Seija Kulkki - Human Habitat 2013

Making Together a Better
Society and World?
Dr. Seija Kulkki
Professor
Department of Management and International
Business
Aalto University School of Business

Human Habitat Seija Kulkki
Lisbon, March 4, 2013

Johannes Vermeer, Astronomer, 1668


Era Transformations?
• (1) ”New World” discoveries by Christopher Columbus
(1451-1506) and Vasco Da Gama (1460 –1524).
• (2)Jules Verne (1828-1905): ”I feel that the era of
humanism is over. It is being conquered by the era of
technology. I feel that literature, poetry, music and the
arts will lose their important status as means to give
meaning to life. Human beings may subordinate their
lives to technology. This will change the premises of life
fundamentally”.
• (3) In 1900s: Industrial era: industrial work, industrial
technologies and industrial efficiency


Our transformation era?
• Since 1990s, the globalization: global financial
markets and industry with global competition, volumes of
scale and cost and scale efficiency
• Question: How to take care of the competitiveness
of local economies, firms and nation states?
• What about the lack of work; the issue of growth and
job creation?
• There is the well-justified argument about:
• A1: The End of Work: The Decline of the Global
Labor Force and the Dawn of the Post-Market Era
(1995), Jeremy Rifkin


What is the transformation we are living in?
• A 2. Jeremy Rifkin (2011): The Third Industrial Revolution: How
Lateral Power Is Transforming Energy, the Economy, and the World
• The Internet has been a very powerful communication tool in the
last 20 years.
• Now we see the new convergence of ICT and energy
technologies.
• There is also a great transition to distributed renewable energy
sources.
• Interesting is the way how these technologies together may
scale up.
• We have grown up in the 20th century with centralized electricity
and communication that scale vertically.
• With the Internet, by contrast, as a distributed and collaborative
means of communication, we may scale laterally.


Rifkin on Third Industrial Revolution (2011)
• As the new industrial revolution is based on convergence of ICT and
energy technologies;
• We may ‘go away from’ the ‘elite’ energies—coal, oil, gas, tar sands—that
are only found in a few places and require significant military and
geopolitical investments and massive finance capital, and that have to
scale top down because they are so expensive.
• The ‘old’ energies are clearly sun-setting.
• We enter the long endgame of this paradigm of energy supply and
consumption.
• Distributed energies, by contrast, are found everywhere in the world:
the sun, the wind, the geothermal heat under the ground, biomass—
garbage, agricultural and forest waste—small hydro, ocean tides and
waves.
• However, the convergence of Internet with distributed forms of energy
has to be managed collaboratively while it scales laterally!


Carlota Perez (2002) argument:
• The technological revolutions are ‘products’ of the industrial, infrastructural and
capital market characteristics of the time.
• The technological revolutions are driving forces for major social, institutional
and economic changes and consequently frame the life of human beings.
• The globalization is seen as mass production and mass consumption carried on
by ICT.
• The ICT has turned to shape not only an industrial infrastructure but also the
human, social, cultural, institutional and economic (infra)structures of life
globally.
• The Jules Verne argument that the life and human beings are subordinated to
technology!
• A 3: However, the role and nature of technology is changing: ICT, energy,
bio, medicine, etc; are not only for products, or industrial and business-to-
business use– they are today widely embedded in human, social and
institutional life:
• Should we better understand the new nature of ’infrastructural’,
’institutional’, or social technologies for everyday life, work, managing,
housing…; i.e.technologies of life.


