ICT-enabled user-driven service innovation · 2009-01-29 · When "good enough" is better than “very good”: addressing situational, emergent and under-served needs i.e. the needs

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ICT-enabled user-driven service innovation

HELSINKI UNIVERSITY OF TECHNOLOGY (TKK) Department of Computer Science and Engineering (CSE) Software Business and Engineering Institute (SoberIT)

29.1.2009

Matti Hämäläinen Laboratory of Software Business and Engineering (SoberIT)

Department of Computer Science and Engineering Helsinki University of Technology

T-86.5750 Seminar on New Business in Digital Economy

Outline   Service Innovation - What is it?

  Case: Innovation in business models - rigid & closed vs. agile & open

  A “Big Transition”: From Push to Pull in service creation and delivery   Case: “old” telco & broadcasting mindset vs. “new” Internet/Web 2.0 mindset   Closed World –> Open World

  The Rise of the User: Service Innovation is “co-creative”   Consumers/citizens are becoming active co-producers of services   Media segment is already user driven

  Enabling User Driven Innovation   Roles of Users in the Process   Users creating services for emergent needs

  Some Approaches and Technologies to Enable the Transition   From “Ownership” to Service Composition and to Federation of Business Services   Open Source approach as enabler for new services

  When "good enough" is better than “very good”:   addressing situational, emergent and under-served needs and opportunities “in the shadows”

  Putting pieces together   If global and pervasive connectivity is the enabling “nervous system”

- service orientation can be the driver of the game change

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What is Innovation

About new business models

From Push to Pull in service creation and delivery

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What is Innovation – a classical definition

Several different forms of innovation (Schumpeter 1934, p. 66): •  the introduction of a new good or a new quality of a good •  the introduction of a new method of production •  the opening of a new market •  the conquest of a new source of supply of raw material or intermediate input •  the establishment of a new organization

According to Schumpeter, innovations can manifest themselves both as radical discontinuities and as new combinations of existing things.

Schumpeter raised entrepreneurs to a central position as innovative agents. He laid the grounds for the insight that everyday business activities are an important arena for the emergence of innovations.

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What is Innovation – a classical definition

Several different forms of innovation (Schumpeter 1934, p. 66): •  the introduction of a new good or a new quality of a good •  the introduction of a new method of production •  the opening of a new market •  the conquest of a new source of supply of raw material or intermediate input •  the establishment of a new organization

According to Schumpeter, innovations can manifest themselves both as radical discontinuities and as new combinations of existing things.

Schumpeter raised entrepreneurs to a central position as innovative agents. He laid the grounds for the insight that everyday business activities are an important arena for the emergence of innovations.

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Comparison of business models: old vs. new in information search and delivery

Source: Markku Tinnilä,Helsinki School of Economics, What will the future hold for multi-channel services and business models? T-86.5300 ICTEC lecture, Helsinki University of Technology, Spring, 2008

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Innovation in business models: rigid and complex vs. agile & on-demand solutions

Source: Timo Teimonen, Open Innovation as a Global Investment Opportunity, in Acceleration of Open Source Software Deployment in China, Beijing, April 2008

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From Push to Pull in service creation and delivery: “old” telco & broadcasting mindset vs. “new” Internet/Web 2.0 mindset

Source:John Hagel III & John Seely Brown, “Push to Pull- Emerging Models for Mobilizing Resources”, Working Paper, October 2005

In the pull model “everybody” could become a content and service provider – even an operator … (“everybody” referring to individuals, communities, companies).

This will enable dramatic scalability in the creation of useful and relevant services based on everyday and situational needs.

“In the emerging open service economy we need “pull approaches” that are user driven, flexibly accommodate diverse providers and consumers of resources, are open-ended and evolve based on the learning and changing needs of the participants.” -> The question: How to complement – not to replace - the closed, rigid and centrally controlled approaches by open, flexible, networked and distributed models?

