started and some of the end user solutions and services are expected to hit piloting phase in early 2010. Together with another innovative SME company Process Vision from the utility Soft Ware Industry. Together with Process Vision and There Corporation(few other Swedish, Dutch and Portuguese SME companies form a smart grid services ecosystem) is piloting its solution in four different countries in an European Commission funded CIP (Competitive and Innovation Programme) project called APOLLON. Nokia rationale to spin-out Innovative SME companies to the market Giving ideas a new life shows the new openness that Nokia is driving. Nokia could make a gag about corporate responsibility and recycling too, but Nokia is clearly enabling emergent wireless service ecosystems to emerge, where it does not have yet direct investments. There is also a direct link to corporate responsibility though. Not only does this impact consumers (more ideas developed into products) but it also impacts new entrepreneurs alongside local SME businesses to create a partnership for an end-to-end service solution to a potential local lead market, which could prove to become a validated global lead pilot area. This initiative can’t be underestimated for its potential impact. It’ll be interesting to see how it grows over the next three years. Prof. Niitamos Nokia presentation and slides will be focusing to this emergent service ecosystem to appear in concurrency with several Living Labs pilot sites with real end-users.

4.3 Cross-Case Analysis After detailed analysis of the cases in all level questions, in this chapter we summarize the key barriers and the lessons learnt from the cases, then identify the relation to Digital Agenda. Many of the issues identified in the context relate to the Digital Agenda.The relation with OSI is at least threefold. • •

First of all, open service innovation is a way of working contributing to smart growth. It improves and speeds up market, R&D and productivity. Secondly, user driven innovation, as an element of open service innovation, can contribute to inclusiveness. More and different groups of people can participate in innovation processes. The Universal Service Directive can increase the speed at which users will become interconnected through high-speed internet Thirdly, open service innovation has a relation with the Digital Agenda, with respect to promoting R&D on the role of ICT based service platforms enabling open innovation in FP7 and the upcoming FP8.

In detail, the following policy actions relate to OSI.

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Action Action 1

Decription Simplifying pan-European licensing for online works

Relation enabler for content collaboration and new content-driven services, enlarges market

Action 3

open up new content based markets

Action 5

Oblige public bodies to give access to public sector information Simplifying the distribution of creative content

Joint creative content

Action 6

Protecting intellectual property rights online

New IPR challenges in open platforms/data environment

Action 8

Revision of the eSignature directive

Lowers threshold for international trade

Action 10

Member States to implement laws to support the digital single market

Users are the beneficiaries, better integration of European service systems

Action 12

Review the EU data protection rules

Adapt regulation to possibilities of new digital services (e.g. to cross-border data mobility)

Action 21

Propose legislation on ICT interoperability

Interoperability crucial for open platform development and for driving ICT-based innovation in European service systems (e.g. health, energy, transport)

Action 22

Promote standard-setting rules

Idem

Action 23

Provide guidance on ICT standardisation and public procurement Adopt a European Interoperability Strategy and Framework

Idem

Action 24 Action 25

Idem

Identify and assess means of requesting significant market players to licence information about their products or services Member States to implement European Interoperability Framework Reinforced Network and Information Security Policy

Idem

Leverage more private investment for ICT research and innovation Reinforce the coordination and pooling of resources

SMEs are the beneficiary Collaboration thrives on resource pooling

Action 52

Propose measures for ‘light and fast’ access to EU research funds in ICT

Current research funds have a bias towards larger and long-term oriented projects. Address entry hurdles of SMEs.

Action 53

Financially support joint ICT research infrastructures and innovation clusters

Strong stimulus for platform development

Action 54

Develop a new generation of web-based applications and services Member States to Engage in large-scale pilots financed by the Competitiveness and Innovation Programme

Should be one of the outcome of open service innovation CIP is an interesting instrument for service, tailorable to this domain

Action 57

Make digital literacy and competences a priority for the ESF

Reinforces the people side of PPPP

Action 58

Develop tools to recognise and identify competences of ICT practitioners and users

Idem

Action 26 Action 28 Action 50 Action 51

Action 56

Idem A consistent policy can increase trust in ICT driven services

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Action 59

Make digital literacy and skills a priority of the "New skills for new jobs" Flagship