A.4: The rise of civil society is a major force of
economic, social and political renewal?
• (1) Power of people and social networks (Benkler, The Wealth of
Networks - How Social Production Transforms Markets and Freedom,
Yochai Benkler, 2006; OECD, 2007, 2008)
• (2) Global Civil Society: An Overview by Lester M. Salamon, S.
Wojciech Sokolowski, and Regina List, : Johns Hopkins Center for Civil
Society Studies, Baltimore, Maryland, USA (2003).
• From the Global Civil Society: Dimensions of the Nonprofit Sector, covers
the civil society sector in each of the thirty-five countries in greater depth.
December 2003.
• Also EU, OECD studies on
– Power of people and social networks
– Role of modern information and communication technologies as an
enabler, social media and Future Internet
– Open, transparent and participative society development


New dynamic and powerful role of the civil
society?
• ‘Global Civil Society’ study (Salamon et al), introduces
the worldwide civil society sector, that gray area
between the market and the state that combines
cultural centers, healthcare providers, universities,
environmental groups, human rights organizations,
soccer clubs, soup kitchens, and much more.
• The civil sector seems to serve contradictory aims: the
desire of participants to act independently in order to
make better their own lives, and to improve the greater
community;
• To solve together shared problems is often the only
way to improve individual’s life situations.

Lisbon, March 2013

Global Civil Society: An Overview
Salamon; et. al (2003):
• A civil-sector organization is an entity that is private, not-for-profit in orientation, self-
governing, and voluntary in nature (employees of civil-sector organizations may be
paid, of course, but participation or membership must not be mandatory).
• The civil society efforts are to be found in developing, developed, and transitional
countries.
• The worldwide civil sector amounts to a $1.3 trillion industry that employs
nearly 40 million people; if it were a country, it would have the seventh-largest
GDP in the world.
• There are different arrangements of how civil-sector organizations are funded, how
extensively they rely on professional staffs as opposed to volunteers, and how NGOs
in a given region are split between those that provide services and those that
perform purely expressive functions.
• The civil sector organizations belong to a variety of sociopolitical clusters, regional
groupings, and developmental levels, and thereby illustrates how much civil society
organizations differ even as they pursue the common goal of getting more people
involved in their communities.


A5: Europe on Global Innovation Map?
• Innovation emergency: Europe in general is lacking in
R&D (2% of GDP) in comparison to the US (2,8% of
GDP) and Japan (3,4%). China will invest 2,5% of GDP
(Innovation Mission 2020 of China)
• US: corporate driven RDI and scientific excellence
• China: RDI for transfer from sustained growth to
sustainable growth; science and technology driven
• Europe Horizon 2020: In addition to (1) science and
technology and (2) corporate driven RDI, EU is aiming at
(3) solving major societal challenges of our time.
• How do we organize ourselves for solving societal
challenges?
Human Habitat Seija kulkki

Horizon 2020
EU H2020 is a flagship initiative and financial instrument for
implementing European Innovation Union for Europe’s global
competitiveness.
The proposed H2020 budget was €80bn for years 2014-
2020. Now it is under spending cuts and discussed in
European Parliament.
Three pillars:
(1) Excellence in science and technology (€25bn) for
becoming a world-class science performer by 2020.
(2) Globally competitive corporate RDI (€18bn) for
bringing new innovations quickly to marketplace.
(3) Solving societal challenges (€32bn) that concern
citizens in Europe and globally.

Human Habitat, Seija Kulkki
Lisbpn, March 4, 2013

Societal Challenges are such as:
Wellbeing, demographic change and health,
Food security, sustainable agriculture,
Marine and marinetime research,
Bio-economy and new sources of energy,
Secure, clean and efficient energy,
Smart, green and integrated transprortation,
Smart and green cities
Inclusive and secure societies,
Climate change, and climate action,
Resource efficiency and new raw materials.
A 6: Does this offer means for transforming the underlying social
and economic dynamism in Europe? Including the reform of
public services?

A6: Values of Transformative Innovation?:
• Should we discuss underlying values and principles that we apply
when solving societal challenges through RDI (research,
development and innovation); for renewal of our social and
economic foundations?
• Should we discuss human-centricity and creative collaboration
of firms, cities, regions and public agencies that engage citizens
and people, for designing a better societies and world?
• Open and participative design?
– Not only pragmatic forms of public-private partnerships but also
principles of engaing people and applying participative, all-
inclusive methodologies for open society development?
– Living Laboratories as means and methodology for
participative RDI in open innovation ecosystems
• Should we even discuss new firm-society collaboration for
shared value creation and better societies?


