Seija Kulkki - Human Habitat 2013

Making Together a Better Society and World?Dr. Seija KulkkiProfessorDepartment of Management and International BusinessAalto University School of Business

Seija KulkkiLisbon, March 4, 2013Human Habitat

Human HabitatLisbon, March 4, 2013

Seija Kulkki

Johannes Vermeer, Astronomer, 1668

http://www.vermeer-foundation.org/The-Astronomer-c.-1668-large.html

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


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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


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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.


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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!


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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.


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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


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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.

Human HabitatLisbon, March 2013

Seija Kulkki


Global Civil Society: An OverviewSalamon; 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.


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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?


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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,

Lisbpn, March 4, 2013Seija Kulkki

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?


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”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?


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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 Innovation SummitSeptember 18, 2012

Seija Kulkki


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)

Human Habitat Lisbon; March 4, 2013

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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?


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Trust and transparency

Human-centricity

Bottom-up, enriching

communication

Co-creation and

collaboration

Openness, enabling

networking

ENoLL Values

12/09/2012

What kind of problems do we solve through open R&D for innovation (RDI)?

Product or Service

InnovationsUser experience-based

RDI for better usability

Business ModelInnovationsEconomic and social validation with users, social networks and user communities for scalability of production, marketing and delivery around ”usage” ”Ecosystem”

InnovationsWider human-centric ”systemicInnovations”, new market orusage creation, even industry creation, solving majorsocietal challenges of our time


Seija Kulkki

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!


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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.


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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


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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?


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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.


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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.


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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 Innovation SummitSeptember 18, 2012

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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!


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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 Innovation ChallengeSeptember 18, 2012

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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?


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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?


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Assumptions:

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

• A.10: What is the leadership challenge?


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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)


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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


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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)


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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.


Seija Kulkki


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


Seija Kulkki

http://www.paneuropeannetworks.com/


Thank you!

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


Seija Kulkki
