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HELSINKI UNIVERSITY OF TECHNOLOGY Department of Electrical and Communications Engineering

Antti Pirttimki

Foresight in a Research and Technology Organisation

Masters Thesis submitted in partial fulfilment of the requirements for the degree of Master of Science in Technology.

Espoo, 20 January 2006

Supervisor

Ahti Salo Professor Petri Kalliokoski M.Sc. (Tech.)

Instructor

HELSINKI UNIVERSITY OF TECHNOLOGY


Author: Antti Pirttimki

Abstract of Master's Thesis

Name of the Thesis: Foresight in a Research and Technology Organisation Date: 20 January 2006 Number of Pages: 110 Department: Department of Electrical and Communications Engineering Professorship: Mat-2 Applied Mathematics Supervisor: Ahti Salo, Professor of Applied Mathematics Instructor: Petri Kalliokoski, Senior Research Scientist, M.Sc. (Tech.)
Product life cycles are becoming shorter and technological development is increasingly complicated and diverse. These factors together with long time horizons of research and development create a strong need for foreseeing future developments to make right decisions. In industry, new product development processes are usually well managed. However, processes to identify business opportunities and to create ideas for new products are often undeveloped; new tools are needed to this so called front end of the innovation process. It will be a challenge how to combine long term scientific research activities with companies' short time frame technology needs. Here, foresight can be used as a tool to engage public research and technology organisation with customer's innovation process at an early stage. Hence, it can prepare for starting development of the technology that will be needed in the near future. This Thesis studies, how a research and technology organisation such as VTT can utilise foresight in its intra-organisational activities and what foresight services it could offer for industry. Specifically, this study concentrates on identifying and addressing foresight needs of industrial firms. Typically, foresight exercises concentrate on studying technology, society or markets. In this thesis it is argued that in addition, it could be fruitful to study specifically future applications at the same occasion. This could be achieved by combining methods of product and service concept development with foresight methods, and hence to foresee innovations. From the view point of the research and technology organisation's internal activities, foresight is especially connected to the strategy process which defines the focal areas of research. Foresight can be utilised in strategic planning and implementation of strategy. In strategic planning, the objective of foresight should be in setting priorities for research areas by comprehensively studying future of society, markets and technologies. In the implementation phase, foresight is concerned with the action planning of chosen focus areas for example using road maps. It can also be used to build networks, raising awareness on future developments and increasing creativity. Futures intelligence considering technology is broadly available for the needs of industrial firms. Foresight exercises are organised in Finland at national, regional and industrial levels. However, tailoring foresight information for a single company is troublesome, because joint studies usually are able to produce only rather general information. Three different functional foresight needs in industrial firms were identified, namely background information on societal and market trends, tools for strategic planning and catalyst for innovation activities. This Thesis argues that the needs of industrial firms in the 'Innovators' customer segment can best be met with a service focusing on foreseeing innovations. The target audience comprises research and development management and engineers as well as researchers of a public research and technology organisation. Innovation foresight seeks to support research and development activities and to develop ideas on new products, services and business models. Innovation foresight exercises can be implemented as private company studies or they can be structured around existing value chains or socio-economic problems involving diverse stakeholders.

Keywords: foresight, research and technology organisation, innovation process

TEKNILLINEN KORKEAKOULU
Tekij: Antti Pirttimki Tyn nimi: Ennakointi tutkimus- ja teknologiaorganisaatiossa Pivmr: 20.1.2006 Osasto: Shk- ja tietoliikennetekniikan osasto Professuuri: Mat-2 Sovellettu matematiikka Tyn valvoja: Ahti Salo, sovelletun matematiikan professori Tyn ohjaaja: Petri Kalliokoski, DI

Diplomityn tiivistelm

Sivumr: 110

Nopeutuvat tuotesyklit, monimutkaistuva ja monipuolistuva teknologinen kehitys ja tutkimus- ja kehitystoiminnan pitkt aikajnteet pakottavat tulevaisuuden kehityspolkujen ennakointiin oikeiden valintojen tekemiseksi. Teollisuudessa tuotekehitysprosessi hallitaan usein erittin hyvin, kun puolestaan toimintamallit uusien liiketoimintamahdollisuuksien tunnistamiseksi ja tuoteideoiden luomiseksi saattavat olla hyvinkin puutteellisia. Thn ns. innovaatioprosessin alkuphn tarvitaan uusia tykaluja. Haasteeksi nousee, miten pitkn aikajnteen tutkimustoiminta ja yritysten lyhyemmn aikajnteen teknologiatarpeet saadaan kohtaamaan. Ennakoimalla tulevaisuuden tarpeita tutkimukseen ja teknologian kehitykseen keskittyv organisaatio voi kiinnitty lhemmin teollisuuden innovaatioprosessiin ja samalla varautua siihen, ett lhitulevaisuudessa tarvittavaa teknologiaa osataan lhte kehittmn hyviss ajoin. Tss diplomityss selvitetn taustoja siihen, miten VTT:n kaltainen tutkimusorganisaatio voi hydynt ennakointia omassa toiminnassaan ja minklaisia ennakointipalveluja se voisi tarjota teollisuudelle. Erityisesti ty keskittyy yritysten tarpeiden tunnistamiseen ja niihin vastaamiseen. Tyypillisesti ennakointihankkeissa keskitytn lhinn teknologian tai yhteiskunnan ja markkinoiden kehityksen ennakointiin. Diplomityss esitetn, ett tmn lisksi hedelmllist saattaisi olla tarkastella samassa yhteydess erityisesti tulevaisuuden sovelluksia yhdistmll ennakointityhn vaikutteita tuote- ja palvelukonseptien kehittmisen menetelmist, ja nin ennakoida tulevaisuuden innovaatioita. Diplomityn mukaan tutkimuslaitoksen oman toiminnan kannalta ennakointi liittyy erityisesti sen strategiaprosessiin, jossa mritelln tutkimustoiminnan painoalueet. Ennakointia voidaan hydynt strategian suunnittelussa ja sen toimeenpanossa. Strategisen suunnittelun yhteydess tulisi ennakoinnissa pyrki priorisoimaan tutkimusalueet tarkastelemalla laaja-alaisesti niin markkinoiden, yhteiskunnan kuin teknologioidenkin kehityst. Strategian toimeenpanovaiheessa ennakointi liittyy valittujen painoalueiden toiminnan suunnitteluun esimerkiksi teknologiatiekarttojen muodossa, verkostojen rakentamiseen, tutkijoiden tiedon kartuttamiseen ja luovuuden lismiseen. Teollisuuden tarvitsemaa teknologiaan liittyv tulevaisuustietoa on laajasti saatavilla. Ennakointihankkeita toteutetaan Suomessa niin kansallisella, alueellisella kuin teollisuuden tasollakin. Ongelmaksi nousee kuitenkin tiedon jalostaminen yksittisen yrityksen tarpeisiin, sill hankkeissa, joihin osallistuu useita yrityksi, usein pystytn tuottamaan vain yleisluontoista tietoa. Diplomityn mukaan yrityksiss on kolmenlaisia tarpeita ennakoinnille: Tarvitaan taustatietoa yhteiskunnan ja toimialojen trendeist, tykaluja yrityksen strategisten valintojen ja suunnittelun toteuttamiseen sek innovaatiotoiminnan katalyytiksi. Diplomityn mukaan yritysten tarpeita voidaan parhaiten palvella innovaatioiden ennakointiin keskittyvll palvelulla, jonka kohderyhmn ovat tutkimus- ja kehitystoiminnan johto ja insinrit yrityksiss sek tutkimuslaitoksen tutkijat. Innovaatioita ennakoimalla pyritn tukemaan yrityksen tutkimus- ja tuotekehitystoimintaa ja kehittmn ideoita uusiksi tuotteiksi, palveluiksi ja liiketoimintamalleiksi. Innovaatioiden ennakointiin keskittyvt hankkeet voidaan kohdistaa yksittisille yrityksille, arvoketjun eri sidosryhmille tai sosioekonomisten ongelmien ymprille monipuoliselle osallistujajoukolle.

Avainsanat: Ennakointi, tutkimus- ja teknologiaorganisaatio, innovaatioprosessi

Preface
I would like to thank all my colleagues at VTT who have been supporting me during my work. You have been really patient and helpful listening to my stories and sharing your experiences and ideas with me. Especially thankful I am to my supervisor Petri Kalliokoski for his great inspiration and for giving me this opportunity. I would also like to thank Magnus Simons and Annele Eerola for all those discussions and wise comments. Mikko Uoti has also had a special role in clarifying my thoughts by having to listen me explain all the frameworks and phases of this study. I am also very thankful for professor Ahti Salo for his insight and guidance. I am deeply indebted to my parents and brothers for their support during my studies and my whole life. Without you this would not have been possible. Finally, I would like to express my sincerest gratitude to my love Heidi for cheering me up and encouraging me during this lengthy process.

Espoo, 20 January 2006

Antti Pirttimki

Table of Contents
1 INTRODUCTION ............................................................................................................................... 1 1.1 1.2 1.3 1.4 1.5 2 BACKGROUND ............................................................................................................................... 1 OBJECTIVES .................................................................................................................................. 3 SCOPE............................................................................................................................................ 4 RESEARCH METHODS ................................................................................................................... 4 STRUCTURE OF THE THESIS .......................................................................................................... 5

CONTEXT OF FORESIGHT ACTIVITIES ................................................................................... 7 2.1 2.1.1 2.1.2 2.1.3 2.1.4 2.2 2.3 2.4 2.5 2.5.1 2.5.2 2.5.3 2.5.4 2.5.5 2.5.6 2.6 2.6.1 2.6.2 2.6.3 2.6.4 INTRODUCTION TO FORESIGHT ..................................................................................................... 7 Defining foresight.................................................................................................................... 7 Rationales................................................................................................................................ 9 Objectives ..............................................................................................................................10 Focus of foresight exercises..................................................................................................11 INNOVATION ...............................................................................................................................12 FORESIGHT AND INNOVATION.....................................................................................................15
THE FINNISH INNOVATION SYSTEM .............................................................................................16

CURRENT FORESIGHT ACTIVITIES IN FINLAND ...........................................................................17 National studies.....................................................................................................................18 Regional studies ....................................................................................................................19 Industry cluster studies .........................................................................................................19 Corporate foresight in Finland.............................................................................................20 Current foresight activity at VTT..........................................................................................20 Complementarities between foresight activities...................................................................21 VTT'S INNOVATION PROCESS .....................................................................................................22 Foresight ...............................................................................................................................23 Concept Creation ..................................................................................................................25 Engineering ...........................................................................................................................25 Commercialisation ................................................................................................................26

REQUIREMENTS FOR FORESIGHT ACTIVITIES.................................................................27 3.1 3.1.1 3.1.2 3.1.3 3.2 3.3 VTT'S FORESIGHT NEEDS ............................................................................................................27 Strategic intent ......................................................................................................................27 Concept creation ...................................................................................................................28 Technology strategy process.................................................................................................28 MAIN DRIVERS FOR FORESIGHT IN INDUSTRIAL FIRMS ...............................................................31 NEEDS OF DIFFERENT MANAGERIAL ROLES ................................................................................32

3.3.1 3.3.2 3.3.3 3.4 3.5 3.6 3.7 3.7.1 3.7.2 4

Top management ...................................................................................................................32 Business division management .............................................................................................33 Research management ..........................................................................................................34 PRACTICAL EXAMPLES OF FORESIGHT-DRIVEN DEVELOPMENT PROJECTS .................................35 FORESIGHT AND STRATEGIC DECISION-MAKING LEVELS............................................................36 CUSTOMER SEGMENTS FOR FORESIGHT SERVICES ......................................................................39 WHAT KIND OF FORESIGHT ACTIVITY IS MISSING AND NEEDED? ...............................................40 Gap in the case of industrial firms .......................................................................................41 Gap in the case of VTT..........................................................................................................41

INTRODUCTION TO FORESIGHT PROCESSES.....................................................................42 4.1 4.1.1 4.1.2 4.1.3 4.1.4 4.2 4.2.1 4.2.2 4.2.3 4.3 4.3.1 4.3.2 4.4 4.5 4.6 APPROACHES TO FORESIGHT.......................................................................................................42 Science-push and demand-pull .............................................................................................43 Participative approach ......................................................................................................... 44 Prospective approach ........................................................................................................... 45 The influence of actors on the foresight study approach .....................................................45 ON FORESIGHT PROCESS .............................................................................................................47 Stages.....................................................................................................................................48 Comprehensive and embedded foresight..............................................................................55 Explicit, emergent and embedded foresight .........................................................................57 ORGANISATION ...........................................................................................................................59 Corporate level......................................................................................................................59 Organisation of the foresight process...................................................................................61 FORESIGHT PROCESS FLOW .........................................................................................................63 IMPLICATIONS OF DIFFERENT FORESIGHT PROCESSES FOR VTT ................................................65 FORESIGHT, STRATEGY-MAKING, RESEARCH AND ITS RESULTS .................................................68