”Participative Societal Design” for Better
Societies, Economies and the Future?
• What are our values and principles of urban, rural, and
regional and national social and economic development; role
of new technology, service and business development?
• How do we discuss and co-create shared values?
• How do we perceive and challenge the underlying usage,
efficiency, productivity and scalability assumptions when
creating new markets and industries?
• Values of participative society, open society, and wider
responsibilities with individual and collective entrepreneurial
spirit?
• Wider impact of social and economic dynamism; what is the
good society for the future?


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

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

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

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

European Design Seija Kulkki
Innovation Summit
September 18, 2012

A. 7: Shared Value Creation through
Collaborative Open RDI?
R&D for innovation (RDI) is not only about technologies or
products but also about business models (Chesbrough,
2003), service designs and systems and even wider social
or systemic ecosystem-based renewal and change (EC,
Open Innovation, 2013, forthcoming, DG:
Communications, Networks, Contents and Technology ).

Open and inclusive innovation, ”democratizing” of
innovation: co-creation with people: involving or engaging
demand-side, markets, customers; i.e people
(Democratizing the Innovation, von Hippel 2005)

Lisbon; March 4, 2013

A.8: Shared Value Creation has an impact on
strategy, structure and processes of RDI?
• Von Hippel (2010): Consumer Innovations:
Traditional division of labor between innovators and
customers is breaking down; about 70% of innovations
comes from markets and customers.
(A survey with 1200 interviewees )

• However, how does the shared value creation
through open collaboration transform the
strategy, structure and processes of RDI?
• How to make this happen?


ENoLL Values

Trust and
transparency

Openness,
Human-
enabling
centricity
networking

Co-creation Bottom-up,
and enriching
collaboration communication
12/09/2012

What kind of problems do we solve through
open R&D for innovation (RDI)?
Product or Service
Business Model
Innovations Innovations
User experience-based Economic and social
RDI for better usability validation with users,
social networks and
user communities for
scalability of production,
marketing and delivery
around ”usage”
”Ecosystem”
Innovations
Wider human-centric ”systemic
Innovations”, new market or
usage creation, even industry
creation, solving major
societal challenges of our time


Human-centered design
• May be about usability and user experience, human-
computer interaction, augmented cognition, engineering
psychology, cognitive ergonomics etc.
• New technologies (basic research!) that make a difference:
– the forever health monitor, where smart phone can monitor vital
signs in real-time and thereby allerting you to the first signs of
trouble (medicine)
– A computer chip that ’thinks’ like brain, where neural computers will
excel at all tasks that regular machines struggle with (computing)
– A wallet inside a person’s skin; you just wave your hand to charge
it, meaning that no cell-phone payment systems are needed any
more,
– Nano-sized germ killers against superbugs (medicine)
– Crops that don’t need replanting and can stabilize soil and increase
yields (agriculture), etc.
Scientific American (December 2011)

User-experience-based product, service
and business development….
– (1) Idea collection and generation

– (2) Opportunity Assessment

– (3) Concept Creation

– (4) Product and Services Development

– (5) Implementation (for value creation)

• Create, capture, evaluate, innovate!


Economic and social validation of new
business and service models!
• Crowdsourcing with potential users in order to learn to know about
customer needs and solutions around mobility in a way that the
service offering can be scaled up.
• Crowdsourcing is the practice of obtaining needed services, ideas,
or content by soliciting contributions from a large group of people,
and especially from an online community, rather than from
traditional employees or suppliers.
• Often used to subdivide tedious work or to fund-raise startup
companies and charities, this process can occur both online and
offline.[1]
• The general concept is to combine the efforts of crowds of
volunteers or part-time workers, where each one could contribute a
small portion, which adds into a relatively large or significant result.
Crowdsourcing is different from an ordinary outsourcing since it is
a task or problem that is outsourced to an undefined public rather
than to a specific, named group.


