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Transformative governance of innovation ecosystems

The CEO of IFI, Totti Könnölä publishes with Aalto University professors in a leading research journal ‘Technological Forecasting and Social Change’ a paper on transformative governance of innovation ecosystems.

New lens for policy and management

The framework of transformative governance developed in the paper, offers a powerful new lens for policy and management contexts which are characterised by complexity and uncertainty, both within vertical policies (e.g. research, energy, mobility or health) as much as within more horizontal policies (e.g. entrepreneurship or innovation).

Apart from designing of specific policy measures, the framework can be harnessed for shaping the general conditions of transformative innovation policy and associated governance structures, for instance by overcoming bottlenecks related to both innovation and entrepreneurial ecosystems. Furthermore, it can be used for assessing and designing policy mixes to support the development of innovation ecosystems into desired directions. In fact, we look for new collaborations to apply this framework in policy/management analysis and the design of new measures.

Transformative innovation policy

The paper addresses transformative innovation policy, which has recently emerged at the intersection of innovation and socio-technical transition research. It has provided valuable heuristics to guide policy; but it has also led to the recognition of major challenges in the management of uncertainty and complexity.

Traditional policy responses to control markets have become a source of inertia and a point of vulnerability addressing challenges associated with digital platforms, financial crises and the covid-19 pandemic as well.

In this paper, we address these challenges by linking transformative innovation policy with research perspectives from (i) complex adaptive systems, (ii) ecosystems, and (iii) adaptive and participatory governance. Specifically, we develop a conceptual framework for transformative governance.

Transformative governance

Ecosystems tend to evolve towards excessive concentration of power and techno-institutional lock-ins, on the one hand, or the dissolution of the ecosystem to fragmented and chaotic markets, on the other. To address this challenge, we develop transformative governance.

Transformative governance seeks to improve the adaptiveness and resilience of the ecosystem and orchestrates socio-technical transformation based on the balanced presence of diversity, connectivity, polycentricity, redundancy and directionality.

In effect, the framework help design and assess policy measures which exhibit the desired five features in the three succession stages, thereby fostering more balanced ecosystem development.

Case study on emerging mobility ecosystem

We present an illustrative example by applying the framework to a Finnish policy reform in which the lack of balanced attention to the ecosystem features catalysed major shortcomings in an emerging innovation mobility ecosystem. Finally, we explore the implications for the design of individual policies and policy mixes that arise from the recognition of the complexity and the holistic policy impacts on the ecosystem and society at large.

The paper results from the international Platform Value Now project, funded by Finland’s Strategic Research Council focusing on understanding the fast-emerging platform ecosystems, their value creation dynamics and requirements of the supportive institutional environment.

This paper is available here to download free of charge. For more information contact Totti Könnölä.

Könnölä et al. Transformative governance of innovation ecosystems

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Towards smart circular economy; the role of digitalisation

The Digital Development and Society Forum of the Spain Digital Foundation supported by the Insight Foresight Institute (IFI) has prepared a dossier in Spanish entitled “Towards the Intelligent Circular Economy; the role of digitization” tries to contribute ideas proposing to take advantage of the potential of digitization to change the model of the current linear economy towards the new system of Circular Economy.

As indicated in the document, its objective is to explain the connection between digitization and the Circular Economy as well as to suggest actions that can accelerate the implementation of this new economic model. The series of specific objectives can be summarized:

Define the role of digitization on the road to the Circular Economy
Identify digital application areas to promote the Circular Economy
Suggest actions to digitize the economy towards circular models.

The dossier specifies some of the challenges to be faced in the search for this particular type of economy and identifies a series of barriers that must be taken into account, classified into three main groups:

Organizational and cultural (eg lack of talent or rejection of open innovation)
Legal and tax (eg confidentiality protection, tariff logic)
Technological (eg interoperability difficulties)

As an example of the capabilities of digitization to accelerate the transition to a Circular Economy, the main axes included in the Spanish Circular Economy Strategy are detailed; Spain Circular 2030 presenting three hypothetical cases applicable to some of them, specifically in the productive sectors of transport (urban eMobility), agri-food and tourism.

After the conclusions highlighting the fundamental role of digitization, the dossier ends by proposing lines of action to promote its role in the Circular Economy.

The Spain Digital Foundation publishes this dossier in support and collaboration towards the full implementation of the new Circular Economy system. This proposal acquires special importance at present as evidenced by the approval by the Council of Ministers of Spain, on June 2, 2020, of the aforementioned Spanish Circular Economy Strategy EEEC; Spain Circular 2030.