FORESIGHT AT VTT LEVEL.......................................................................................................71 5.1 5.1.1 5.1.2 5.1.3 5.1.4 5.1.5 5.1.6 5.2 5.3 5.4 5.5 ASSESSMENT OF POSSIBLE OPERATING MODES...........................................................................72 Foresight consulting .............................................................................................................72 Think tank or observer unit...................................................................................................72 Integrated foresight activity..................................................................................................73 Foresight as independent customer projects........................................................................74 Organising foresight forums .................................................................................................74 Foresight knowledge base.....................................................................................................75 FORESIGHT AND THE TECHNOLOGY STRATEGY PROCESS ...........................................................75 FORESIGHT AND CUSTOMERS......................................................................................................77 FORESIGHT AS A DECISION-MAKING SUPPORT TOOL ..................................................................78 KNOWLEDGE ACCUMULATION....................................................................................................79

5.6 5.6.1 5.6.2 5.7 5.7.1 5.7.2 5.8 5.9 5.10 6

ORGANISATION ...........................................................................................................................80 Tasks and responsibilities .....................................................................................................80 Other organisational issues ..................................................................................................82 FORESIGHT AS A COMMERCIAL SERVICE ....................................................................................83 Services to each customer segment.......................................................................................83 Earning model of commercial foresight services .................................................................84 RELEVANCE TO VTT'S RESEARCH ..............................................................................................86 UTILISING RESULTS OF FORESIGHT AT VTT ...............................................................................87 SUMMARY OF SUGGESTED FORESIGHT ACTIVITIES .....................................................................89

INNOVATION FORESIGHT..........................................................................................................91 6.1 6.2 6.3 6.4 6.4.1 6.4.2 6.4.3 6.4.4 6.4.5 6.5 6.5.1 6.5.2 6.6 6.7 DEFINITION .................................................................................................................................91 PROCESS STRUCTURE ..................................................................................................................92 MODULES ....................................................................................................................................93 FORESIGHT ..................................................................................................................................95 Technology foresight.............................................................................................................95 Application foresight.............................................................................................................95 Market foresight ....................................................................................................................96 Topic selection.......................................................................................................................96 Social dimension ...................................................................................................................98 ACTION PLANNING ......................................................................................................................99 Strategic planning ...............................................................................................................100 Action planning ...................................................................................................................100 ORGANISATION .........................................................................................................................100 IMPLEMENTATION OF INNOVATION FORESIGHT .......................................................................101

CONCLUSIONS ..............................................................................................................................104

REFERENCES ..........................................................................................................................................107 APPENDIX 1 PRODUCT INNOVATION FORESIGHT SERVICE CONCEPT ...........................113 7.1 7.2 7.3 IN BRIEF ....................................................................................................................................113 PATH OF ANALYSIS ...................................................................................................................114 WORKSHOPS .............................................................................................................................114

List of Figures
FIGURE 1 ORGANISATION OF VTT, ADAPTED FROM VTT COMMUNICATION ................................................. 3 FIGURE 2 MAIN QUESTIONS OF FORESIGHT, ADAPTED FROM FOREN (2001B) (MODIFIED) ........................... 8 FIGURE 3 DIFFERENT INNOVATION PROCESSES, ADAPTED AND MODIFIED FROM GREEN (2005) ..................14 FIGURE 4 THREE STAGES OF AN INNOVATION PROCESS, ADAPTED FROM KOEN ET AL. (2002).....................15 FIGURE 5 THE FINNISH INNOVATION SYSTEM, ADAPTED FROM HTTP://WWW.RESEARCH.FI, CITED 10.12.2004 ...............................................................................................................................................................17 FIGURE 6VTT INNOVATION PROCESS MODEL, ADAPTED FROM VTT INNOVATION MANAGEMENT TOOLBOX (MODIFIED) ............................................................................................................................................23 FIGURE 7 INFLUENCE CHANNELS OF FORESIGHT ON VTT'S INNOVATION PROCESS.......................................25 FIGURE 8 DECISION PROCESSES AS APPLICATION AREAS OF FORESIGHT .......................................................37 FIGURE 9 STAGES OF A FORESIGHT PROCESS .................................................................................................50 FIGURE 10 ADMINISTRATIVE ORGANISATION OF THE FORESIGHT PROCESS, ADAPTED FROM MARTIN AND IRVINE (1989)........................................................................................................................................62 FIGURE 11 FORESIGHT PROCESS STRUCTURE - STAGES, ISSUES AND OUTPUTS .............................................64 FIGURE 12 POSITIONING FORESIGHT PROCESSES ...........................................................................................67 FIGURE 13 FORESIGHT, STRATEGY-MAKING, RESEARCH AND ITS RESULTS FROM VTT'S POINT OF VIEW .....68 FIGURE 14 STAGES OF THE FORESIGHT PROCESS AND RELATED FUNCTIONS .................................................92 FIGURE 15 INNOVATION FORESIGHT MODULES ..............................................................................................94 FIGURE 16 THEME SELECTION FRAMEWORK..................................................................................................97 FIGURE 17 INNOVATION FORESIGHT PROJECT ORGANISATION ....................................................................101 FIGURE 18 IMPLEMENTATION OF INNOVATION FORESIGHT - TYPES OF STUDY ............................................102 FIGURE 19 PATH OF ANALYSIS IN A PRODUCT INNOVATION FORESIGHT EXERCISE .....................................114

List of Tables
TABLE 1 PRODUCTS OF FORESIGHT, ADAPTED FROM FOREN (2001) ............................................................... 9 TABLE 2 COLLABORATIVE OBJECTIVES FOR FORESIGHT ...............................................................................11 TABLE 3 THE TECHNOLOGY STRATEGY CYCLE AT VTT...............................................................................30 TABLE 4 OPPORTUNITIES IDENTIFICATION PROJECT EXAMPLES ....................................................................36 TABLE 5 MARKET FORECASTS AS STRATEGIC INFORMATION: FOCUS OF INTEREST BY STRATEGIC ISSUE,
ADAPTED FROM EEROLA (1990)............................................................................................................37

TABLE 6 MARKET FORECASTS AS STRATEGIC INFORMATION: FUNCTIONS SERVED BY FORECASTS IN THE


VARIOUS PHASES OF THE DECISION-MAKING PROCESS, ADAPTED FROM EEROLA (1990).....................38

TABLE 7 CUSTOMER SEGMENTS FOR FORESIGHT SERVICES ...........................................................................40 TABLE 8 CREATING TECHNOLOGY FORESIGHT: CENTRAL ACTORS AND OBJECTIVES IN THE THREE
DIFFERENT TYPES OF TECHNOLOGY STUDY, ADAPTED FROM EEROLA (1996) ......................................46

TABLE 9 TECHNOLOGY FUTURES ANALYSIS CONTENT AND PROCESS SCOPING ISSUES, ADAPTED FROM PORTER ET AL. (2004) ...........................................................................................................................52 TABLE 10 COMPREHENSIVE AND EMBEDDED FORESIGHT, ADAPTED FROM SALO AND SALMENKAITA (2002) ...............................................................................................................................................................56 TABLE 11 CHARACTERISTICS OF EXPLICIT, EMERGENT AND EMBEDDED FORESIGHT PROCESSES, ADAPTED
FROM SALMENKAITA AND SALO (2003) ...............................................................................................59

TABLE 12 FORESIGHT ORGANISATION TYPES IN CORPORATIONS, ADAPTED FROM BECKER (2002)..............60 TABLE 13 TASKS OF FORESIGHT, ADAPTED FROM FOREN (2001)..................................................................62 TABLE 14 TASKS AND RESPONSIBILITIES OF INNOVATION FORESIGHT FUNCTION .........................................81 TABLE 15 SUMMARY OF FORESIGHT ACTIVITIES ...........................................................................................89 TABLE 16 SUMMARY OF THE EXERCISE - STAGES AND METHODS USED ......................................................115

Introduction

1 Introduction

"Inventions have long time ago reached their limit, and I see no hope for development in the future" Julius Sextus Frontinus, Roman engineer, A.D. 10

1.1

BACKGROUND

Product life cycles are becoming shorter and technological development is increasingly complicated and diverse. These factors together with long time horizons of research and development create a strong need for foreseeing future developments to make right decisions and investments. In industry, new product development processes are usually well managed. However, processes to identify business opportunities and to create ideas for new products are often undeveloped; new tools are needed to this so called front end of the innovation process. It will be a challenge how to combine long term scientific research activities with companies' short time frame technology needs. For this purpose, foresight is needed. VTT Technical Research Centre of Finland is a research and technology organisation (RTO). With its 2,800 employees, VTT provides a wide range of technology and applied research services for its clients, private companies, institutions and the public sector. The mission of VTT is defined as follows: "Through creating and applying technology, we

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Introduction

actively enhance the global competitiveness of industry and other business sectors, and thus increase the welfare of society." (VTT website)1 VTT carries out three types of activities: commercial activities, joint projects and selffinanced projects. Commercial activities are performed according to direct demand from customers. Joint projects are initiated on the basis of need and usually funded jointly by VTT, companies, research funding bodies and other research parties. Self-financed research consists of technology-based strategic research projects aimed at developing competitiveness and acquiring knowledge and expertise to meet the future needs of customers. From the beginning of 2006 VTT a new organisational structure will be implemented at VTT. Simultaneously, new processes and practices will be introduced, enhanced foresight activity being one example. Due to ongoing process development, this Thesis studies the organisational context at a rather general level. VTT's new organisation (see Figure 1) is divided into five main divisions, which are Research and Development, Strategic Research, Business Solutions, Ventures, and Expert Services. Research and Development consists of the research institutes of VTT. They constitute the real operational division, which conducts strategic and applied research. Strategic Research is responsible for the technology strategy of VTT and for allocation of funding for strategic research. Business Solutions is the main sales organisation of VTT, which is responsible for sales of large customer projects as well as for managing customers and customer strategy. Ventures is responsible for management of VTT's IPR and commercialisation of research. The Expert Services division deals with testing services.

http://www.vtt.fi/vtt/inbrief/mission.htm, cited May 19, 2005

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Introduction

CUSTOMERS AND OTHER STAKEHOLDER GROUPS


BUSINESS SOLUTIONS Management of contract research

STRATEGIC RESEARCH Management of self-financed and jointly-funded research

RESEARCH AND DEVELOPMENT Projects Competence management

EXPERT SERVICES Consulting services, testing, certification

MANAGEMENT, SUPPORT PROCESSES, QUALITY MANAGEMENT, INFORMATION SERVICE

VENTURES Commercialisation of research output, venture activities and spin-offs


Advisory boards

Figure 1 Organisation of VTT, adapted from VTT Communication

1.2 OBJECTIVES
The main objective of this Thesis is to identify what kind of foresight activities VTT Technical Research Centre of Finland could organise. Another key objective is to design a foresight service concept for VTT to support its innovation process and cooperation with industrial firms. Here, it is to serve the foresight needs of industrial firms, to identify future business opportunities and to develop service and product solution concepts for further development. The foresight process should also support VTT's technology strategy process by providing information on potential areas of strategic research. The objectives of this Thesis are presented as follows: Present basic guidelines on the kind of foresight activity that VTT could organise and how it could be implemented. Develop a foresight service concept for VTT Business Solutions.

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Introduction

These objectives are studied with the following research questions: 1. What are the needs for foresight at VTT and within its company customers? 2. How can innovation activities and technology strategy processes be supported by foresight activities? 3. What themes should these foresight activities address and what should the structure of a foresight process be like? 4. How could foresight activity be organised and what issues have to be considered in its implementation?

1.3 SCOPE
The theory of this Thesis builds on the literature on foresight processes and experiences on practical foresight exercises. This Thesis concentrates on analysing foresight from VTT's point of view. Issues are dealt with both at the top organisational level and at the level of the actual foresight process. However, the process is elaborated only at the level of principles. Results at the VTT level include guidelines on the type of activity that is suggested, as well as the tasks of the foresight organisation. At the process level, the main themes and functional modules of the process are presented as well as basic guidelines on how to design the process in each case.

1.4 RESEARCH METHODS


This Thesis builds on foresight needs which are identified in semi-structured interviews with experts in different positions at VTT and the management of industrial firms. The theoretical background of this study builds on a review of relevant literature. The model for foresight activity is created by constructively building on needs in light of the literature.