Value Creation and Business Models

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

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

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

• (4) Understanding the Sources of Scalability through Pre-Market
Experimentation and Piloting
– experimentative RDI with users for behavioral changes and functionalities
and for changes in market dynamism; new demand and market creation

• (5) Experimentation for Implementation for Value Creation


Transformative innovation for solving
societal challenges?
• Dialogue for shared value creation in collaboration may evolve
around inquiry such as:
• What are the new production, delivery and consumptions patterns
for sustainable development?
• How do we design cities for green growth?
• How do we design welfare systems that are efficient not only as
service production systems, but also from the viewpoint of
’customers’ or, rather, human beings?
• How do we improve traffic and transportation systems to become
environmentally sustainable, intelligent and user-friendly?
• How do we develop distributed co-production systems of energy?
• How do we change energy consumption behaviour of people?


Process for solving societal challenges?
• (1) Mission, vision and strategy creation with a wide collection of
ideas about future issues and scenarios, including experimentation and
piloting around a set of potential hypotheses and pre-concepts for
solution,
• (2) Experimentation around selected sets of hypotheses and
properties of pre-concepts as service or business models, or
specifications for architectural or ecosystem designs.
• This includes economic and social validation of new concepts with
firms, public agencies, and people; this is a wide, interactive dialogue
with future ‘markets’ of emerging innovations. This broadens the
understanding about the sources of the economic, social and
environmental sustainability of value propositions.
• (3) We may commit partners, developer communities and people to the
co-creation of features of usage and sources of economic and
social scalability. This pre-market prototyping, experimentation and
piloting is designed to capture the new market dynamism and customer
behavior and the personalized and generic functionalities of future
usages, amongst other things.


Process for solving societal challenges?

• (4) Wide-scale experimentation and piloting that
brings about understanding of how to implement
new solutions: how to produce and to deliver.
• (5) We may even experiment for new forms of
entrepreneurial activities – and firms!
• We argue that there is an opportunity to create
foundational elements of new value creation ‘formula’ for
firms – non-profit or profit based – to emerge.
• All the steps involve – in different ways and
combinations – own people, customers, collaborative
firms, experts and others.


Open Innovation Ecosystems for Shared
Value Creation
• Open ecosystems for research and innovation
incorporate all the relevant players in ”a nutshell”.

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

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

European Design Seija Kulkki
Innovation Summit
September 18, 2012

A. 9: Nature of Transformative Challenge?
• (1) Transformation from ”industrial logic” to ”services logic” or
even to shared value creation/ecosystem logic: issue of
productivity, efficiency and scalability?
– The role of users in developing new sources of and mechanism for productivity, scalability and value
creation
• (2) Transformation from vertical approach to a more horizontal
approach?
– The demand and market dynamism may determine the collaborative structure for value creation?
– A rich collection of user cases, user communities, social webs and networks may be needed.
• (3) The opportunity to learn from users about the
functionalities of service business models and service
systems
– What are the functionalities and how to design an internationally competitive value constellation that brings
about personalization, safety, security and interoperability, etc.
• (4) Critical role of social and economic activities and services
and businesses where we act in RDI for tackling even wider
societal challenges such as Green Growth, Wellbeing,
Environment and Energy Efficiency, eDemocracy
– The demand-driven and human-centric as well as user driven
RDI may include private and public services, and people and
social networks!


A 10: Nature of Leadership Challenge!
• Distributed leadership where wisdom is embedded in every
individual and collective practice and action (Nonaka and Takeuchi,
2011).
• Competence of grasping the essence of a problem and knowing
how to draw conclusions from random observations and acting on
them immediately.
• ’Hands-on’ leadership in touch with the reality.
• This implies that we consciously act based on aesthetic and ethical
values such as goodness, beauty and truth;
• They are applied, tested and recreated with other people in every
action.
• Nonaka, Ikujiro and Takeuchi, Hirotaka (2011): The Wise Leader: How CEOs can learn practical
wisdom to help them do what is right for their companies - and society. HBR, May 2011

European Design Seija kulkki
Innovation Challenge
September 18, 2012

Assumptions about our challenges of
globalized world:
• A1: The end ’traditional’ industrial work! How to create
new jobs? What kind of jobs and where?
• A2: Ongoing ’New Industrial Revolution’ based on
convergence of technologies and horizontalization of
market and industry structures. How to create new firms
and industries and/or renew the structures of our industries?
• A3: The nature and role of technology is changing: from
industrial technology towards the technology of life.
• A4: The rise of civil sector to become the ’third major
player’ along the private and public sertors? Democratization
of Innovation?