Closed Open

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Mobile Services: Moving beyond operator centric model in service creation

Traditional – Operator Centric Model

Future – Ecosystem for User Driven Creation

Service Production

“Rigid, expensive arrangements” “Everybody can become a service/content producer by using service-components produced by others”

Service Delivery

“Controlled by mobile operators” “Everybody can become a mobile service provider”

Service Consumption

“Use what you get” “Customize or compose your own services”

Business Models

”Controlled by dominating partners” “Markets for services. Competition establishes fair prices”

Enabling Software

”Every service provider does everything from scratch”

“Free access to core tools and components which can be used to implement mobile services”

This model is based on ”vision” of an environment that would enable the creation of new types of services and applications for the mobile user in a simple and inexpensive manner – developed by Shosta Sulonen, Matti Hämäläinen, Juha Laine and their colleagues at Helsinki University of Technology/SoberIT and Christer Carlsson & colleagues at Åbo Akademi/IAMSR in 2004.

Push / Closed

Pull / Open

From Push to Pull in Service Creation and

Delivery Complement the closed, rigid and

centrally controlled approaches by open, flexible, networked and

distributed models!

User Driven Service Innovation: Serving specific situational and local needs

Companies, Public services/ authorities

SERIOUS mode - Enterprise IT

Consumers, Citizens, Workers

”Web 2.0” & social computing LEISURE mode – lightweight citizen IT

Pulling things together for enabling 2-way scalability …

Dual Model: Complementing public & corporate

services by user created services

Adding value by people to people

Interfacing the public & private

How to match these two worlds?

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Open and User Driven Service Innovation:

Service Innovation is “co-creative”

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The Enabling Infrastructure: Global “Nervous System” as enabling Infrastructure for Open Systems in an Open World

Source: Bror Salmelin, Advisor to the Director, EC, 2008

Because of technology, billions of people can now interact, information service offerings are common (e.g., WoW) and there are a lot more people who are customers of new types of Service Offerings.

Pervasive Network – More than 1 Billion People online – By 2011 – 2 Billion

Convergence progressing – Networks, Media, Content – Broadband & Multimedia

Interactive Capabilities increasing exponentially – Web 2.0 – Social Networking – Virtual Worlds Source: Jim Spohrer, IBM Almaden Research Center, “State-of-the-Art” for

Service Science,Service Factory Workshop at the Helsinki University of Technology, May, 2008,

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Closed World –> Open World

Source: Dr. Richard Straub, Chair of the Open Innovation Strategy & Policy Group, Advisor IBM EMEA, “Open Services Innovation Collaboration and Integration across Boundaries”, Service Factory Workshop at the Helsinki University of Technology, May, 2008

Closed vs. Open Philosophy/Concept/Attitudes/Values

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The Rise of the User: Service Innovation is “co-creative”

Source: Dr. Richard Straub, Chair of the Open Innovation Strategy & Policy Group, Advisor IBM EMEA, “Open Services Innovation Collaboration and Integration across Boundaries”, Service Factory Workshop at the Helsinki University of Technology, May, 2008

What the Provider believes vs. What the User needs

Only 25 % of all Innovations are successful!

-> Technology provides New Opportunities for User Involvement

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Enabling User Driven Innovation: Roles of Users in the Process

Source of data: Jo Pierson, IBBT-SMIT, Vrije Universiteit Brussels Users as co-creators of innovation, Annual CKIR Workshop ‘Open Innovation and Renewal’, Helsinki, August 2007

The “1 – 9 – 90 Rule”:

Examples: use of SMS, MP3, etc

By empowering and supporting the groups of “everyday innovators”, new social practices, and new business models, we may see new successful services emerging.

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Towards user driven services: consumers/citizens becoming active co-producers of services

•  Involving users in services co-creation has become very popular.

•  Social computing and Web 2.0 has brought new services on the web, based on content publishing, sharing and content based interaction – however, so far primarily for leisure applications.