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Introduction

1.5 STRUCTURE OF THE THESIS


Chapter 2 presents the context for this Thesis by outlining foresight activities in the national innovation system and the role of foresight in VTT's innovation process. Chapter 2 explains the channels of influence that foresight can have on VTT's innovation process. Moreover, in an overview to current foresight activities in Finland is given to lay ground for identification of gaps between the needs of industrial firms and availability of corresponding services. Specific needs of foresight at VTT and within its company customers are studied in Chapter 3. Here, the technology strategy process of VTT is analysed. Based on this analysis, needs for future-oriented information at different organisational levels can be assessed and the approach for and the type of foresight processes can be determined in the technology strategy context. In this Chapter, customer segments are identified for the basis of commercial foresight service development and a market opportunity for foresight services is identified building on market need and supply of services. An introduction to the concepts and methodologies of foresight is given in Chapter 4, which also seeks to create a theoretical reflection to the case environment. This Chapter explains, what foresight can be used for, how the process should be structured and organised, and what are the implications of different foresight approaches to VTT. In Chapter 5, foresight needs are considered in more detail with the theory. Here, an assessment of possible operating modes is made and issues considering their implementation at VTT are discussed. Finally, a portfolio of possible foresight activities of VTT is presented. Chapter 6 develops, defines and discusses in more detail one main suggested foresight activity, innovation foresight. Innovation foresight is first defined. Secondly, the frameworks of an ideal foresight process developed in the Chapter 4 are applied to innovation foresight. Thirdly, a tool for choosing the topic of the exercise is presented. Finally, four different options are given on how the innovation foresight can be implemented. One of these options, namely product innovation foresight for a single

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Introduction

company is further elaborated in the Appendix 1 to give an example on how the innovation foresight framework can be applied. Finally, the findings and conclusions of this Thesis are summarised in Chapter 7.

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Context of Foresight Activities

2 Context of Foresight Activities

"The phonograph ... is not of any commercial value." Thomas Alva Edison, Inventor of the phonograph, c. 1880

2.1 INTRODUCTION TO FORESIGHT 2.1.1 Defining foresight


Foresight is part of the field of futures studies. Martin (1995) uses the term 'foresight' in the following sense: "the process involved in systematically attempting to look into the longerterm future of science, technology, the economy and society with the aim of identifying the areas of strategic research and the emerging generic technologies likely to yield the greatest economic and social benefits." Also, another definition has been given (FOREN, 2001): Foresight is a systematic, participatory, future intelligence gathering and medium-to-long term vision building process aimed at present-day decisions and mobilising joint action. Martin (1995) also stresses two aspects of foresight. One is that foresight is a process, not just a set of techniques, suggesting that it involves consultative procedures to ensure feedback to and from relevant actors. Secondly, the starting point of foresight is the belief that there are many possible futures. Precisely which of these futures we will arrive at depends in part on the decisions we take now. The aim of foresight is to explore

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Context of Foresight Activities

systematically these alternative futures. Thus, foresight involves a consciously 'active' attitude towards the future, recognising that the choices made today can shape or even create the future. A definition of J. Cassingena Harper (cited in Georghiou, 2003) also emphasises the process nature of foresight: "The foresight process involves intense iterative periods of open reflection, networking, consultation and discussion, leading to the joint refining of future visions and the common ownership of strategies, with the aim of exploiting longterm opportunities opened up through the impact of science, technology and innovation on society It is the discovery of a common space for open thinking on the future and the incubation of strategic approaches" The main questions of foresight (Foren, 2001b) are presented below in Figure 2. These reflect the goals of the exercise as well as execution and participation.

What is wanted to foresee?

Who will execute the foresight?

Costs and duration of the exercise

Who will participant in foresight?

What is the goal of the foresight?

Which methods are used?

Figure 2 Main questions of foresight, modified from FOREN (2001b)

What is crucial in foresight is the elaboration of a guiding strategic vision, about which there can be a shared sense of commitment (achieved, in part, through the networking processes). There also has to be explicit recognition and explication of the implications for present-day decisions and actions. Foresight is advantageous only if it can be turned into practical action. Moreover, it should be made clear that what foresight cannot do is to solve all problems; it creates visions. (FOREN, 2001)

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.

Context of Foresight Activities

Foresight methodologies include both quantitative and qualitative tools (Porter et al., 2004). Some widely used methods are, for example, scenario analysis (e.g. Mietzner and Reger, 2004), technology road mapping (e.g. Phaal et al., 2004), Delphi studies and expert panels (e.g. Porter et al., 2004). A synthesis of the products of foresight is given by FOREN (2001). Foresight can have both formal and informal outputs, which appear at different stages of a foresight exercise. As an example, these are summarised below in Table 1.
Table 1 Products of foresight, adapted from Foren (2001)
Formalisation Dissemination Networking Strategic Process Formal outputs Report, book workshops, newsletters, press articles, web sites Institutionalisation of networks Informal outputs results and evaluation circulating within networks

Development of new networks or new links within existing ones Formal incorporation of results Informal incorporation of results within strategic processes within strategic processes

2.1.2 Rationales
Fundamentally, the rationale for technology foresight derives from the widely held perception that a deliberate future-oriented consideration of scientific, technological and societal developments is conducive to innovation, economic growth and societal wellbeing. (Salo and Cuhls, 2003) According to Havas (2004), foresight is important for emphasising the possibility of different futures and hence the opportunity of shaping our futures, to enhance flexibility in policy-making and implementation, broaden perspectives and encourage thinking outside the box. Salo and Salmenkaita (2002) present a rationale for foresight at the RTD programme level. They point out that if companies neglect longer-term concerns in developing their core competencies, they may become reluctant to participate in joint RTD efforts which are not seen to be of immediate relevance to their current technological competencies. This may translate into a reactive stance whereby the focus of publicly supported research is shifted to low-risk RTD activities with moderate potential only.

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2.1.3 Objectives
The primary benefit of foresight efforts lies not in specific predictions but in the process by which these are generated (e.g. Martin, 1995). The main aspects of the process in this sense can be summarised as 'the five Cs' for foresight's objectives presented by Irvine and Martin (1984) (cited in Martin, 1995). 1. Communication the process brings together industrialists, academics, policy-makers, forecasters, commentators and others concerned with the future of science, technology and innovation, and facilitates communication among them. 2. Concentration on the longer term it forces participants to concentrate seriously and systematically on the longer term, without which short-term problems tend to dominate. 3. Coordination it enables participants to coordinate their R&D plans. 4. Consensus it helps participants to develop a consensus on research priorities, creating a shared vision of the future they would like to achieve. 5. Commitment it generates a sense of co-ownership of, and therefore commitment to, the results of the forecasting exercise, with the result that what start out as predictions may then take on the nature of national goals to be achieved by the date estimated, if not sooner. The last process benefit is especially important, because the process involved in generating the predictions means that they become, to a large extent, self-fulfilling prophecies (Martin, 1995). The foresight process can reduce uncertainty, because participants can align their endeavours once they arrive at shared visions (Havas, 2004). Tegart and Johnston (2004) add that the objective of foresight can be seen not as the solution of future problems, but as the transformation of higher levels of uncertainty into lower levels of uncertainty. Salo et al. (2004) suggest that much of the value of foresight derives from its role in enhancing the long-term innovative capabilities of the whole innovation system and its parts. Georghiou (2003) adds that foresight can also be used in two functions important in the case of VTT. These are exploring future opportunities so as to set priorities for

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investment in science and innovation activities, and building new networks and linkages across fields, sectors and markets, or around problems. All these goals may be pursued at organisational, local, regional, national or supranational levels. Becker (2002) presents objectives for foresight in companies. He argues that it is useful to categorise foresight in terms of its more intermediate functions and impacts for the company, which are: anticipatory intelligence, direction-setting, determining priorities for funding decisions, strategy formulation and innovation catalysing i.e. stimulating and supporting innovation processes between the different partners. The collaborative objectives for cooperation between innovation network partners can also be seen as needs for the foresight process between the joint decision processes of network partners. Collaborative objectives for foresight are summarised below in Table 2. These consist of goals for management of long-term visionary, medium-term strategic and shortterm operational decision-making processes. (Pirttimki, 2005)
Table 2 Collaborative objectives for foresight
Collaborative objectives Visionary Aligning future visions Networking C ommitment building Decision processes Strategic Incubation of strategies Sharing responsibilities C omplementary knowledge Operational Exchanging ideas Managing operations Complementary skills

In the light of the above suggestions it seems that foresight, when well implemented, could serve VTT in enhancing innovation activities, strengthening relationships with industrial firms and supporting the establishment of priorities in strategic research.

2.1.4 Focus of foresight exercises


Martin and Irvine (1989) present a classification for focus in terms of the breadth of coverage. According to them, foresight can be holistic, i.e. concerned with the entire spectrum of science and technology

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macro-level, such as foresight for a single government agency that covers a range of disciplines meso-level, i.e. foresight relating to a single scientific field, technological area or product range (such as foresight by an industrial association) micro-level, i.e. foresight for a scientific specialty, projects within a technology programme or a specific product (such as foresight by a company or research institute)

Broad foresight exercises enable priority-setting between different scientific areas. Focused foresight instead can clearly inform strategic research, but it cannot help in establishing overall research priorities (Miles, 2004). This is true especially when priority-setting is done using hard decision-making methods and comparing several alternatives, assessing them and assigning priority to the most attractive alternatives. Instead, in conditions of soft decision-making, judgements are more value based. Focused foresight can help establish priorities, when they are set in a fashion that compares alternatives, for example, to the strategy of the organisation by asking if this alternative is attractive enough to make it a priority. For a comparison of decision-making methods, see for example Murtoaro (2004). The perspective that one should then take depends on the actual purpose of the exercise it should be used in the context of adequate policy needs. Its focus is, therefore, largely determined by the perceived socio-economic and developmental needs. (Havas, 2004)

2.2 INNOVATION
Innovation is the introduction of new ideas, goods, services, and practices which are intended to be useful. An essential element of innovation is its application in a commercially successful way (Wikipedia, 2005). The importance of innovations has long been emphasised, since Schumpeter (1934) presented his theory on economic development. In business and economics, innovation is often divided into five types (Wikipedia, 2005). These are:

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Product innovation, which involves the introduction of a new good or service that is substantially improved. This might include improvements in functional characteristics, technical abilities, ease of use or any other dimension

Process innovation involves the implementation of a new or significantly improved production or delivery method. Marketing innovation is the development of new marketing methods, with an improvement in product design or packaging, product promotion or pricing. Organisational innovation involves the creation of new organisations, business practices or ways of running organisations. Business model innovation involves changing the way business is done in terms of capturing value.

Innovations can also be categorised as incremental or radical, according to their impact on the technology trajectory. Innovation can also be sustaining or disruptive, depending on how it influences the market and businesses (see e.g. Christensen and Raynor, 2003). For example, Drucker (1985) and Tuomi (2002) argue that innovations are typically social by nature. An autonomous innovation can be incorporated without adjustments to the system to which it belongs. A systemic innovation, on the other hand, requires significant adjustments to other parts of the system. Not one but many complementary innovations have to come together and be applied throughout the whole chain of system elements. Therefore, the systemic character of innovation implies increased dependence on others (Maula, 2004). On systemic innovations, see for example Lattunen (2003). A more detailed typology of technological innovations and innovativeness terminology is presented by Garcia and Calantone (2002). Innovations are created in an innovation process, which can be described as a creative process where resources and ideas are turned into new solutions and user propositions (Green, 2005; see Figure 3). Technological innovations are usually created in a product development process, which can either follow a closed loop model or an open model (Chesbrough, 2003). Typically, an

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innovation process (see Figure 4) consists of three stages, namely fuzzy front end, new product development and commercialisation (Koen et al., 2002). The front end of the innovation process is the source of ideas for development projects. Here foresight can be utilised to identify opportunities in the long term.
Values

Market / business trends Socio-cultural trends Technology trends

New solutions and user propositions

Figure 3 Nature of an innovation process, modified from Green (2005)

Innovation process models have been the subject of strong debate. However, a division between technology push and market pull types of processes has traditionally been made, but more complex models of innovation have also been presented (see e.g. Trott, 2005). In this Thesis, VTT's innovation process model is used as a case example and it is discussed later in Chapter 0.

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Fuzzy Front End New Product Development

Commercialisation

Figure 4 Three stages of an innovation process, adapted from Koen et al. (2002)

2.3 FORESIGHT AND INNOVATION

Foresight and innovation have links with each other. Martin and Irvine (1989) have found several analogies between foresight and innovation processes; they are also strongly interconnected. Knnl et al. (2005) argue that although foresight has often supported shared visionbuilding and generic priority-setting, it can also foster diversity in perspectives, collaborative relations and ideas on innovations. They also state that novel ideas about prospective innovations can be viewed as more focused and action-oriented reflections of weak signals which can be more readily interpreted in the context of innovation processes. Knnl et al. (2005) define innovation ideas as: "Concrete and context-related new ideas for innovations that (i) are related to the chosen issue area (e.g. nutrigenomics), (ii) are new to the participant or have received insufficient attention, (iii) may be related to technological discontinuities, iv) are interesting in the light of present observations, (v) may provide the chance to develop an innovation (applicable new technology, concept, method or practice) within 10-15 years and (vi) may require collaboration among different actors." In the literature of innovation studies, the so-called linear model which proceeds from basic and applied research through product development to innovations in a relatively

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straightforward manner has been widely abandoned in favour of more complex models in which the importance of user-developer interactions and feedback loops is recognised. (Salo and Cuhls, 2003) The increasing importance of dialogue and iteration in creating innovations would imply a move to more solution-based innovation processes where customer and market needs as well as socioeconomic problem-solving are increasingly becoming the main sources of innovative opportunities. Hence, the close relationship between foresight and innovation would suggest that foresight could also benefit from moving from the technology-push linear innovation process approach, which examines scientific developments for foreseen customer and market needs as well as socioeconomic problems, to a solution-based approach, which is similar to innovation development.