Assumptions:
• A.5: We should understand our unique position in
global innovation competition: We could be for
human-centric open societies capable of solving
societal challenges and transforming of our social and
economic foundation?
• A6: However, we should learn to organize ourselves
around value-based social and economic
transformation!
• A.7: How do we organize ourselves for firm-society
collaboration?
• A.8: What would be the process for value-based social
and economic transformation through solving major
societal challenges?


Assumptions:
• A.9: What is the very nature of
our economic transformative
challenge?
• A.10: What is the leadership
challenge?


Cases to discuss:
• Industrial and/or regional renewal-driven RDI-
collaboration in ecosystems that are concsciously
in place for solving contemporary wicked problems
(local, European, global) such as:
• Renewal of the socio-economic structure of a city for growth and
wellbeing (Aqueda City North from Lisbon, Portugal)
• SAVE ENERGY for improving energy efficiency through changing
consumption patterns of energy usage in cities (public buildings in
Helsinki, Lisbon, Manchester, Leiden, Luleå)
• Opening the Public Data for New Social and Economic Activities to
Emerge (Helsinki)
• Creating housing areas that activate citizens for new economic
activities and Life Management (Arabianranta in Helsinki)


More cases:

• Creating and reforming an industry (building up the car
industry in Portugal, close to Lisbon)
• Reforming the fishery-industry in Spain (EU: IP:
Collaboration@Rural)
• Creating new ”AgroMarket” based on on-line real-time
auction principle in Hungary with 3000 farmers, ICT-
firms, academia and public agencies
(Collaboration@Rural)
• New forms of Social Banking, granting loans for
businesses and other investments that do incorporate
not only economic but also social value creation


Corporate cases:

• A global glass company (AGC) wanted to rethink its
technology base and the role in marketplace?
– What is the glass for? What can it be made of? How do we
make this happen?
– Includes wide use of specialists!
– Includes wide social validation!
• IBM wanted to redirect its service offering for the future
in order to participate in solving global problems
– IBM Jazz Jam: for wide dialogues with customers, experts and
own personel
– Results into strategic initiatives around Wellbeing, Socio-
Economic Development, Smart City and Smart Planet (Global
Outlook)

Human Habitat Seija kulkki

Corporate cases:

• SAP develops in South Africa and in other emerging
markets ICT- and wireless service infrastructures - even
user-centric service architectures - for small businesses
and start-ups
• Cisco has a specific concept for developing information
and communication infrasrtuctures for cities (technology
as an enabler for reforming future cities)
• Etc.


Sources:
• Kulkki Seija (2011): Europe on Global Innovation Map: Human-centric RDI
for solving major societal challenges of our time, Public Service Review:
European Science & Technology: issue 13
• Kulkki, Seija (2012): Human-centric RDI: A post-industrial paradigm for
solving major societal challenges, Public Service Review: European
Science & Technology: issue 15
• Kulkki Seija (2012): Getting Competitive, Pan European Networks: Science
and Technology, 02; www.paneuropeannetworks.com
• Kulkki, Seija (2012): Towards a European socioeconomic model: Firm-
society collaboration for shared value creation, Public Service Review:
Europe: issue 24
• Kulkki Seija (2013, March, forthcoming): Collaborative innovation
ecosystems for solving societal challenges in Open Innovation 2013, EC
DG: Communications, Networks, Contents and Technology


Thank you!

• Dr. Seija Kulkki
• Professor
• Department of Management and International Business
• Aalto University School of Business


Seija Kulkki - Human Habitat 2013

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Seija Kulkki - Human Habitat 2013