•  Changes to mass user behavior that can challenge traditional business models “controlled” by established industry players (eg. VoIP, P2P downloads, social networking).

The ability for users to be involved in creating useful services for their specific and local needs – at a very low cost – is crucial for developing scalable solutions to address emergent and underserved needs.

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Media segment is already user driven

Source: Wikinomics, The User Revolution – Setting the Stage Don Tapscott, FASTforward 08, February 18, 2008

Example of Users Creating Services for Emergent Needs

  Habbo Hotel (by Sulake), is an online game environment and a of global teen brand built upon an online community.

  Business model based on selling virtual items (virtual furniture, game enhancements, tickets, features etc) and on advertising (in-game & banners)

•  Intentionally ”plain” environment provides basis for users to interact and create. Lacks high end graphics but allows/calls for stimulating interaction.

•  Much content and many ”service concepts” are created by the users.

•  Many of these represent completely unanticipated solutions that could not have been envisioned by the service provider (Ugliest Habbo contest, horse race, ...)

-> How to implement this in “serious” needs based and situational services (e.g. health, SMEs, …)?

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Some Approaches and Technologies to Enable the Transition

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From “Ownership” to Service Composition and to Federation of Business Services

Source: Dr. Richard Straub, Chair of the Open Innovation Strategy & Policy Group, Advisor IBM EMEA, “Open Services Innovation Collaboration and Integration across Boundaries”, Service Factory Workshop at the Helsinki University of Technology, May, 2008

Service Oriented Computing – services composed from the network (aka mashup)

Source: Kari Hiekkanen T-86.5300 ICTEC lecture, Helsinki University of Technology, spring 2007

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The New Internet Companies … Empowering the User ?

Source: Bror Salmelin, Advisor to the Director, EC, 2008

Consider how you could make use of such services, software, (open) standards and the business models they have adopted in developing user and community driven service innovation, including development and delivery.

Open Source approach as enabler for new services

1. Open Source 2. Open Content 3. Open Standards 4. Open Innovation 5. Open Access 6. Open Collaboration 7. Open Technologies 8. Open Hardware 9. Open Services 10.Open XYZ

Source: Mikko Puhakka, SoberIT, Helsinki University of Technology & COSS

Open Source Software (OSS) will be one of the main “game-changers” in software driven industries and related innovations. This is an opportunity for joint China-Europe development: •  Europe and Finland in particular has cultural heritage and track record in developing open source platforms. The OSS past and “LAMP stack” are looking very Nordic: •  LINUX - from Finland, MySQL - from Finland/Sweden, PHP - from Denmark (also Internet Relay Chat, IRC – from Finland).

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Some Elements to Enable the Transition

Service architectures and tools helping to: •  find, connect, use & compensate for use of services/elements •  customize and adapt existing service instances for locally relevant and novel uses •  compose own services from pre-defined service elements and •  ”mis-use” existing services for unanticipated needs

Very “lightweight” approaches for service set-up, contracting and new business models: •  minimize effort to launch a service (e.g. SaaS) and establish contracts •  enable new business models and incentives (e.g. financial vs. emotional rewards, tokens, …) •  mechanism for trust - and propagation of trust among network of partners

Source: Kari Hiekkanen T-86.5300 ICTEC lecture, Helsinki University of Technology, spring 2007 Source: IBM

When "good enough” is better than “very good”

Towards a new “world order” in service innovation and delivery

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When "good enough" is better than “very good”: addressing situational, emergent and under-served needs i.e. the needs and opportunities “in the shadows”

  Aim at not providing a complete (complex, expensive, long-to-be-waited) solution: serving 80 % of needs is good enough - sometimes even 10 % when otherwise totally under-served.

  ”Long Tail”: originally discussed in media industry but appears to be highly relevant for services (e.g. mobile apps, SaaS based SME serving solutions, …).

  Service innovation moves into the emerging markets – and back!

Adapted from Anderson 2006 by Kivi.