2.4

THE FINNISH INNOVATION SYSTEM

Freeman (1987) defines a national innovation system as "the network of institutions in the public and private sectors whose activities and interactions initiate, import, modify and diffuse new technologies." The Finnish national innovation system is illustrated below in Figure 5.

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Figure 5 The Finnish innovation system2

In the national innovation system, VTT is positioned as a public research institute. From the government's point of view, VTT acts as an instrument of technology policy. Its role is to conduct strategic research for the public sector's needs and provide supporting technology development and testing services to the private sector, but also to act as an independent expert. VTT is governed as an independent institute, but it reports to the Ministry of Trade and Industry.

2.5 CURRENT FORESIGHT ACTIVITIES IN FINLAND


Current foresight activities in Finland are briefly discussed to gain a basic-level understanding of the kind of foresight services that are currently available to VTT's customers and the kind of issues they answer. Building on needs of industrial firms and gaps in present foresight activities, opportunities for attractive foresight services can be

adapted from http://www.research.fi, cited 10.12.2004

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identified. Moreover, it is possible to identify complementing exercises so that double work can be better avoided. According to Alpo Kuparinen, Deputy Director General of the Ministry of Trade and Industry, the goal is to create a decentralised and distributed foresight system, where each stakeholder in the innovation system practises foresight for their specific needs. Moreover, he adds that general foresight information is also available and generated in other countries and thus it would be reasonable to focus on more specific issues among the participants of foresight exercises. Kuparinen also says that when research and technology development priorities are being determined, these efforts should be coordinated at the national level to establish shared priorities among funding and performing agencies. Therefore, for example, foresight within VTT should not be practised without the presence of representatives of Tekes the National Technology Agency of Finland. This is one more reason for pursuing complementarities between foresight exercises.

2.5.1 National studies


In Finland, national foresight exercises have not yet been reported. However, starting in autumn 2005, a national level exercise, Finnsight20153, was launched. Coordinated by Tekes and the Academy of Finland, this comprehensive foresight process covers scientific fields broadly through ten main themes and panels. This exercise would involve several stakeholders and also provide holistic and general long-term foresight visions also on VTT's technological fields. A national exercise could provide good background information on the future development of technologies. However, national studies give rather general results (e.g. Eerola and Vyrynen, 2002), so they cannot offer focused information on markets or more focused results such as application concepts.

See http://www.finnsight2015.fi/

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2.5.2 Regional studies


Many regional foresight studies have been conducted in Finland. Usually these have been conducted, for example, by the Association of Finnish Local and Regional Authorities (Kuntaliitto) and local Employment and Economic Development Centres (TE-keskukset). The main objectives have been to strengthen regional networks and to enhance technological development in the region, and also bring other aspects into consideration. Participants have been public authorities, firms, citizens and other stakeholders. Regional foresight exercises have supported local development activities. They have not, however, because of their limited scope, contributed to general knowledge on future developments such as technology, but instead on trying to capture what is important for each region in the future and on creating a shared vision of that.

2.5.3 Industry cluster studies


In industry, foresight exercises have been organised and continuous foresight forums established. For example, in summer 2001, the National Technology Agency and the Finnish Food and Drink Industries' Federation decided to sponsor a project aimed at evaluating Finnish research activities in the food and drink industries in order to foresee the future technology needs in these industries up to 2015 (Salo et al., 2004). Another example is the Future Forum on the Forests of Finland, which is a multi-sectoral and multi-disciplinary meeting point aimed at generating information and knowledge on issues affecting sources of livelihood in the future. The purpose of the Forum is to identify expected changes in the forestry environment in the next 10-20 years. By exploring and predicting developments affecting livelihoods in the forest sector of Finland in the future, the Forum aims to support the development of the national forest policy, and other policies relevant to the future of forest sector, and to offer new stimuli, material and tools for the future and strategy work of the forest sector organisations. The Forum promotes the forest sector and forest-based livelihoods. It can therefore be seen as a "pro-forest

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sector" initiative rather than an initiative predicting the future from the perspective of individual organisations (Future Forum on Forests website). Industrial studies promote understanding of the future of the industry. The results may, however, remain rather general within the framework of the study, since participating firms may not want to discuss future possibilities in too much detail with competitors. The main objectives in these joint studies are to strengthen industry competitiveness and to coordinate the strategies of the industry.

2.5.4 Corporate foresight in Finland


Systematic foresight activity in corporations is still relatively rare in Finland. There are few major corporations, like Nokia, that have their own foresight unit; most of the foresight activities in corporations and SMEs are done through participating in external studies, such as regional or industry sector studies. Especially in technology foresight, individual firms may not have enough capacity to run the exercise on their own. During the last decades more firms have started to use scenarios as one strategic management tool (e.g. Bunn and Salo, 1993). Scenarios are mostly used in analysing longterm developments in the business environment, specifically society and markets.

2.5.5 Current foresight activity at VTT


Currently, VTT Technology Studies performs interdisciplinary research on the interface between technology, the economy and society. It also organises and participates in foresight studies at industry, national, Nordic and EU levels. The aim of the research group is to assist decision-making in the public and private sectors, by analysing science and technology policies and instruments, industrial innovation and transformation, and to carry out technology foresight and technology assessment exercises. (http://www.vtt.fi/ttr/indexe.htm, cited 22.7.2005) Important users of the VTT Technology Studies' future-oriented technology information include the Ministry of Trade and Industry, the National Technology Agency (Tekes), companies and research institutes developing new technologies, the Committee for the

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Future of the Finnish Parliament, the Nordic Innovation Centre, the European Commission and the EU Parliament. Futures studies and foresight have also been used in the planning of technology themes, which are instruments of VTT's technology strategy, by constructing road maps on technological areas (Eerola and Vyrynen, 2002).

2.5.6 Complementarities between foresight activities


National, international and industrial foresights study the development of society and scientific areas. Other foresight exercises can complement both each other as well as foresight at VTT. Complementarities arise through participation and studying the results of other exercises, because they examine partly same issues and create knowledge on common interests. Future visions and networking can complement other foresight exercises. Knowledge on earlier foresights can be used as explicit information in the form of reports, but also through knowledge acquired by participating in the exercises as an expert. National exercises are holistic by nature. It means that many scientific fields are covered and that is why knowledge in many disciplines is created. The products of national exercises are rather general descriptions of technological trends and rising key technological areas. Visions of national exercises, and perhaps even established priorities, can provide good background information for more focused studies. Industry sector exercises usually create future visions of the industry and aim at coordinating development activities among the industry (see e.g., the Future Forum of Forests of Finland). Organisations that have participated in sectoral exercises have already formed a vision on future issues in the industry. Some work can then be saved and further foresight exercises can be more focused on identified problems and emerging opportunities. National exercises can create networks where the best expertise is easily found. Industry sector exercises help form coalitions to strengthen industry at the organisational and

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industry level. It should be noted that not only Finnish exercises should be studied, but also those conducted in other countries. It seems that, in light of other foresight activity in Finland, foresight at VTT could benefit from concentrating on other, more focused issues, than those examined at the national or industry sector level. This is because knowledge on future development of scientific fields and technologies is relatively well-known, so there is no reason to do double work. Instead, it would be more tempting to go beyond the general level and try to answer more focused questions that are strategically relevant to VTT and its customers.

2.6 VTT'S INNOVATION PROCESS


In this Thesis, the innovation process provides the context for practising foresight. Foresight represents the creation of ideas for research and visions that form the basis of strategic planning. These ideas and strategies are then realised as research and development projects aimed at generating commercialised products and other scientific knowledge as the end result of the innovation process. VTT's innovation process has four stages, which are illustrated below in Figure 6. These are Foresight, Concept Creation, Engineering and Testing and Services. In this chapter, they are discussed in order to gain an understanding of the kind of activities that VTT has and to identify potential links to foresight. The VTT innovation process model is a simplification of the "real" process, but serves here as a conceptual basis. In practice, the innovation process model has several feedback loops and connections to other sources of innovative activity, such as other partners and sources of IPR. Nevertheless, the model helps understand different stages of research and development.

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Industry Innovation Process

Foresight

Research

Development

Commercialization

Collaborative Activities

Aligning the Future

Creation of Business Opportunities


Concept Creation
Business Models Technology Concepts Solution Concepts Forums

Product and Service Development

Commercial Services

VTT Innovation Process


VTT Offering

Foresight

Engineering

Testing and Services


Testing services IPR Spin-offs Consulting Tools

Market Technology Business

R&D services Products Services Outsourced R&D

Figure 6VTT Innovation process model, adapted from VTT innovation management toolbox (modified)

As foresight, we here mean future visions created in the foresight process. The foresight process as such can also be used to stimulate other stages of the innovation process by appropriate topic selection and by engaging decision-makers and experts accordingly.

2.6.1 Foresight
In the VTT innovation process model, the first stage, the so-called fuzzy front end, is named 'Foresight'. Here foresight means having ideas about the future needs for research foreseeing what is needed in the future or which areas of research are promising. Foresight means generating ideas for further development. Regardless of the form that foresight takes in the process, it is at least implicitly part of the innovation process, since the researcher or inventor performs his actions based on what he foresees will be the consequences of his work, and through his actions then pursues these consequences. This Thesis seeks to make the foresight part of the innovation process more explicit and formal. Anyhow, the result of VTT's innovation process including collaboration with industrial firms should be technologies, applications or products. Thus, the role of foresight in VTT's innovation process should be predicting outcomes of the process the

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consequences of VTT's actions namely, foreseeing innovations. This vision can then serve as a basis for the innovation process by providing a clear goal. The goals of the foresight exercise should reflect that needs of customers in terms of what the result of the innovation process should be. Therefore, it is vital to first define what the ultimate goal of the customer is not for the foresight exercise, but for the innovation process that the foresight is part of. What is the expected product or service that we are trying to foresee like? By answering this question the goals for the foresight exercise are defined. The innovation process aims at producing innovations. To be able to perform focused and goal-oriented research and development at different stages of the innovation process, goals of the process should be made clear. Outcomes of the innovation process should be characterised by examining different types of innovations. Some dimensions for innovations can be given. Starting from the level of analysis, the first challenge is to identify whether to develop and commercialise a new autonomous innovation, or whether to make a new system succeed (Maula, 2004). This has implications for the innovation process and thus for the foresight process that reflects and supports the innovation process. One example of these implications could be increased dependence on others, in the case of systemic innovations.

2.6.1.1

Channels of influence to the innovation process

The innovation process is led by demand for innovation activities and the steering of the process. Demand comes from customers, industrial firms. Steering is implemented largely by technology strategy. Both of these channels can be influenced by a foresight process. In the case of VTT's innovation process model, foresight is followed by a 'Concept Creation' phase. Channels of influence to the innovation process are illustrated below in Figure 7.

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Future opportunity identification

Customers
Demand Demand for for research research

VTT Innovation Process

Visions, Foresight Innovation ideas

Concept Creation

Engineering

Testing and Services

Funding Funding Interesting strategic research areas

Technology strategy

Figure 7 Influence channels of foresight on VTT's innovation process

2.6.2 Concept Creation


The concept creation phase in VTT's innovation process consists of creating technology and business concepts for the client. Its goal is to analyse the customer's business, identify problems and opportunities, and create a basic solution for business and technology needs. The actual engineering research and development can take place on this basis. The outputs of this stage are new business models and service and application concepts. According to the definition of Koen et al. (2002), the concept has a well-defined form, including both a written and visual description, that includes its primary features and customer benefits combined with a broad understanding of the technology needed. This stage requires information on the current and future business environment, including visions, scenarios and ideas for innovations.

2.6.3 Engineering
The engineering phase consists of projects for meeting the current and specific needs of industrial firms. In practice, engineering means strategic and applied research.

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'Strategic research' is defined by Irvine and Martin (1984) as "basic research carried out with the expectation that it will produce a broad base of knowledge likely to form the background to the solution of recognised current or future practical problem". The time frame of strategic research is typically more than 10 years to commercialisation. At VTT, strategic research is managed by a specific strategic research unit, which makes the decisions to finance strategic research from the government's basic funding. Research is then conducted in research teams. Strategic research usually has a strong societal connection. In some scientific fields, the results of strategic research have more societal and environmental benefits and uses than direct links to commercial technology development for industrial firms. Applied research at VTT is conducted in close cooperation with customers. Products of applied research are new technologies or products. Applied research is financed by VTT, the National Technology Agency and industrial firms. A major share of VTT's activities can be considered to be applied research. The time frame of applied research is shorter than in strategic research, typically 3 to 10 years to commercialisation.