Idem

Action 64

Make sure that public sector websites are fully accessible by 2015 Assess whether the ICT sector has complied with common energy and emission measures

Idem

Support partnerships between the ICT sector and major emitting sectors Assess contribution of smart grids and define minimum functionalities to promote interoperability

Idem

Action 74

Member States to include specifications for total lifetime costs for public lighting in public procurement

Idem

Action 75

Give Europeans secure online access to their medical health data Propose a recommendation to define a minimum common set of patient data

Next generation health care systems

Action 69 Action 70 Action 71

Action 76

Important for building a `smart` society

Idem

Idem

Action 84

Support seamless cross-border eGovernment services in the single market

E-gov services can act as launching platforms

Action 89

Member States to make eGovernment services fully interoperable Member States to agree a common list of key cross-border public services

Society will be the vital beneficiary

Action 92

Apply the Intelligent Transport System Directive in support of interoperability and rapid standardization

Idem

Action 97

Promote the internationalisation of internet governance

Action 98

Support the Internet Governance Forum

Internationalisation of internet governance as catalyst to open market Idem

Action 99

Improve international trade conditions including IPR

Towards open licensing and creative commons

Action 91

On demand and active participation of EU users

Table 4: Digital Agenda Policy Actions and relation to OSI Study

In the Table 5 we show the cases outcomes and the relation to Digital Agenda Actions and beyond.

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Case Name

Presented by

Barriers

Lessons Learnt

Digital Agenda Actions

National Pension Registry

Logica

(1) political: no "gain" for government. (2) Technical: data security is an issue

(1) incorporate into law at a (i)national level, then (ii)EU level-go to Single EU Market (2) open innovation application within traditional multidisciplinary environment is challanging (3) participation of users are central in this case

DA3, DA10, DA12, DA64, DA84, DA89, DA91

Mobile Point of Care (MPoC EC) East Cheshire NHS Trust

Intel

(1) R&D skills help, (2) shared clear and common goals, values, objectives

DA21, DA54, DA58, DA75, DA76

Smarter Planet Initiative

IBM

(1) qualifying opportunities,(2) aligning partners is difficult, (3) lack of ICT skills of the userspractitioners (1) complex and multipartner innovation process challanges

(1) scope management is key - easier to invest in defined pilot implementations rather than large-scale exploratory project, (2) New forms of organzing PPP is needed, (3) New funding models are needed, (4) new form of innovation-orientation procurement is needed

DA6, DA21, DA22, DA23, DA24, DA26, DA28, DA56, DA69, DA70, DA71, DA74, DA97, DA98, DA99

Collaboratory.nl

Novay

(1) forming a multi-party consortium, (2) security can be an issue to involve all parties, (3) funding for innovation

(1) R&D expereince helps, (2) use of innovation-intermediary worked very well, (3) better and integrated service engineering techniques is needed

DA21, DA24, DA26, DA51, DA52, DA53, DA54

MeeGo

Intel and Nokia

(1)alignment of different styles and competences (2) identifying the opportunities where the open services innovation can apply

(1) defining clear responsibilities, (2)shared values, goals (3) the organizational innovation has improved the perception of the group

DA1, DA6, DA21, DA22, DA23, DA24, DA54, DA75, DA84, DA92

OMT (Online Monitoring Tool)

Logica

(1) people changing behavious, (2) technology awareness

(1) Service: apply gaming to enhance adoption, (2) the process is usercentric/driven, (3) Service: clear goals, busines case, launching customer

DA23, DA26, DA54, DA84

Mobile Point of Care (MPoC SJ) St Johns Hospital

Intel

(1) aligning partners is difficult (2) qualifying opportunities, (3) lack of ICT skills of users

(1) combination of investing in people at all partners, (2) R&D skills help, (3) shared clear values, objectives (4)use intermediary for innovation process

DA21, DA54, DA58, DA75, DA76

Capability Maturity Framework

IVI and Intel

(1) industry leadership was needed for launch of open innovation, (2) R&D organisations were also needed

(1) development of IP management at early stage is important, (2) academic researchers must expand their roles: knolwedge brokers in industry

DA1, DA3, DA6, DA12, DA23, DA25, DA28, DA59

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IZIT

Novay

(1)adoption capabilities of end-users, (2)getting enduser involvement, (3) market fragmentation