We need to scale down first to scale up

”Barrier of visibility” – Barrier for Innovation:

The true needs are not visible – but remain ”in the shadows” - when decisions are made based on established views on market segments, on short term profitability and immediate payback expectations (to create new and yet unknown services ”greed is not a great business model …”).

In particular this applies to services that are not even identified by the users due to lack of experience from useful services.

X

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We need to scale down first to scale up

Plant the “seeds” for services in areas where needs exist … to enable new services to grow

Putting pieces together:

If global and pervasive connectivity is the enabling “nervous system”

- service orientation can be the driver of the game change

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If global and pervasive connectivity is the enabling “nervous system” - service orientation can be the driver of the game change

Pervasive Networks: enabling to be connected globally

– and locally More than 1 Billion People online and 3,5 billion

via mobile

Enablers: lowering the threshold of becoming a

service provider/consumer

SaaS - Software-as-a-Service Cloud computing - Infra-as-a-Service

Open Source Service Oriented Computing & SOA

Interactive Capabilities: increasing participation and

empowerment

Web 2.0 and Social Networking

Source: Jim Spohrer, IBM Almaden Research Center, “State-of-the-Art” for Service Science,Service Factory Workshop at the Helsinki University of Technology, May, 2008,

Billions of people can interact Information service offerings are common A lot more people (and entities) are customers of new types of Service Offerings - but also potential providers of services

People are becoming active in service co-creation

Pervasive Networks: enabling to be connected globally

– and locally More than 1 Billion People online and 3,5 billion

via mobile

Enablers: lowering the threshold of becoming a

service provider/consumer

SaaS - Software-as-a-Service Cloud computing - Infra-as-a-Service

Open Source Service Oriented Computing & SOA

Interactive Capabilities: increasing participation and

empowerment

Web 2.0 and Social Networking

Source: Jim Spohrer, IBM Almaden Research Center, “State-of-the-Art” for Service Science,Service Factory Workshop at the Helsinki University of Technology, May, 2008,

The ability for users to be involved in creating useful services – not just for leisure – but for specific and local needs and at a very low cost, can lead to scalable solutions for addressing emergent and underserved needs. In all areas: enterprise, public sector, media, …

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Service Oriented Enablers: lowering the threshold of becoming a service provider/consumer enabling creation of “service ecosystems”

Pervasive Networks: enabling to be connected globally

– and locally More than 1 Billion People online and 3,5 billion

via mobile

Enablers: lowering the threshold of becoming a

service provider/consumer

SaaS - Software-as-a-Service Cloud computing - Infra-as-a-Service

Open Source Service Oriented Computing & SOA

Interactive Capabilities: increasing participation and

empowerment

Web 2.0 and Social Networking

Source: Jim Spohrer, IBM Almaden Research Center, “State-of-the-Art” for Service Science,Service Factory Workshop at the Helsinki University of Technology, May, 2008,

New “World Order”: reverse globalization innovation moves to new and emerging markets – and results will be reflected back

Pervasive Networks: enabling to be connected globally

– and locally More than 1 Billion People online and 3,5 billion

via mobile

Enablers: lowering the threshold of becoming a

service provider/consumer

SaaS - Software-as-a-Service Cloud computing - Infra-as-a-Service

Open Source Service Oriented Computing & SOA

Interactive Capabilities: increasing participation and

empowerment

Web 2.0 and Social Networking Source: Deependra Moitra

Not just potential big markets but also: •  urgency of needs based solutions •  “clean slate” – no extra baggage/inertia •  potential for industry disruption via inclusion

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Example from Mobile Services: Since the Early Days We Have Come a Long Way …�

Source: John Williamson, WolffOlins (2003) and Jarkko Vesa (2005) Source: Cel’Amanzi MNCH

From the enterprise world to consumer and citizen world - and back …

Thank You!

Prof. Matti Hämäläinen Helsinki University of Technology (TKK) Department of Computer Science and Engineering (CSE) Laboratory of Software Business and Engineering (SoberIT)