2.6.4 Commercialisation
In VTT's innovation process, commercialisation means supporting commercialisation of technologies and products. VTT's services comprise commercial testing services for products and their components, but also, in VTT Ventures, commercialising VTT's intellectual property rights, for example by licensing technologies to industrial firms. Commercialisation deals with already available technologies and therefore it is not in a key position in the innovation process from the foresight perspective.

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3 Requirements for foresight activities

"I think there is a world market for about five computers." Thomas Watson, Chairman of IBM, 1943

Requirements for foresight activities are examined by analysing foresight's channels of influence on VTT's innovation process.

3.1 VTT'S FORESIGHT NEEDS


In this chapter, foresight needs within VTT are discussed. Needs assessment helps identify the areas in which foresight could be applied. It is also the basis for choosing the design for the foresight process and the organisation.

3.1.1 Strategic intent


The strategic intent of VTT's foresight from the government's point of view is executing VTT's role as a policy tool in the national innovation system. In the light of decentralised foresight activities in the Finnish innovation system, Alpo Kuparinen adds that, in addition to its current foresight activities, VTT should serve the foresight needs of industrial firms and deepen VTT's industrial relationships through foresight exercises that have practical outcomes which can be translated into innovation activities.

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Taking a corporate management perspective of VTT, the strategic intent of foresight at VTT is to support the creation of innovations through technology creation, application and technology transfer. Foresight is to help create innovative concepts, identify strategic research areas and build innovation networks between VTT and its customers. According to Director General Erkki KM Leppvuori, the strategic intent of developing VTT's processes is to create ways to favour collaboration and develop innovation activities and combinations of technologies. In innovation activities, the emphasis should be on the development of radical innovations. These goals also reflect the intent of foresight activity. According to Annele Eerola, in terms of organising the foresight process, the intent should be to guarantee the accumulation of knowledge, competence and synergies, and to make the activity continuous, professional and persistent.

3.1.2 Concept creation


The main function of the concept creation stage in VTT's innovation process is to solve the customer's problems at a conceptual level, or at least to identify the main developmental areas and opportunities. The concept creation stage aims to create new business models and technology concepts for the customer. These can then be engineered at the next stage of the innovation process. At this stage, foresight could help in identifying longer-term future opportunities for industrial firms. Foresight outputs at this stage can be visions on the development of technology, markets or society, for example, but also more focused products, such as ideas for future innovations. Moreover, development of future-oriented innovation ideas could be very beneficial from a concept development point of view. If the foresight process so allows, in terms of scope and participating organisations, concept creation could actually become an integral part of the foresight stage.

3.1.3 Technology strategy process

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The technology strategy process defines what research is conducted at VTT. Technology strategy is implemented using technology themes, research programmes and key technology actions as instruments. They define the funding structure for research and the goals for these areas. According to Director General Erkki KM Leppvuori, the goal of technology strategy is to create priorities for allocating funding for strategic research by examining business opportunities. Technology strategy is created in an annual technology strategy process. As a decisionmaking process, it seeks to identify important areas of research and to establish priorities. Here, the structure of the process and the chosen approaches as well as the information and foresight needs are discussed based on the results of interviews. However, it should be noted that this presentation is an interpretation of the author, since no formal models of the process exist publicly. Moreover, the description of the process is rather general and does not include detailed information about its implementation.

3.1.3.1

Structure of the process

The technology strategy process begins with the identification of future opportunities and research needs. First, visions of technological development and ideas for avenues of research are created at the operating research-team level. At the middle-management level, consensus about further development is then formed. At the top-management level, priorities are set for different research areas. Financial frameworks and goals are then given to the research institutes as implementation of technology strategy instruments. Following this, planned avenues of research are activated through calls for proposals and by setting priorities for project selection. This phase is implemented through the technology strategy instruments, creating an array of technology programmes within VTT. Research initiatives are then presented bottom up from the research-team level to the decision-makers who select proposals to be financed. During ongoing research projects, knowledge of technological development accumulates. This learning effect then feeds back to the next technology strategy cycle. The technology strategy cycle and its objectives for foresight are presented below in Table 3.

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Table 3 The Technology Strategy Cycle at VTT


The Technology Strategy Cycle Organisational level Strateg ic plan n in g Dec isio n appro ac h 4. Decision-making 3. Establishing priorities for existing and new areas in research portfolio 2. Identify ing critical technologies and development paths 1. Identification of needs and opportunities Visions of technological development 5. Goal setting Funding structure 6. C alls for proposals Establishing priorities for projects 7. Research Development of innovative solutions Strateg y im plem en tatio n

Top management

Priority -setting

Research institute

C onsensus-seeking Project selection Exploration C reativity Diversity 8. Learning

Research team

In the technology strategy process, different organisational levels have different tasks. This is because researchers have the substance knowledge in science. Also, they have the closest contact with customers. This enables the operational level to bring information on customer needs into discussion, if this link is well exploited. Top management must rely on operational level arguments in setting priorities, analyse the greater setting and take into consideration the objectives presented by the government and issues of international cooperation between RTOs. This situation makes priority-setting vulnerable to political influences, which should be avoided if objective assessment of potential of research areas is desired. Knowledge created in the first phase of the cycle remains in the heads of researchers and is ready to be applied in the implementation phase. If the quality of ideas could be improved at this stage, it would then also support the implementation of the strategy in the form of research initiatives, not only strategic planning by producing better arguments. Based on the above analysis, stimulation of the research-team level could have most impact on planning and implementation of technology strategy.

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3.1.3.2

Foresight objectives in the technology strategy cycle

The main goal of technology strategy planning is to set priorities for research areas. At the planning phase of the technology strategy process the main objectives are to create future visions and set priorities. At the research-team level the focus of foresight is to create novel ideas and innovative solutions. The foresight process should then aim to produce a creative variety of ideas and future visions. At the next level of the process, the focus should be on consensus-seeking in order to define the most important directions of a specific research area. At the topmanagement level, establishment of priorities becomes focal. During the implementation phase of the technology strategy cycle, foresight is used in an environment where the main direction and priorities are set. This could be compared to managing a research and technology development (RTD) programme. Managing the planning of research and catalysing innovative operations are the main goals for foresight activities at the implementation stage. In practice this means forming appropriate research teams and the selection of projects according to formed priorities. At this stage, creativity stimulating tools could help development of research ideas and innovative solutions.

3.2 MAIN DRIVERS FOR FORESIGHT IN INDUSTRIAL FIRMS


Firms' internal need for foresight is mostly associated with their decision-making processes. In industries characterised by long product cycles and high development or investment costs, long-range monitoring and planning is an inevitable prerequisite for any strategic RTDI decision (Becker, 2002). Foresight is also beneficial in a more turbulent business environment. For firms that pursue an "innovation leader" strategy, foresight seems inevitable to secure their technological leadership in the market (Becker, 2002). Foresight can also be used as a tool of visionary leadership by creating a clear and shared vision for the organisation (Nanus, 1992). Also, another operative task for foresight can be

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to act as a tool in strategic planning processes, which is the case, for example, in scenario analysis. Industrial firms may also have external reasons for practising foresight. First, foresight can be used as an early warning system to prepare for wild card events and sudden shocks. Second, it can help to build up knowledge about emerging technologies and their future users. Third, the networking benefits of the foresight process help in opening the company to the outside world and in finding starting points for innovation transfer, cooperation and best practices. Foresight analyses of the business environment often serve as the starting point for the development of a corresponding corporate strategy. (Becker, 2002)

3.3 NEEDS OF DIFFERENT MANAGERIAL ROLES


Foresight needs may differ at different managerial levels in industrial firms, because they have different responsibilities and make decisions on different issues in varying time frames. To assess foresight needs from different managerial perspectives, some corporate management members were interviewed. Based on these interviews, some requirements for foresight exercises from industrial firms' point of view and case examples are presented. Some general requirements from the corporate leaders' perspective have been given by Sallner (2005), who says that future studies need to meet three criteria in order to help a business leader make good decisions. Firstly, corporate leaders need insights into the future of their customers and industry. The problem is that most futures studies concentrate on macro-level PESTE analysis. However, managers are more interested in trends specific to their industry, for example customer segments, technology architectures and value chains. Secondly, decision-makers want help in understanding the implications for their business. This means combining facilitation with domain-specific knowledge, which can be achieved through cross-functional and scientifically multi-disciplinary participation. Third, corporate leaders need to be involved in exploring the options they face. This arises from the observation that relevance can be created only through co-creation.

3.3.1 Top management

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Pekka Ketonen, CEO and Chairman of Vaisala Plc and Chairman of the board of VTT, was interviewed to gain an understanding of the information needs of the top management of a medium-sized industrial firm. According to Ketonen, in the case of Vaisala, future-related information on other industries is important, especially understanding their customers' technological and business areas. This can also be assumed to be the situation in other companies. When discussing the time horizon of foresight and the information that is needed, Ketonen says that a 20-year time frame is necessary, because achieving break-even might easily take 10 years from the beginning of major development projects. In order to run foresight exercises, foresight process competence is needed by Vaisala. Therefore, providing that process is important for VTT, according to Ketonen. The main professional problem in the work of a CEO and Chairman, Pekka Ketonen summarised as follows: "Are these all the options we have, or are we missing any? Which ones should we choose?" As options he means new business and technological opportunities. The importance of Ketonen's concern is highlighted by an observation of Knnl et al. (2005b), who argue that the lack of technological options and collaborative relations may be particularly noteworthy in times of discontinuous radical changes. Information needs in this context can be seen, on the one hand, as the number and quality of options and, on the other hand, understanding future development of the business environment. In this sense, foresight has the twin role of catalysing creativity and innovation management by creating new innovation ideas for further development, and of producing predictive analyses that support strategic decision-making and vision building.

3.3.2 Business division management


As a representative of business division management, Hannu Tuominen from Vaisala Oyj was interviewed.

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According to Tuominen, future-related studies mainly focus on a relatively short time frame, two to three years. In addition, some long time horizon scenario work has been done within Vaisala Oyj. The strategy process is the foundation of long-term development activity. The process that Tuominen describes has four stages for new business development, namely: opportunities, intent, resources and actions. The first one, opportunities, can be seen as a task for foresight, whereas the others are more internal tasks in a corporation and answer more the question of which opportunities the firm should pursue and how. The key theme, according to Tuominen, is understanding the operative processes of the customer and foreseeing how the customer's business and environment are going to develop. Another interesting area from the division management point of view is foreseeing the development of one's own sector as well as societal and legislative issues. Tuominen adds that there are three main viewpoints: society, technology and customers. In conclusion, Tuominen says that foreseeing new business opportunities would be very beneficial. When it comes to running the foresight process in practice, Tuominen highlights the fact that activities must be driven by direct customer needs, because the anticipated utility from the exercise defines how much resources participants are willing to commit. When it comes to networking goals for foresight exercises, Tuominen says that customers are the main target group that a company wants to network with. There has to be a common win-win issue to bring people to the same table. The main concern in his job, Tuominen says, is how to network faster with customers.

3.3.3 Research management


Research Director Lars Gdda from M-Real has another view on innovations and foresight needs in corporations. In contrast to Tuominen's view, he says that most development and new innovations are technology driven. But he also agrees that in the service sector, customer involvement is a more important source for innovations. These views are supported by Miles (2004), who suggests that in manufacturing and high-tech sectors the

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innovations being undertaken in various specialities and branches are yet to reach general awareness, and therefore experts on the service dimensions of products may have little awareness of forthcoming innovations. Since the paper industry has a very long cycle, the time horizons for scenarios have to be as long as possible. Themes that should be considered are societal development globally as well as technological development, especially disruptive innovations that could change the name of the game in the industry. As one example he names the technology to use the eucalyptus tree as a raw material, which changes the geographical balance of raw material supply and has thus long-term technological and business effects. As the most interesting area for a foresight exercise, Gdda names studying the future development of customers' industries. Gdda would very much like to hear the voice of end users, in addition to customers, in the foresight exercises. He also stresses the importance of complementary technologies and businesses, like the opportunities of Internet, in such studies. Interpreting Mr Gdda's views it seems that in his industry, the main tasks for foresight would be in preparing for wild card events and in identifying business opportunities by examining the future of customers' businesses more closely.

3.4 PRACTICAL
PROJECTS

EXAMPLES

OF

FORESIGHT-DRIVEN

DEVELOPMENT

In this chapter, some practical examples of industrial firms' needs for foresight-driven projects are given. They are summarised based on personal interviews. VTT Business Solutions offers specific opportunity identification projects that implement a foresight-oriented approach. The aim of these projects is to find technology solutions to future market needs or to look for business applications for technologies. Examples of opportunity identification project topics are presented below in Table 4.