(1) don't mix network and the projects, (2) Solve problems not only talk, (3) don't give away your assets easy

DA3, DA8, DA21, DA23, DA53, DA56, DA57, DA58, DA59, DA75, DA76

IBOR - Integral Maintenance of Public Space

Logica

(1) No academic and or scientific institutes involved, (2) Limited by the customer needs

DA3, DA21, DA23, DA51, DA69, DA74, DA84, DA89

AbelLife

Novay

Blue Cloud Initiative

IBM

(1) quality in NL is different, (2) incompetent authorities, (3) difficulties with funding (1) lack of standards, (2) lack of security, privacy, regulatory compliance, performance and stability

(1) open innovation as catalyst for a new innovative integral solution based on the customer needs, (2) develop the original service offering in parallel to keep the scope of the innovation services more open and not limited with current customer needs (1) from research into SME is possible, (2) After exploration focus on end-user (1) different combination of partners and instruments in different phases (2) research and application are closely aligned (3) complex problems require open innovation and mix of open innovation approaches

DA6, DA21, DA22, DA24, DA52, DA53, DA54, DA56, DA75, DA97, DA98, DA99

Dialogues Incubator: Next Generation Bank

Logica

(1) dealing corporate politics makes open innovation more complex, (2) A service is unprotectable, (3) Starting up takes time and money

(1) Innovation is combinatoric, (2) Failing in the beginning is excellent, (3) Make money scarce and not the goal of your project, (4) motivations of the users to participate in OI is important, (5) new forms of pertnerships are needed to create better services

DA1, DA5, DA6, DA22, DA24, DA25, DA28, DA50, DA84, DA91, DA97, DA98, DA99

Innovation Mill

Nokia

(1) complex open innovation environment, (2) compex IPR

(1) giving ideas to a new life is new openness, (2) promotion of creation of new partnership with SMEs towards creation of new services: New PPP is needed

DA1, DA5, DA6 DA21, DA25, DA28, DA50, DA54, DA97, DA98, DA99

SPITS

Logica

(1) open innoavtion to apply different domains, (2) multidisciplenary partnership buidling

(1) open innovation for better traffic flow is possible (2) Open platform for in-vehicle system via multidisciplianry partnershp

DA21,DA54, D69, DA71, DA84, DA92

DA1, DA3, DA23, DA52, DA54, DA92

Table 5: OSI cases outcomes and the relation to Digital Agenda Policy Actions

Throughout the cases, four types of barriers pop up (linked to the open service innovation model given in section 3.1): A. related to the innovation process, both within an in between organisations: there is a lack of knowledge on how to organise open innovation, both in collaboration, IPR protection, culture, and the linkage between internal R&D and external partners; B. related to the service and customer involvement: there is in many cases a lack of ICT skills that hampers user involvement. ICT skills are needed for user driven innovation of ICT-based services;

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C. related to the firm level: funding of ICT based service innovation often proved difficult. Not many funding scheme’s aim at services, and banks are reluctant to provide credit due to lack of securities; D. related to ICT specifically: lack of standards (especially concerning security and privacy) and lack of ubiquitous high quality networks hampers adoption and diffusion. Also, some joint lessons can be identified: E. related to the innovation skills and culture, both within an in between organisations: sharing values, culture and R&D is important. If there already is an R&D culture, this helps in the process. If not so, pay attention to generating a shared vision; F. related to the innovation process, both within an in between organisations: funding schemes, way of working, partners etc. change during the innovation process quite drastically. This is often neglected and poorly understood, Investment in early stages proves difficult; G. related to the service and customer involvement: end user involved is crucial (as expected); H. related to the network level: SME participation is very well possible and proves fruitful often, given their speed of adoption and decision. Despite the identification of the relations with the Digital Agenda policy actions, the Digital Agenda in some cases does not fully cover the issues identified. The question we face now is what policy recommendation should be derived from the cases, the barriers identified and the lessons learnt, in combination with the lessons from literature. This is tackled in the final chapter.