For more information

HACIA LA ECONOMÍA CIRCULAR INTELIGENTE; EL PAPEL DE LA DIGITALIZACIÓN

Towards the smart and circular economy

CEO of Insight Foresight Institute, Totti Könnölä, writes in the Telos Magazine on the role of digitalization in circular economy. Digitalization can significantly reduce emission levels and the polluting impact of human activity on the environment.

The economic model that society has lived up to now is the linear one that follows the sequence: extract – manufacture – use – throw away and that requires large amounts of cheap and easily accessible energy and other resources, with evident negative environmental consequences. The consumption of these resources is reaching the limit of its physical capacity. Luckily companies are increasingly looking for win-win solutions providing simultaneously greater business competitiveness and a better environmental results.

An alternative that has more and more advocates is the so-called Circular Economy, based on the following three principles:

design to reduce waste and pollution;
keep equipment and materials in use longer ; and
regenerate natural systems.

Applying these three principles involves changing value chains and of business models, which makes it possible to transform the entire economy toward a new paradigm, a more sustainable system.

This concept is capturing interest from both companies and policy makers. In line with the ‘The New European Green Deal’, the European Commission adopts an EU industrial strategy to tackle the double challenge of green and digital transformation. The goal is to harness the potential of digital transformation, which is a key enabler to achieve the goals of the Green Deal. Also in Spain, the Government has elaborated the strategy to promote the transition to the Circular Economy. Including this article results from the debate organized by the Foundation Spain Digital indicating among other initiatives real and growing interest in circular economy.

More information

Download the article in Spanish (free)

Access to the full issue of the Telos including this article.

Advise to Andalusia in the industrial transition towards carbon neutrality

The CEO of IFI, Totti Könnölä advises the Joint Research Centre of the European Commission in its work to support the Andalusian Government to create industrial transition towards carbon neutrality. Within the frame of the project RIS3 Support to Lagging Regions, the JRC has launched a Working Group on Understanding and Managing Industrial Transitions.

The Working Group aims to support regional (and where appropriate national) authorities facing major industrial transitions, away from declining sectors and activities and charting actionable paths towards employment-intensive economic growth. The Working Group comprises of JRC staff, an Advisory Board and external experts engaged in reviews of industrial transition, coordinated by Ken Guy (Advisory Board Member of IFI).

The core activity of the Working Group are the reviews of industrial transition following a common methodology (POINT, Projecting Opportunities for INdustrial Transition) that draws on expertise on system innovation/transition management, foresight, industrial policy and innovation governance.

The reviews focus on an industrial theme of growing global importance suggested by the relevant territorial authorities (for instance, but not confined to: climate change, electrification of transport, circular economy, digitalisation, artificial intelligence) to collect evidence and examine the scope for developing adequate territorial responses that harness cross-portfolio complementarities (e.g. between ministries and between levels of governance) and cross-stakeholder coordination (e.g. between businesses and broad constituencies of consumers/users). In each territory under review and for an industrial theme suggested by the authorities the final report will:

(a) Map the affected orientation, resource mobilisation, production and consumption systems in the territory;

(b) Document existing planning arrangements and directions of deliberate change (e.g. as described in thematic policy and business strategies, or evident in momentum-gathering social concerns and movements, consumer trends, common territorial values etc.) of various stakeholders in the affected systems that could later form the basis for a broadly-supported transition vision;

(c) Make concrete suggestions for the advancement of the transition and for managing its downsides. Given the nature and magnitude of the transition challenge, adequate territorial responses will include not just research and innovation policies that are already part of RIS3, but also industrial and employment policies more generally, including provisions for education and skills, for complementary large public infrastructures (e.g. in energy, transport, waste), urban planning, fiscal policy and social security reform, among others. Therefore the recommendations of the review will place a particular emphasis on fostering alignment and coordination within government.

The reviews aim to build the evidence base for appropriate “Actions to Manage Industrial Transitions”, as stipulated in fulfilment criterion No.6 of the enabling condition of good governance foreseen in the next multi-annual financing period of the EU Structural Funds (without prejudice to the final decision of the European Commission). The reviews can further inform RIS3 design and implementation (e.g. refining or extending priorities, broadening the EDP, fostering synergies with other funding streams) as well as informing, and been informed by, industrial policies and other territorial strategies for economic and social development. More broadly, it is hoped that the reviews can be an input to a participatory process of stakeholder engagement leading to the development of credible positive visions for the future that can be the source of pride and inspiration for the region (or country) and a rallying point for the mobilisation of actors and resources from all levels.