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Table 4 Opportunities identification project examples


Description Example Opportunities identification project examples Looking for business applications for technologies, or looking for technology solutions to problem Identify ing future needs of customers for basis of R& D decisions 5 y ears Single company Seeking new application areas for sensors Information to back up investment decision for a paper mill 30 y ears Society globally Market and society development Top management Production mgmt U nderstanding future development of technological areas 5-20 y ears Scientific sector Technology foresight Research directors Researchers

Time frame Level of analysis A pproach Users of information

10 y ears Multi-industry

Market foresight to technology C ombination of market and technology foresight Top management R& D management Researchers Engineers R& D management Engineers

Experts

C ustomers Top management Engineers and researchers

Researchers Business unit mgmt C ustomers List and descriptions of potential applications

Top and middle mgmt Economists Researchers Vision statements Scenarios Quantitative forecasts

Researchers C ustomers

Deliverables

Application concepts

Vision statements Roadmaps

R& D priorities and roadmaps Roadmap of RTD efforts Vision statements

The variety of different approaches and objectives poses a challenge to foresight process design. The approach could be purely technical, societal or addressing markets, or it can have some components of both market and technology foresight. The special goal of finding applications for technologies requires understanding of both market needs and technological enablers. Foresight is expected to serve as a clarifying function creating normative vision statements to support information needs in specific decision-making situations, but it can also include more creative and stimulating elements, for example aimed at developing new application concepts.

3.5 FORESIGHT AND STRATEGIC DECISION-MAKING LEVELS


For optimal benefit, foresight should lead to research and technology development projects that address the future needs of industry and customers. This can be achieved by using the results of foresight in several decision processes, which are illustrated in Figure 8.

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Figure 8 Decision processes as application areas of foresight

These decision processes correspond to those strategic issues identified by Eerola (1990), who classifies use of market forecasts into three main strategic issues, namely portfolio, investment and resource allocation management (Table 5). Time horizons in the above framework are defined according to interviews.
Table 5 Market forecasts as strategic information: Focus of interest by strategic issue, adapted from Eerola (1990)
Focus of interest Products and market areas Aggregation levels Company ' s potential markets by product group / country group Company ' s intended markets by product group / user group / Company ' s existing markets by product / client / competitor

Strategic issue Portfolio Investment

Time 10-30 y ears 3-15 y ears

Resource allocation 1-5 y ears

At the visionary decision-making level at VTT, foresight can be used to deal with issues concerning the start of new technology themes and the identification of areas of strategic research. At the strategic level, decision processes are concerned with the development of already established technology themes and strategic research areas. At the operational level, the issue is to create ideas and research project initiatives, and to perform research. In industrial firms, managing the business portfolio and identifying future business opportunities are domains of long-term visionary decision-making. At the strategic level, usually within a three-to-five year time frame, the corresponding business and technology

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strategy are managed. Short time horizon operational level decisions focus on executing the strategy. This involves the operational management of research and technology development, even though these activities could be aimed at a longer time horizon. Operational decision-making then deals with the operational management of projects and activities. Strategic issues and longer time horizon RTD decisions are dealt with at a strategic decisions level. Vertical transitions between decision processes can be seen as strategic planning processes. Moreover, acting together with customers at different stages of these processes, joint activities can be managed. Through previously discussed decision processes, foresight can be used to establish priorities in RTD management. Priorities are then implemented as the selection of projects which are to be started. Through these mechanisms foresight can be turned into future-oriented research projects. Eerola (1990) also presents a theoretical background to the functions that foresight, as market forecasts, can support in the various phases of the decision-making process (see Table 6). This theoretical background also validates the observation of the foresight needs of industrial firms that has been gained in the interviews. Building on interviews and theory, customer segments for commercial foresight services are presented in the next chapter.
Table 6 Market forecasts as strategic information: Functions served by forecasts in the various phases of the decision-making process, adapted from Eerola (1990)
Functions served Role of the market forecasts Reasons for considering uncertainty Inputs of problem solving Discovering possible threaths and opportunities Parts of reference frames for testing derived solutions Inputs of timing and fine tuning / Parts of reference frames for testing deviations Preparation of contingency plans Identification of early warnings / Consideration of corrective procedures

Decision-making phase Recognizing and analy zing strategic problems and situations Preparation and selection of alternative plans Implementation and follow-up of decisions

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3.6 CUSTOMER SEGMENTS FOR FORESIGHT SERVICES


According to the functional need for foresight, customer segments of commercial foresight services for industrial firms can be identified. Based on interviews, the following functional needs for foresight were identified. Futures intelligence. Creating an understanding of the dynamics of the business environment and raising awareness of current and emerging trends. Discovering possible threats and opportunities in existing and intended markets and using them as inputs of problem-solving. Strategic management. Using foresight as a decision-making support tool for the preparation and selection of alternative plans and strategic choices for intended and potential markets. Innovation management. Steering research and development activities by stimulating the front end activities of the innovation process. Using foresight as a tool to create new ideas and concepts for a company's intended markets. Creating networks and alliances. In addition, networking is emphasised as an important objective of foresight exercises. An industrial firm may need all these functions, but the target audience for the study may vary. For example, top management is responsible for managing the business portfolio and also for examining potential markets for the company, while business unit management is responsible for resource allocation for existing business, with research and development personnel being responsible for creating products for existing and intended markets. Customer segments are named after functional needs as Future Scouts, Strategic Planners and Innovators. Customer segments are presented in more detail in Table 7.

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Table 7 Customer segments for foresight services


Customer segment Future Scouts Fun c tio n al n eed Raising awareness on market and technology trends, Identify ing opportunities and threats Characteristics Target audien c e Serv ic es Tim e ho rizo n Analy sis sessions 3-5 y ears Business unit and reports of management, top trends and weak management signals in company ' s markets and its clients' industries

Strategic Planners

Top management, Industry scenario 10-20 y ears Preparation and research management analy sis workshops selection of alternative plans and strategic choices Research and development management, engineers Technology roadmapping exercises 5-10 y ears

Innovators

Stimulating front end of the innovation process

Research and development management, engineers, business unit management

C reating research and development alliances and networks

Existing value networks, small clusters of companies

Innovation ideas 5-10 y ears to and concepts that commercialisation capture potential of emerging technologies and market trends Innovation ideas 2-5 y ears to and product commercialisation concepts that apply existing technologies Theme specific 5-20 y ears foresight forums

3.7 WHAT KIND OF FORESIGHT ACTIVITY IS MISSING AND NEEDED?


As discussed earlier, there is a supply of general-level public foresight information and consulting services, like corporate scenario analyses. Moreover, some industry-level analysis is conducted by industrial associations together with industrial firms. The focus of these analyses is on raising general-level awareness of future developments and on building coalitions to develop industrial competitiveness. They highlight the future challenges, but

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the solutions still have to be given by the industrial firms. Considering VTT's and industrial firms' foresight needs, the gap between the services available and those that are needed are summarised.

3.7.1 Gap in the case of industrial firms


Foresight in corporations is still relatively rare. Some major corporations have their own foresight unit (Becker, 2002), which monitors their own field. However, for this Thesis no specific information on foresight in SMEs was found. The assumption is that their foresight work is relatively unstructured and ad hoc around technological issues. In business issues, such as using scenario analysis, some activity is assumed to exist, as implied by the existence of various consultant agencies, independent futurists and futures research institutes. What seems to be missing is foresight work that discusses more focused issues at the level of an industrial firm, especially considering small and medium-size enterprises. Also, lack of awareness of the field and foresight process competence seems to restrict firms' foresight activity.

3.7.2 Gap in the case of VTT


At VTT, there is a need for foresight information that would indicate the kind of technologies that industrial firms need in the near future, so that steering of research would be easier and more market-oriented. To satisfy this need, information on the future needs of industrial firms and industry clusters would have to be created. In addition, to support more long-range research planning, some analysis on emerging sciences, technologies and societal trends is needed. This need could anyhow be answered with a business intelligence function that monitors the latest developments and weak signals around the world. The main concern here is to avoid unnecessarily developing technologies that are already available or being developed by others.

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4 Introduction to foresight processes

"By the end of this century we live in paperless society." Roger Smith, President of General Motors, 1986

This chapter introduces the theoretical background for this Thesis by examining the literature on foresight. Firstly, foresight as a discipline is defined. Secondly, a closer look at foresight processes is taken for the basis of creating an understanding of the kinds of possible applications for foresight at VTT. Third, the organisation of foresight is briefly discussed and, finally, the theory is synthesised to answer the question of what kinds of approaches could be employed at VTT and what an ideal foresight process would be like.

4.1 APPROACHES TO FORESIGHT


Foresight can be performed in many different ways according to the objectives given for it. Dimensions in different approaches can lie in the extent to which participants are engaged in the process or whether topics should be more science- or market-oriented. Moreover, the number of participating organisations has implications for the process, affecting the issues that can be covered, for example. In this chapter these issues of foresight processes are discussed.
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4.1.1 Science-push and demand-pull


Whether foresight should focus on producing innovations by science and technology push or demand pull depends on the orientation of the research. For curiosity-oriented research, greater weight should be given to technology push, and for applied research the opposite holds; for strategic research, the balance should be more equal. (Martin, 1995) Martin (1995) also warns that if socio-economic demands are allowed to dominate, the end results tend to be short-term and conservative. Nobel Laureate Ivar Giaever has suggested a paradigm shift in research.4 He says that natural sciences are already so well known that scientific exploration should continue in the domain of technology. On the same occasion, Nobel Laureate Kary Mullis emphasised the significance of accidents in scientific discovery. These remarks highlight the importance of strategic research technological development is a significant scientific practice and, as a by-product of focused and goal-oriented research it may lead to the making of unanticipated discoveries. These considerations should be taken into account also in foresight. On the other hand, observing possibilities should not be too restricted; it still has to be needs driven. Also, when attractive areas for strategic research are specified, it should be noted that even a very narrow field or application could open broader opportunities and therefore these should not be assessed only by comparing the anticipated potential of each opportunity. Strategic research can start from small beginnings (referring to a single application), but it can end up with greater achievements than expected. Therefore, products of foresight should not be assessed according to potential among present customers of research results. Even if there is a small initial target customer, risk should be accepted and the project should not be given lower priority. Projects that start from demand pull might eventually end up in technology-push applications, so in the light of these observations taking a demand-pull approach cannot be viewed as a total abandonment of the science-push factor.

Presentation at the Festival of Thinkers, Abu Dhabi, March 27 2005

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4.1.2 Participative approach


A participative approach to foresight highlights the importance of participation in the foresight process. Participative foresight aims at increasing the process benefits of foresight. Salo and Cuhls (2003) remind that "the very remit of foresight calls for the creative envisioning of alternative futures and the pursuit of processual objectives (e.g. enhanced networking among stakeholders) which also imply that foresight is usually best enacted as a collaborative endeavour". Participative approaches involve interaction of wider ranges of stakeholders and experts in envisioning the future, which reflects several goals. For example, by greater participation the knowledge base that is drawn upon can be enlarged. Havas (2004) argues that discussing the various visions with a wide range of stakeholders also leads to a more transparent decision-making process and hence provides a way to obtain public support. Miles (2004) supports this view by giving a democratic rationale for participation in foresight. He says that engaging more stakeholders in developing future visions can give foresight processes and recommendations more legitimacy. Miles (2004) continues that the enlistment of a wide range of actors in the process means that these individuals become members of social networks, forging contacts with the others involved in the process. This may remain a matter of better understanding the capabilities and likely strategies of other parties. It may spill over into new collaborations around opportunities identified in the process. He adds that the participants will also become better informed about the issues and interests that underlie the formal products of foresight and thus be more able and inclined to embed the messages of the programme into their own organisations and practices. The main advantage of participative exercises seems to be getting stronger buy-in for the results of foresight by involving actors in the exercise, but also getting appropriate expertise for the study. These considerations imply that actors who are supposed to work with the anticipated issues after the exercise should participate. Participation should also be considered when there is a need to raise awareness in the issues among actors or when the

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goal is to build networks for possible future interaction. When appropriate expertise in some areas is not available among interested parties, this competence should be acquired from external sources. For employing participatory methods in foresight, see Slocum (2003) and FOREN (2001) and for using methods in support of face-to-face interaction see Salo and Gustafsson (2004).

4.1.3 Prospective approach


Prospective studies involve traditional forecasting efforts, using systematic methods to explore future dynamics, enabling development of coping strategies. A critical element of much foresight work is some matching of (present and forecast) opportunities and capabilities, framing a vision of desirable and feasible futures. These are the classic extrapolative and normative approaches, and between these are multiple scenario analyses, forging outlines of alternative development paths and possibilities. (Miles, 2004) In prospective studies, participation has less importance and thus it can be seen more product than process oriented, which has implications for what it can or cannot be used.

4.1.4 The influence of actors on the foresight study approach


Technology foresight exercises may have different approaches depending on the actors and their objectives (see for example Eerola, 1996). Foresight exercises may also have goals other than creating visions of technological futures. They may also have a need to envision societal development as well as development of market needs and industry structure. Eerola (1996) presents different approaches to creating technology foresight characterised by the type of central actors in the study. The characteristics of these different exercises have been summarised in Table 8. What is important in the division between these approaches is that the foresight approach is strongly influenced by who the client of the study is and whether it is produced for a single company, a group of organisations or for public purposes. This has an impact on the kinds of issues that can be discussed and on who should participate to produce the results.