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5 Findings and innovation policy

recommendations

on

open

service

To support our study conclusions and finalise our study results we have presented the study interim results at international conferences, workshops and discussed with expert groups. The feedbacks we received from the relevant events and domain experts are taken into account in the final outcomes [73]-[86]. Policy should be used to remove barriers that would not be removed by normal market mechanisms. Market failures or systemic failures can prevent the uptake of innovations or of new innovation mechanisms, such as open innovation in services. As the scope of this study is industry led, the findings and recommendations are grouped from the perspective of the market. There are 3 perspectives: A. Given that open services innovation is about sharing ideas, (half-) fabricates and results of intellectual creativity, what then are the barriers for people and organisations to make this input available and be able to collaborate. Are there policies that enable novel sharing principles and accelerate the availability of this input? B. The process of open services innovation as described in the model section of this study indicate that one of the most important drivers for innovation are end-users and their interaction with producers and service providers. The case studies indicate likewise. Then what are the barriers that we seek to remove to improve this interaction process. C. Open service innovation seeks to create value for our society and our economy. Harnessing the available input into a productive interaction process must lead eventually to services that benefit our European society and economy. What then are the barriers that keep us from exploiting the creativity of our organisations and people and how can be stimulate wealth generation in socio-economic terms. The above mentioned approach is illustrated in the `Open-Box` model (Figure 9).

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Figure 9: Open Service Innovation “Open-Box” Model

A.

Findings and recommendations on sharing creativity

Creative society The rise of a class that takes open services innovation as the baseline has an impact on society. We see the growing impact of information, communication and media on social interaction [3]. Each person is connected into several communities at the same time, both in the real world as well as in virtual worlds. These are the communities in which you work, do sport, absorb culture, live, recreate, share emotions and experiences. Creation of virtual communities will allow new groups to form, defined by their media interests. A large number of the old barriers to entering to the creating sector have been removed by digitalization. Entry costs are no longer determined by the costs of hardware and distribution networks. Using and rebuilding information leads to new prominent companies. The user will live in a cloud of information. More simple and cheaper access to public information is needed for governments to be heard. Open design, open access, open architecture are in order. Creative commons and open sources are searching their way next to protected creative or intellectual property. New rules may be implemented as new laws or as new habits. Old barriers will go. We better participate to make that happen.

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Recommendations. 1.

Open data of public bodies: a proactive attitude is required by public and semi public bodies. What is the new ‘Industrial Open’, the new ‘Industrial trust’.

2. Open data is a must, but conflicts will arise with protection of personal integrity. Open data of one own body is strictly private. Here deeper insight in ethical issues is required. What is the new security, the new individual openness. B.

Findings and recommendations on a productive interaction process

The services chain From conception to execution, the services production chain differs profoundly from the earlier waterfall model in that it starts and ends with the end-user. This forms a loop in which experimentation and creation are following each other iteratively. Living labs have been introduced as means to measure and optimize the usability. Therefore, the innovative aspect of the creative technology chain is that it runs from science via valorisation into education, impact and social innovation. The services creation partners Services innovation happens where the creative core plus research & development plus industry meet. The challenge is in the scaling up from an idea to production. The problems in scaling up are primarily due to broken links in the technology chains. At the heart of services innovation are small organisations, ad-hoc cooperative ventures, freelancers and one-person businesses. At the other end are big industries with production experience and capacity. At yet another end is the research world in universities and institutes with its own average world-class reputation, practically inaccessible to small organizations. The creative core, science and industry need to meet. The essence of creation is to be at the same place, the same time and the same mood. Nothing can replace that. Therefore, the creative climate has proven to be an important attractor. The creative climate is to be stimulated regionally. Collaborative skills are often lacking. Shared ideas, values, and processes are lacking. There is lack of joint vision on open service innovation processes, due to immature innovation and R&D culture in services firms. The parallel (versus the sequential waterfall approach) is demonstrated in the Blue Cloud case: The case shows clearly that the classical sequential model of innovation does not hold here but that different open innovation mechanisms are applied in parallel and in a networked organization. Recommendations: • Take the end-user of a service (the one who applies a service) as co-creator (st Johns hospital, Intel). The implication is that no matter if people are inside or outside of an organization, the right triggers must be applied. This is not financial reward only, although a sustainable living must be possible when one is adding ‘value’ to someone else’s business. • Create and experiment with new forms of open laboratoria (Digital Design Labs and Virtual laboratoria) where institutionalized R&D personnel work together with non-institutionalized researchers from the creative core of SME’s. Include the informal R&D professionals in the established R&D networks including the flagship initiatives. Open-up the labs, create workplaces and invest in digital infrastructure to share data, models, half-fabricates and knowledge. • Create new forms of PPPs (public private partnerships) or PPPPs (public private people partnerships) to stimulate the creation of new services.