The JRC plans to complete three such reviews (Andalucía, Bulgaria and Greece) in the current phase of the project in 2020.

For more information

Working Group on Understanding and Managing Industrial Transitions

Digitalisation as the gear for circular economy

Totti Könnölä, experto en economía circular. FUNDACIÓN RAMÓN ARECES — Totti Könnölä, expert in circular economy. FUNDACIÓN RAMÓN ARECES

El Mundo, the leading newspaper in Spain, interviews Totti Könnölä on digitalisation and circular economy.

Totti Könnölä defends the role of ‘big data’, industry 4.0 or the economy and collaborative platforms as spurs to achieve economic and environmental sustainability.

A total of 16 tons. That is the amount of materials that each European consumes during a year. Of them, six tons end up turned into waste. And, of these, around 50% end up forgotten in a landfill with the consequent environmental impact and for the health of all.

This is an untenable situation for anyone with some common sense and who has driven political efforts of various kinds (recycling, restrictions on industrial waste, …), BUT often without addressing the root of the matter: the real nature of products and how they are generated, consumed and reused. We better talk about designing products thinking of their future beyond the life-cycle. To change our mindset from a model with beginning and end, to another where there are no extremes and everything flows forever.

“What we have now is a totally linear value chain, in contrast to what is being proposed by the circular economy: a systemic change that will allow us to reuse the products to create new ones and thus close the entire life cycle of the goods.“, Says Totti Könnölä, executive director of the Insight Foresight Institute. This man, whose life is halfway between Finland and Spain, is a recognized expert in innovation and sustainability.

The reason that the circular economy has not been firmly committed is that “typical chains have many actors and each of them seeks to optimize its business, but only does so with its share”. That inevitably results in a problem that is not technical (the recycling of materials takes years), but a business model. «The question is mainly organizational. Even in many cases, the waste is separated and then it ends up coming together again because it can not be used,” says Könnölä in an interview with INNOVADORES held at the Ramón Areces Foundation.

Faced with this panorama, marked by the dissonance between theory and practice, we asked Könnölä about the disruptor that makes this philosophy take off once and for all, not from production, but from survival as a species. «Digitization is key. Thanks to trends such as big data, we can take full traceability of the materials, know what their history is and how we can make better use of them, “he explains.

“concepts such as the collaborative platforms [e.g. Airbnb] allow better use of existing resources, avoiding the production of more goods than necessary. In addition, digitalization also facilitates that many products that were previously bought and sold, are now marketed as a service. By controlling the whole life cycle of the product, companies can design for future recycling or perform a more efficient preventive maintenance that reduces the need for spare parts.

Betting on the circular economy is the simplest solution to avoid reputational potholes derived from the purchase of materials (such as metals or minerals used in electronics) to countries in conflict, while reducing installed volatility in the commodity markets.

The platforms, adds this guru of the second opportunities, are especially interesting because, “as has happened with the music industry, intermediaries are removed from the chain, causing the different agents to abandon their traditional roles to connect or even be themselves both the producers and consumers of the same good ».

Some meeting points between two vertices can also be extended to the less glamorous area of waste. “In Atlanta (USA) they have created a platform to coordinate the collection of garbage and make matching with companies that can take advantage of it. That is to make an innovative use of waste. turning the problem of garbage into tremendous opportunities ». If we add to this equation the 4.0 industry and its capacity to personalize products and adjust the use of materials to the maximum, we have the perfect bases to make the circular economy a reality.

But first, as with any great revolution, we have to change our mentality. The citizens, of course, but also the companies. “As consumers we are vague, we do not look at the data where a product comes from and, furthermore, it is difficult to know. Now, with big data, we generate more information for users and that is an opportunity for companies that want to differentiate themselves in the market because of their transparency and trust, “Könnölä summarizes.

“Companies must also change the chip with what they understand with sustainability. For example, Apple boasts in its reports of the use of clean energy in its servers, but then uses different combinations of materials in its mobile phones that are very difficult to separate once their life cycle is over. Also, they prevent their equipment from opening easily, which makes it difficult to recycle other components. It is a question of your brand, but it is essential that you design your products thinking about their future uses.“

All this without forgetting the primary role of the public sector in these issues. “The Administration should guide and accelerate the adoption of the circular economy through environmental policies and reducing legal uncertainties in these matters. For example, stop crushing collaborative platforms and blocking new technological possibilities. But everything is a process of learning and continuous adaptation, not only in terms of the circular economy, but also for the digital economy and society in general”.

The interview available in English in El Mundo.

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