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When participation is more restricted, more focused and strategically sensitive issues can be discussed. This also has implications on the goals and results of the study. Moreover, the above framework presents issues that are sensible to discuss in each organisational context. Specifically interesting in the case of VTT is whether its customer-oriented foresight activity will be arranged with single companies or clusters of companies. As mentioned earlier (Maula, 2004), the point concerning how systemic or autonomous the issues are applies here.
Table 8 Creating technology foresight: Central actors and objectives in the three different types of technology study, adapted from Eerola (1996)
Type of study Orderer Private company study C ompany management Joint study / Public study Multiclient study A group of companies Society , citizens & organisations sharing a common interest Public authorities Academic community Inter-organisational task Wide-base task force / authorized project force / authorized group with multiple project group with a reference frames common reference frame Academic researchers

Producers of foresight

In-house experts & others on trust

(Science fiction authors) Primary users of C ompany C ompanies & org. Public planners, the results management and its ordering the study and advisors & politicians R& D groups sharing its costs Scientists & technologists Citizens Primary objectives Supporting Strengthening industrial Supporting public of the study company 's strategy competitiveness plannin & political formation and decision making innovation activities C oordinating the strategies of the industry / efforts of the development community Coordinating the efforts of the development community Stimulating futureoriented thinking

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4.2 ON FORESIGHT PROCESS


In this chapter the structure and nature of foresight process are discussed. The goal of this chapter is to contribute to creating a model of an ideal foresight process which can be applied at VTT. Firstly, the characteristics of a foresight process are discussed and secondly, the stages of the process are presented. The timescale of foresight ranges from the immediate future to the far horizon (Georghiou, 2003). For strategic research, a typical time horizon might be 10-20 years, while it is normally somewhat shorter for applied research. The time horizon should ideally be around two or three times that adopted by the 'clients' in their normal planning process. (Martin, 1995) According to Salo and Cuhls (2003), it has been asked if the benefits of technology foresight accrue from the foresight process or foresight products, such as published reports. They claim that the evidence suggests that the two are intricately intertwined, meaning that neither aspect should be overlooked. According to Salmenkaita and Salo (2004), the foresight process may evolve through iterative, incremental and even experimental activities through which the stakeholders become more aware of future opportunities and commit themselves to actions that reflect their enhanced understanding. Regardless of context, foresight activities can be viewed as social learning processes (Salo and Cuhls, 2003). Learning in foresight processes can be modelled using the SECI model of Nonaka and Takeuchi (Eerola and Vyrynen, 2002). The SECI model applied in the foresight process explains how tacit knowledge can be made explicit and turned again into tacit knowledge using foresight methods (see Eerola and Vyrynen, 2002), thus creating a cycle for knowledge creation to support innovation. According to Havas (2004), relevant policy needs should be addressed by applying appropriate tools and involving relevant players. Therefore, the dynamism of innovation and varying needs may require different set-ups of methods and participants, because any highly standardised foresight process will encounter difficulties in reflecting changes in

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innovation networks, systemic technologies and the society at large (Salmenkaita and Salo, 2004). Salo and Salmenkaita (2002) argue that the monitoring of ongoing RTD work in rapidly evolving fields of technology such as electronics and telecommunications is likely to produce insights which may enrich or even invalidate earlier foresight conclusions. Therefore, responsiveness which refers to purposely instituted managerial mechanisms for making warranted mid-course adaptations to foresight objectives and implementation plans should be regarded as a relevant design variable in the management of foresight activities. Responsiveness also requires flexibility in planning and implementation, achieved through the ability to envision and execute even radical changes in the foresight process.

4.2.1 Stages
Martin and Irvine (1989) present a process model for research foresight aimed at prioritysetting. Its main steps are presented here to gain an understanding of the structure of a foresight process and to recognise important aspects that have to be covered during the process. Martin and Irvine (1989) divide the foresight process into three main stages, namely pre-foresight, main foresight stage, and post-foresight.

The pre-foresight stage consists of two steps. The first step is an explicit decision to initiate the process. The second step involves various preparatory activities, including preparation of a strategic plan specifying the principal issues to be addressed, basic guidelines on the approach to be employed, and appropriate operating and reporting procedures. Another function for preparatory activities is to establish an organisational framework for executing the exercise, and in particular for building the links necessary to gain the active involvement and commitment of relevant stakeholders. The main responsibility here according to Martin and Irvine (1989) should be at a high-level oversight committee.

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The main tasks in the main foresight stage are detailed design of the foresight process, strategic analysis of the potential benefits associated with different research options, agreeing the most promising options, and disseminating the results to those involved, directly or indirectly, in determining the priorities. The point in the last step is to disseminate the results for the target audience, which can in other types of exercises also be stakeholders other than those setting priorities for research. In practice it can be interpreted that these are the people who are working with the issues after the exercise. Strategic analysis aims at evaluating the future prospects for research options. It involves examining evolving socio-economic needs and threats, emerging research opportunities, comparative advantages and weaknesses associated with economic and other resources, and existing scientific strengths and technological capabilities.

Martin and Irvine (1989) add that a fifth input is also needed, namely results from other relevant prospective studies, including those at a more macro- or micro-level. They also point out that the nature of the strategic analysis will vary considerably depending on the nature of the foresight activity in each specific case. Martin and Irvine argue that detailed design of the exercise should be the task of the main working group at this stage. However, it continues the designing of the process from the pre-foresight stage. Depending on the organisational context, there might be no reason why these two phases should be separated, if the main working group and the oversight committee are mostly the same group of participants, which might be the case when foresight is conducted within industrial firms or between a small number of organisations. The strategic analysis step in practice is divided into futures studies and strategic analysis of their findings. It means creating visions of future needs and identifying the most promising opportunities. Then, strategic analysis on their relevance in the organisational context is conducted. After the strategic analysis, the next step is reaching an agreement on the most
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promising research options. Finally, these results should be diffused among relevant stakeholders. According to Irvine and Martin (1989), the post-foresight stage concentrates on implementation of the findings. This means involving the institutional processes to determine resource allocation priorities. The end result in most cases of this stage will be an explicit decision to launch, expand, or change the direction of a research programme. The next step of the post-foresight phase is project definition and programme execution. The final stage is dissemination of research results. Martin and Irvine also remind us that the post-foresight stage tasks are no less central for the foresight process than the others, since the success of the foresight will ultimately be judged in terms of whether the resultant R&D activities subsequently meet important scientific or socio-economic needs. To summarise the most important functional phases of the foresight process, four main activities are identified in addition to the initial decision to launch the process. These are designing the process, conducting the preliminary studies for background information of the analysis, the actual foresight phase to study future opportunities, and the action planning phase, where firstly strategic analysis is conducted in the organisational context and then decisions and plans for following research and development activities are made. These main stages are presented below in Figure 9.
Designing Designing the the process process

Preliminary Preliminary studies studies

Foresight Foresight

Action Action planning planning

Figure 9 Stages of a foresight process

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4.2.1.1

Designing a foresight process

Some important aspects are briefly discussed here in order to raise the issues that have to be considered when designing a foresight process. The conclusion of this chapter presents some questions that help in designing a process and lists variables that have to be determined. According to Havas (2004), designing the foresight process is critical to its success. He presents that the success of any foresight programme depends on the match between its context, focus, goals, geographical scope (level), themes, time horizon, methods and participation. These can be seen as the main variables in foresight process design. In a foresight exercise, where the goal can be to produce innovation ideas to capture future business opportunities, innovation process and type as well as the target market for innovations provide the context, focus and goals for the process. These in turn influence the scope and themes of the study. Therefore, in innovation foresight (see Chapter 6) the definition of objectives should start by defining the kind of innovations in question and on which market they to be targeted. Finally, objectives must be properly set and realistic and one should not expect from foresight more than it can give (de Lattre-Gasquet et al., 2003). Porter et al. (2004) also present issues to determine the scope of content and process of a technology futures analysis. These and their implications are presented below in Table 9.

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Table 9 Technology futures analysis content and process scoping issues, adapted from Porter et al. (2004)
Scoping issue Co n ten t issues Time horizon Geographical extent Level of detail: micro (company ), meso (sector), macro (national, global) Pro c ess issues Participants (number, nature - experts or broader, disciplinary mix) Decision processes (operational, strategic, visionary ) Study duration (minutes to y ears) Resources available (funding, data, skills) Methods used Organization C ommunication flows (internal, external) Representation of findings (technology information products) Some implications data needed, suitable methods data (proximity affects direct vs. secondary access process - nature of interaction with stakeholders

how expertise is tapped, how study is conducted choice of experts methods usable methods suitable; modes of access to expertise data needed, analy tical outputs methods suitable, staffing, process management process management, nature of participation usability by various audiences

The time frame of the study influences the choice of methods (Porter et al., 2004) as well as the kind of research that is targeted, strategic or applied (Martin, 1995). Therefore this should be among the first issues defined when designing the process. However, to integrate business aspects into the discussion, the time horizon of the foresight process should correspond to the following factors according to interviews: Time horizon = duration of innovation process + time to break even + time to profit = "expected life cycle of the innovation or technology" Tegart and Johnston (2004) give seven criteria for methodology selection based on scoping issues presented by Porter et al. (2004). These criteria relate to the anticipated product of foresight and how the study can be conducted. These seven criteria are degree of uncertainty about the future, time horizon, type of future, numbers of participants, type of participants, logistics and the key challenge. Also the questions of (i) how systemic the targeted innovations are (Maula, 2004), (ii) what kinds of networks should be built have to be assessed when planning for the study, because

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these have implications for choosing the participants, and whether the study should be a private company study, a joint study or a public study (Eerola, 1996). Also the target audience of the study has to be taken into account when choosing the participating organisations (Eerola, 1996), which is supported by definition of foresight as a participative process. Following the arguments for applying the participative approach to foresight (Miles, 2004), participants should be selected so that key decision-makers of participating organisations are involved, as well as those scientists and engineers who are likely to work among the issues after the exercise. Also the availability of expertise should be considered when choosing the participants. On how foresight should be specified, Havas (2004) states that the focus and thus the main objectives should be formulated clearly at the very beginning. Arguments of Salo et al. (2004) instead suggest that these should not be fixed at the outset, but left open for iterative specification. Finally, considering the design of the process, Havas (2004) argues that if decision-makers strongly favour a certain approach, it is definitely not a good idea to try to push through a drastically different programme design even if it might seem to be relevant from an abstract theoretical or methodological point of view.

4.2.1.2

Preliminary studies

Preliminary studies here refer to preparation of reviews of earlier foresights, as well as relevant business intelligence information on recent developments around the focal issues of the foresight study. Their purpose is to serve as an information source for those participating in the foresight vision building stage of the process. Preliminary studies seek to find out what kind of knowledge already exists in the field to avoid double work (e.g. Becker, 2002) but also to stimulate discussion and arouse interest in the subject. Allocating sufficient resources for a thorough review of the findings from previous foresight studies at both higher and lower levels of specificity has proved significant in successful exercises (Martin and Irvine, 1989). Even to such an extent that Havas (2004)

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states that without inspiring 'semi-finished products' background papers, draft visions and reports the process cannot be triggered at all.

4.2.1.3

Foresight

The foresight stage consists of the actual foresight vision building and represents the central element of the process. Vision building should answer the research questions and discuss specific themes and employ appropriate methods, as specified in the first stage of the process. To illustrate different thematic approaches to foresight, Georghiou's (2003) distinction of three generations of development of foresight are discussed. The first generation consisted of technology forecasts made by experts. The second generation covered both technology and market perspectives. These were addressed by both academia and industry, and the programmes were structured around industry and service sectors. The third generation of foresight is structured around thematic socio-economic problem-solving with the broad participation of academics, industry, government and social stakeholders. In any case, Georghiou (2003) argues that foresight should be conducted inside the implementation space, meaning within those organisations that it seeks to affect and addressing corresponding topics. As the first glimpse of the fourth generation of foresight, Georghiou suggests a distributed model of foresight embedded at multiple levels within the innovation system, which also represents the model that is present in Finland as described by Kuparinen. Georghiou continues that here "knowledge acquisition by firms is as much about the ability to scan and draw in external technology and manage partnerships as it is about internal R&D". The context of foresight dictates the kind of issues it should answer. In the case of VTT, the context is defined in the first place as fulfilling VTT's role in the innovation system and, more specifically, supporting the innovation process by identifying business opportunities for industrial firms, seeking to identify attractive areas for strategic research, and producing visions and innovation ideas for the concept development phase of the innovation process (see Chapter 2.6.1.1 Channels of influence to the innovation process). The context of innovation processes implies that examining themes according to the structure of the

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innovation process, or at least approaching the issue from innovation management perspective, could be fruitful. Foresight should be conducted for the actual needs of participants. In the case of VTT, supported by the context, there are several themes and structural approaches for foresight that can be considered. These themes are those discussed in the context of innovation processes, namely society, markets, applications, technologies and the social dimension. Apparently, these are same as those in the foresight literature, excluding applications development. Possible structural approaches are socio-economic problem-solving and a more predictive approach around the industry and service sectors on the macro, meso and micro levels.