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Stimulate the role of corporate industries as upscaling partners for the creative core. Find or create new fiscal and financial instruments and their legal frameworks that bring the creative core and corporate players at a level playing field. Production vouchers or production performance contracts are promising directions. Implement the approach IPR protection with openness requirements, e.g. Creative Commons, open licensing, etc. A shared process in which knowledge is made available openly and transparently for all to develop Internet-based products and services on the new platforms. In “Intellectual Property and Legal Issues in Open Innovation in Services“[52], specific issues concerning IPR and networking, user involvement of open platforms are identified and recommendations are provided.

Education Despite all development, end users often lack the innovation, entrepreneurship and ICT skills to actually participate in open innovation and creative society. Think of hospitals ( MPoC cases, IZIT case), where both nurses as well as practitioners lack ICT awareness to be sufficiently open to new services and participation in service development. Think of users´ motivations (NPR and Dialogues Incubator case) on participation in open innovation. There is a tremendous gap between potential and current state of affairs. This also holds for public authorities and civil servants that lack skills to play a role as lead customer in service innovation. Services are all about experience. To stimulate the end–users to participate in services creation or usage, gaming methods are often applied (OMT case). Games are highly stimulating and improve the end-user‘s motivation. Highly motivated games, exploration of information and media sources and direct feedback by wearables are the best asset for life-long learning, where the player needs to know in an instance whether the answer is right or wrong. The distinction between learning at school and learning in life will fade. Learning for personal development will be supplemented by learning for sustainability and society. Recommendations: • Vitalize education; teach a new generation how to operate in a networked society where firms, the network and people are all actors in the same ecosystem. • Traditional careers will differ. A life-long employment with a corporate firm will be replaced by a life-long employment in a network. • What is the new life-long employment. • Educate service professionals; raise awareness of ICT potential, clearly distinguishing between hype and truth. Additional ICT in the classroom can significantly improve learning experiences and access to education (especially in disadvantaged regions in Europe and globally), empowering and training teachers to use technology to change lives. • Invest in ICT knowledge of civil servant / public authorities that often lack knowledge and skills to play a reinforcing role in service innovation. • Support and participate in Education Transformation - increase student competitiveness, build job skills and competencies, support economic development and provide social cohesion. This includes assessment, the ability to assess 21st century skills • Encouraging student participant and interest in STEM (Science, Technology, Engineering, and Maths) will fuel technical advancement and opportunities.

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C.

Findings and recommendations on wealth generation

The definition of wealth generation is undergoing a revision. In the corporate thinking of many of the case study participants, it is no longer share-holders profit only, but a mix of client satisfaction, employee satisfaction and share holders satisfaction. Finding: wealth generation relates to client, employee and shareholder satisfaction in equal terms. In fact, this means a further raise of the role of the individual, because in the end, client, employee and shareholder all refer to the same individual, albeit in different roles. Our society is becoming aware of the role the individual is playing in the wellbeing of everything around us. The consequence of this trend is that we also have to reverse thinking about the innovation cycle. We have to start at the individual and focus on what is adding the most value to that individual. This thinking is described as reversing the innovation pyramid.

Figure 10: Innovation ecosystem: traditional and new open innovation model

In the reversed innovation pyramid, we have to find a new understanding of share-of-profit. • •

What makes people contribute? Why would they do that? How is added value capitalized into wealth and the benefits shared over all contributors?

Wealth generation for the market The innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market (Figure 11). The` buyer value ` is in opportunities for services never offered to customers before, so called simultaneous pursuit of differentiation and low cost and the combination tries to highlight the sweet spot in the middle. We extend that to stay

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“buyers” or “users” can be both consumers and innovators/participants, given all of the supporting conditions.

Figure 11: Value Innovation (Chan Kin & Mauborgne, 2005)

Wealth generation in an inclusive society The right combination of creativity, content and technology will generate services that close the digital divide. New devices will bring inclusion to the elderly and the handicapped by story tables, monitoring wearables, devices and individualized memory access from public broadcast archives. Closing the digital divide pays off in social values. Social coherence needs specific attention in response to the fragmentation of society by television and passive Internet use. Reintroducing story telling in computer settings almost without interfaces will serve societal coherence. Wealth generation for well-being There are many opportunities once the worlds of information, monitoring and communication have been brought together. Sharing content and creativity by Internet will create new well working life styles: where-ever and whenever. Wearable technology supported by Internet coaching will create well being life styles for young people and the elderly. Hence it will control health care costs by communication as needed. Sustainable energy, sustainable water and sustainable material use will require a complete turn-around in our daily practices: for companies, for individuals, for the government. Recommendations: • Adopt a policy to stimulate Social Innovation Sciences in the recognition that wealth generation is driven by the rights balance between citizens, clients, employees and shareholders´ interest. • In The Netherlands alone a high percentage of freshmen from higher education start their own enterprise. Their ambition, at start at least, is not to enter a big corporate, but to exploit one’s

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• • •

own intellectual capital at the stage of innovating. If we manage well as a society, we can exploit a vast resource of creative and entrepreneurial minds. Push a new service mindset versus a new product mindset. This new mindset will place the client experience at the centre of a business’s purpose. It will unlock greater value for customers in their dealings with providers. It will redesign business processes and business models leading to renewed growth for the business, and for an economy of such businesses. See also [68]. Involve users to participate in the innovation process and creation of new services by studying the innovation ecosystem and user’s motivations. [32], [44], [69]-[72] o The OMT case on the energy saving completion: how to involve people, what triggers them to contribute? Energy and money saving as main motivations and increasing energy awareness by using gaming methods. o Dialogues Incubator (ABM AMRO) case – why the “crowd” invests in a good idea? Why individuals participate in open innovation process, what is the return on investment? Is the shared ownership, shared profit and eventually the same crowd is the user or there are more societal aspects involved. o National Pension Registry case – the society can be more financially mature and make their financial-life planning driven by ICT.A single market within EU is important in this case. What is the impact of life-long employment in the network to our pensions. What is the new pension scheme. Stimulate heterogeneous cluster forming and create financial and fiscal constructs to help them. Focus on new combinations of technology, societal issues, users/creator groups and artistic forms. Initiate an EU-wide creative council where employers, unions, public agencies, politics and SME’s are represented. Promote Creative Thinking as foundation for open services innovation. Build a single market for services in Europe with active participation of users.

The key driver to ‘the individual-corporate’ is ICT. As we have seen from our case studies, they cover different sectors; however, all are driven by ICT. So, what new industries are coming up that incorporate this openness approach already: ICT-led Creative Industries. The information motor Several new ways are open ahead of us. A different style of working has entered the stage with less emphasis on control and more on initiative and self-reliance. The life style is more conscious in society, better informed about energy, body and security to ensure longer living at home when we grow old. Art is more important than ever to the many as the meaning of life in a society with less religion. And there is an effect on the habitats we live in, from the anonymous world of Internet to the social media. The creative life style, The individual corporate The key driver to ‘the individualcorporate’ is ICT. Many are beginning to work and to live the creative way. They work in a high degree of autonomy and, as the other side of the same coin, with a high degree of purpose and result. They create something individually and at the same time operate in a network of relationships. This is a life style where responsibility and accountability are important assets. Leading the shift are the people in many diverse fields who create for a living, not only products, software or designs but also education, strategic advice and science. This new economic class is generally known as the creative class. Artists and designers are only a small subset of the class we have in mind. What makes the creative sector unique is the integrated way of living and working and regulating with an emphasis on self-motivated and flexibly networked. At the core of the creating class are information, communication and media.

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[54] Innometrics (2008), European Innovation Scoeboard 2007 – comparative analysis of innovation performance. [55] MERIT (2006), 2006 Trendchart report: Can we measure and compare innovation in services?, Merit, Maastricht, The Netherlands. [56] Gago, Da. and L. Rubalcaba (2007) Innovation and ICT in service firms: towards a multidimensional approach for impact assessment, Journal of Evolutionary Economics 17, pp. 2544. [57] Hempel et al (2004) ICT and productivity: where the fruits are left? [58] Savage, N. in Technology Review (MIT) (2011): HP’s open Innovation Strategy http://www.technologyreview.com/business/32260/ [59] Flores, M. et al (2009) A Balanced Scorecard for Open Innovation: Measuring the Impact of Industry-University Collaboration [60] EU FLOSS (2006) EU: Economic Impact of FLOSS on innovation and competitiveness of the EU ICT sector, http://www.epractice.eu/files/media/media_479.pdf [61] Nedimovic, N. (2009), The trends of open service innovation in services. European Commission, DG Information Society and Media, ICT for Societal Challenges [62] NESTA (2009) The innovation index. OECD (2005), Growth in Services - Fostering Employment, Productivity and Innovation, OECD, Paris. [63] Poot, T., Faems, D., Vanhaverbeke, W., 2009. Toward a dynamic perspective on open innovation: a longitudinal assessment of the adoption of internal and external innovation strategies in the Netherlands. International Journal of Innovation Management 13 (2), 177–200. [64] De Jong, P. J., Vanhaverbeke, W., Kalvet, T., Chesborough, H. (2008). Policies for Open Innovation, Vision Era-Net, Helsinki. [65] Roodink, C. (2011) Services Innovation and ICT, Services Innovation yearbook 2010-2011, European Commission, DG INFSO, page 103 [66] OISPG and OSI groups in Facebook http://www.facebook.com/group.php?gid=36351853660 [67] OISPG 2010 – Observations and literature review by the OISPG members presented and discussed in different board meetings (Feb 18, 2010 in Brussels; April 14, 2010 in Valencia; Sept 30, 2010 in Brussels; March 10, 2011 in Brussels) [68] Chesbrough, H. (2011) Lead article: Open services innovation-a new mindset to find new sources of growth, Services Innovation Yearbook 2010-2011, European Commission, DG INFSO, pp. 9-13 [69] Apollon EU project FP7 CIP PSP (2009-2012) http://www.apollon-pilot.eu/ [70] Save Energy EU project FP7 CIP PSP (2009-2012) http://www.ict4saveenergy.eu/ [71] Hekkert, MP, R. Suurs, S.O. Negro, REHM Smits, S. Kuhlmann, (2007), Functions of Innovation Systems: A new approach for analyzing technological change, Technological Forecasting and Social Change,74 (4): 413-432. [72] Koch, M. And Möslein, K. (2005) Community Mirrors for Supporting Corporate Motivation [73] Smeulders, A. Professor and Expert adviser from IIP CREATE, Input received for the study [74] Sargsyan, G. OSI Presentation and Exhibition at ICT 2010 event in Brussels, Sept 27-30, 2011 [75] Meijer, G. and Sargsyan, G. Presentation at Future Internet event in April 2010 in Valencia [76] Salmelin, B. and Sargsyan, G. expert meeting with Chesbrough, H. and discussing the study at Hit Barcelona event June 16-17, 2010. Input received by H. Chesbrough for the study [77] Sargsyan, G. and Salmelin, B. expert meeting with Florida, R. and discussing the study at Hit Barcelona event June 16-17, 2010, input on creative class received [78] Sargsyan, G. expert meeting with Savage, S, Oklahoma Secretary of State , State of Oklahoma, USA at Creativity World Forum 2009 in Stuttgart, feedback received [79] Meijer, G. and Sargsyan, G. presentation and discussion in Future Internet Assembly, Dec 14-18, Ghent, Belgium

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[80] Niitamo, V. P., User Driven Open Innovation, presentation at PICNIC2010 event Sept 22-24, 2010 and expert in the panel for “IPR for creative talent” IIP CREATE event at PICNIC 2010, Sept 24 [81] Sargsyan, G. OSI Presentation and Exhibition at ICT 2010 event in Brussels, Sept 27-30, 2011 [82] Logica client meeting / European Commission with Salmelin, B. Meijer, G. and Sargsyan, G., presentation of OSI at Logica SPARK innovation centre, March 2010 [83] Meijer, G. and Sargsyan, G. OSI Study Findings at OISPG group meeting in March 10, 2010 [84] McGuirk, S. presentation at Intel Developer Forum (IDF) in San Francisco, Sept 12-14, 2010 [85] McGuirk, S. presentation at Innovation and Research Conference (ERIC) in Braunschweig, Germany, Sep 21-22, 2010 [86] Regular OSI workshops 2010-2011 Logica/Novay and OSI meetings with all the partners (Logica, Novay, IBM, Nokia, Intel and IVI)

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Annex. Measuring openness, services, innovation and impact of ICT General topics/areas for the impact of open innovation • • • • • • • • • •

Type of innovation Type of Collaboration Network building Knowledge creation and transfer Productivity increase R&D embedding Revenues and investment figures Growth/Change Industrial sector Co-production

Hansen: •

Phases of innovation: creation, development and diffusion

Van Buuren et al: • •

Networked perspective. In which innovation phases to companies collaborate and exchange knowledge. Phase 1:Idea an planning o Problem / opportunity o Origin of the idea o Solution direction o Role of ICT o Consortium o Rationale o Objective of R&D project / consortium o Partners o Business logic per partner o Partner relations o Management support by partners o Project financing Phase 2: exploration o Governance o Cooperation o Input o knowledge o resources o Responsibilities o Procedure/Method o Dynamic o Results o IPR Phase 3: Implementation o Impact by partners 173

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o o o o

Performance Continuity Innovation Cooperation

Gago& Rubalcaba •

Product and process innovation o Productivity and enterprise costs Cost savings, enhancement labour productivity, higher levels of employee motivation, increasing production capacity o Product or market expansion Increasing income revenue, more variety of services, presence in other regions, higher degree of internationalization o Employment and skills Acceleration of the employment generation process, capital/employment substitution, Higher use of skilled labour, higher use of non skilled labour o Service quality Flexibility in adjusting to customers’ needs, delivery speed, temporal availability, Service user friendliness, reliability o Environmental impact Fulfilment of ecological and sanitary standards and regulations Organizational innovation o Change in the number of employees o Expansion in the number of premises/establishments o Decentralization of tasks o Task specialization o Promotion of networking/strategic alliances o Higher levels of department autonomy o Outsourcing of routine tasks o Outsourcing of non-routine (advanced) tasks o Enterprise relocation o Relocation of certain activities

Poot • •

Reliance on external and internal information sources (ratio, evolution) External and internal collaboration (ratio, evolution) o Within holding o Competitors o Suppliers and customers o Consultancies, universities and research institutes Industry variables

Flores (BSC); (measures are omitted) • • • • • •

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Competiveness Sustainable development Innovation Strategic Knowledge Partnerships Human Capital Internal Business processes


SOCIO-ECONOMIC IMPACT OF OPEN SERVICE INNOVATION

Hempell (2004) (not fully/easily described in paper; productivity effects ICT) • • • • •

Firms output Labour input ICT capital investment; non ICT capital investment Share of ICT in total capital Share of ICT in value added

EU FLOSS (2006) • • • • • •

Capital investment (ICT) Knowledge creation Effective capital Human capital Labour (research, production) Final output

NESTA • • • • • • • • • •

The nature and drivers of innovation in the firm and sector. The nature of the firm’s partners for innovation and the nature of collaboration. Skills involvement in innovation and skills shortages. Knowledge sourcing mechanisms and idea generation. Innovation management and organisation. Teams and their role in the innovation process. Knowledge exploitation. Marketing and customisation. Process innovation. Barriers to innovation.

SSII: 1.

EIS 2.1.1 Business R&D expenditures (% of GDP)

2. EIS 2.1.3 Non-R&D innovation expenditures (% of turnover) 3. EIS 2.2.1 SMEs innovating in-house (% of SMEs) 4. EIS 2.2.2 Innovative SMEs collaborating with others (% of SMEs) 5. EIS 2.2.3 Firm renewal (SME entries plus exits) (% of SMEs) 6. EIS 3.1.1 SMEs introducing product or process innovations (% of SMEs) 7.

IS 3.1.2 SMES introducing marketing or organisational innovation (% of SMEs)

8. EIS 3.1.3 Resource efficiency innovators, unweighted average of: Share of innovators where innovation has significantly reduced labour costs (% of firms) and Share of innovators where innovation has significantly reduced the use of materials and energy (% of firms) 9. EIS 3.2.5 New-to-market sales (% of turnover) 10. EIS 3.2.6 New-to-firm sales (% of turnover) 11. EIS 3.2.2 Employment in knowledge-intensive services (% of workforce) 12. EIS 3.2.4 Knowledge-intensive services exports (% of total services exports) 175

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