4.2.1.4

Strategy and action planning

Foresight has to be engaged to the strategy-making processes if the aim is to influence the strategy of the company. Action planning follows strategy and here it represents the resource allocation process that actually defines what the organisation does and therefore what its actual strategy is. This stage of the foresight process consists of shaping the strategies of participants, building on foresight results, and making the action plans for implementing the strategy in terms of collaborative research and development. Building on future visions and options for development, strategic analysis should be conducted in firms to define the direction where the company will be developed. After this main question, a dialogue between research partners can begin. Based on the strategic direction of organisations, a collaborative strategy can be defined. Here research areas and goals should be made explicit and an agreement on collaboration should be made. Finally, when the main guidelines for the collaboration have been set up, action plans should be developed. These action plans should present necessary research projects, their goals and plans for execution.

4.2.2 Comprehensive and embedded foresight


Foresight exercises can differ for example in terms of time horizons, coverage of issues and purpose. Salo and Salmenkaita (2002) give definitions for forms of foresight which can be

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used for different purposes and differ in terms of objectives, methods and results, namely comprehensive and embedded foresight. Characteristics of comprehensive and embedded foresight processes are presented in Table 10. Embedded foresight refers to the individual and collaborative processes through which prospective information about relevant technological, commercial and societal developments is acquired, produced, refined or communicated within RTD programmes, in order to generate shared understandings in support of RTD activities. (Salo and Salmenkaita, 2002) Comprehensive foresight is more extensive in terms of its time horizons and coverage of issues that need to be considered in setting the long-term research agenda. Comprehensive foresight is supposed to be used when setting the generic research priorities, but it can also support the five C's of Irvine and Martin (1984). In terms of purpose, embedded foresight can instead be viewed as a tool that serves to develop structures, processes and methods that support the execution of RTD efforts. Embedded foresight can thus be viewed as a tool to implement the research priorities. Embedded foresight in the sense that Salo and Salmenkaita (2002) have discussed it as an integrated management function in RTD programmes should therefore be viewed as a complement to and not as a substitute for more encompassing foresight activities.
Table 10 Comprehensive and embedded foresight, adapted from Salo and Salmenkaita (2002)

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Lev el Mode of execution Time horizons Participants

Co m prehen siv e fo resig ht Periodically conducted autonomous exercises Five y ears or more Extensive and voluntary stakeholder participation Deliberate attempts to transcend established boundaries Shaping of the research agenda and generic reserach priorities The five C 's - concentration, coordination, consensus, communication, commitment Networking through 'wiring up' the innovation sy stem U se of formal methods (e.g. Delphi) to support the production and codification of knowledge Reliance on external foresight facilitators

Em bedded fo resig ht Continuous activities within RTD programs Three to five y ears Structured around the program management and the participating research organisations Translation of research priorities into RTD efforts Sharing knowledge about the participants' research interests Continuous questioning of the research agenda and associated RTD management structures Assimilation of inputs from other initiatives (e.g. large-scale foresight exercises) Informal consultations in conjunction with program management Strong links to ongoing program monitoring Preparation of C alls for Proposals to launch new RTD efforts Alignment of mid-term research activities in RTD organisations Vision statements and periodic updates thereof Calls for Proposals

Objectives

Methodology

Decision focus

Strategic resource allocations by RTD policy makers

C odified outputs

C omprehensive analy ses in support of networking and allocative decisions

4.2.3 Explicit, emergent and embedded foresight


Salmenkaita and Salo (2003) distinguish three different types of foresight processes, namely: explicit foresight processes initiated by policy-makers to shape scientific research and technology development priorities and innovation policies, emergent foresight processes that are driven by overlapping interests and which are typically run within industry organisations to build coalitions for development activities, and

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embedded foresight processes, which are typically conducted within innovation policy instruments, for example RTD programmes, to translate priorities into action and to adapt the research agenda into a changing environment.

Characteristics of these three process types are summarised in Table 11. In explicit foresight processes, "the participants represented their separate interests and areas of expertise. The process is highly structured and systematic methodologies are used, and the results can be used to justify the changes in S&T priorities, which in turn may affect resource allocation". (Salmenkaita and Salo, 2003) Emergent foresight refers to "a collective and competitive process through which futureoriented analyses are iteratively produced, revised and evaluated in response to a recognised need to align interdependent RTD agendas with opportunities that are perceived and shaped by stakeholders who share overlapping interests". (Salmenkaita and Salo, 2003) In embedded foresight, "participants are already involved in collaborative RTD activities, whereby the very organisational framework for such collaboration (e.g. RTD programme) is intentionally utilised to facilitate future-oriented discussions beyond the scope of individual projects. In effect, this kind of continual consultation among the participants helps in adapting RTD activities to perceived opportunities and threats. Such adaptation at the project level is complemented by higher level changes, most notably through resource allocation decisions that pertain to the discontinuation of existing programmes, the initiation of new ones or the redirection of programmes at mid-term." (Salmenkaita and Salo, 2003)

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Table 11 Characteristics of explicit, emergent and embedded foresight processes, adapted from Salmenkaita and Salo (2003)
Interests Approach toward innovation policy Mode of consultation Methodology Organizational influence Resource allocation Result Other observations Explicit disparate "policy makers decide" consultative sy stematic implicit batch-mode recommendations "all are equal" (expert contributions) Emergent overlapping "policy makers follow" competitive ad hoc both continuous actions less competent viewpoints tend to be discounted ("meritocracy ") Embedded within same domain "policy makers adapt" continual structured ad hoc explicit staged adaptation promotes self-guidance

These three types of foresight processes can be applied to VTT's different foresight activities. When it is necessary to create future-oriented information for strategic planning and implementation needs in industrial firms or at VTT, explicit and embedded foresight can be applied. Explicit foresight can also be used in systematic analysis of future challenges for provide a basis for innovation idea development. Emergent foresight activity could be stimulated and organised, where the goal is to study the future of industrial clusters in order to build coalitions for innovation activities. Embedded foresight could in turn be used to coordinate RTD activities between VTT and industry.

4.3 ORGANISATION
Here, the organisation of foresight is discussed based on the literature. Foresight organisation has two levels, namely how the function is organised at the corporate level and how the actual foresight exercises are organised. Firstly, some corporate-level structures are presented and secondly, organising exercises are discussed on the project level. Following chapters are meant to provide guidelines for organising foresight in general. The question of how these should be applied at VTT is discussed later in Chapter 4.3.

4.3.1 Corporate level


The main task of corporate-level foresight organisation is to ensure that the activity is continuous. The function of foresight at VTT sets the basic conditions for the type of

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organisation. Here different alternatives are presented and, in the following chapters, how they relate to the nature of activity is reflected upon. Foresight in enterprises can take place at three organisational levels (Becker, 2002): corporate level, mainly by corporate research or development by divisions, technology centres and business units by temporary task forces which overlay the other two structural levels with a third, "virtual" structure Becker (2002) presents three overarching "ideal types" of foresight organisations in corporations. These are the Collecting Post, the Observatory and the Think Tank (see Table 12). These organisations or their functions can be organised at the levels presented above. These three types of organisations represent the extensiveness of the activity and they can be used as a kind of benchmark for VTT's foresight function.
Table 12 Foresight organisation types in corporations, adapted from Becker (2002)

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Organisation

The Collecting Post In conjunction with and embedded in other strategic R&D activities

The Observatory The Think Tank An autonomous foresight Special units who act as a unit, own budget, clear forward-looking think tank mandate to focus on futurerelated issues Full-time specialist staff A group of full-time futurists, experts and researchers, more generalists than specialists

Personnel

Part-time "futurists"

Target audience

Top management level, R&D decision-makers

The corporate development Top management, highdepartment ranking managers researchers, external clients Highly specialised purpose, All kinds of future-related long term strategic information, also in the intelligence wider socio-economic, cultural and regional sphere Re-use of already existing Broad and elaborate data, generating new future- foresight work to create a bigger picture of the future, related knowledge tasks beyond and above classical foresight External networks of Global internal and external specialists from the similar networks of experts, long fields of expertise term co-operation with research centres and institutes

Information provided

Basic background information (such as competitor or patent analyses) Search and collection of future-related information that is already prepared by others and is easily accessible Internal network of observers and experts, knowledge bought from specialised agencies or consultancies

Tasks

Sources of information

The Collecting Post is mainly concerned with providing background information for the decision-making processes of the company and it is present in companies with low levels of foresight activity. According to Becker (2002), the Observatory is an autonomous foresight unit with a fulltime staff and a budget of its own. Its particular trait is that is fulfils a highly specialised and rather singular purpose for the company. Out of its single-minded function follows that it also has a single addressee in the company in most of the cases, the corporate development department. The Think Tank is a special forward-looking unit, performing elaborate and broad foresight work in a company. This type of organisation can also provide foresight services to external clients.

4.3.2 Organisation of the foresight process


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Considering the actual foresight process, Foren (2001) names the following as the main tasks (Table 13), which cover all the main stages of the process. They are presented here to illustrate some practical tasks that the organisation has to perform.
Table 13 Tasks of foresight, adapted from Foren (2001)
Examples of some of the most frequent tasks in foresight Nominate group members Employ foresight methods, e.g. scenarios Manage process Organise conferences on specific issues Identify existing literature Prepare synthesis Prepare reports on specific issues Prepare final report Organise expert hearings Organise public debate on specific issues

Martin and Irvine (1989) discuss the structure of administrative organisation in the case of large foresight exercises aimed at science and technology priority-setting (see Figure 10). This kind of organisation is in principle applicable to smaller foresight projects, although in some areas these functions may overlap.
Authorities Authorities requesting requesting foresight foresight exercise exercise

Oversight Oversight committee committee Secretariat/ Secretariat/ support support staff staff Main Main working working group group

'Light 'Light touch' touch' committees committees and and other other informal informal networking networking

Expert Expert sub-committees, sub-committees, panels, panels, etc. etc.

Workshop Workshop discussions discussions

Formal Formal consultation consultation

Systematic Systematic surveys surveys by by specialist specialist consultants consultants

Figure 10 Administrative organisation of the foresight process, adapted from Martin and Irvine (1989)

The main point in the above administrative model is the notion of how different kinds of stakeholders can be brought into the discussion. It helps to assign experts, high-ranking directors and project management roles that match their competencies and position in the innovation system.

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The main working group should consist of the responsible personnel in each participating organisation as well as project management. It is also noteworthy that some experts may be brought into discussions only through the actual workshops, while other stakeholders may be engaged through more informal networking events. Cirad (Centre de coopration internationale en recherche agronomique pour le dveloppement), a French public research institution, has conducted two foresight exercises on agricultural commodities, one on cocoa and one on hevea - natural rubber. (de Lattre-Gasquet et al., 2003) Building on their case examples, de Lattre-Gasquet et al. give some recommendations on how to organise a foresight exercise. Firstly, there must be an ordering body and a steering committee. Also, there should be a permanent team managing the exercise. Considering participation, they emphasise that the circle of participants should be well defined, meaning that it should be explicitly stated who is participating in the exercise and what the particular roles of each participant are. There should also be a sufficient number of volunteers and active participants available, and operators and stakeholders must be encouraged and pressured in order to have an interest in the results. Finally, de Lattre-Gasquet et al. (2003) remind us that there is no single best way to perform foresight, so the practical arrangements should be considered separately under each set of circumstances.

4.4 FORESIGHT PROCESS FLOW


Here the final foresight process flow is synthesised and summarised (see Figure 11).

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Stage Designing the foresight process Responsibility: Steering group Scoping foresight

Issues

Output

1. Define objectives What questions should be answered? What kind of innovations are we targeting? 2. Systemic nature How systemic are the issues? What fields have to be covered? How classified are the results? 3. Target audience Who are users of the results? 4. Information sources Who has the best expertise? Who will be working on the subject after the foresight exercise? 5. Background information What kind of results have earlier foresights produced? What is the latest business intelligence information? 6. Futures studies Market, application and technology foresight 7. Strategic planning What should be our focus areas? Corporate / business strategy Technology strategy Research strategy 8. Action plans How should we proceed?

Topic Research questions Time frame Methodology selection Private study Joint study Participating organisations and decision makers Participants Experts

Planning how to conduct exercise

Choosing experts

Preliminary studies Responsibility: Foresight and BI units Foresight vision seminars Responsibility: Steering group Strategy development Responsibility: Research and corporate management Action planning Responsibility: Research management

Review Review of of earlier earlier foresights foresights Business Business intelligence intelligence on on recent recent developments developments Innovation Innovation ideas ideas Future Future visions visions and and scenarios scenarios

Cooperation Cooperation strategy strategy

Decision Decision on on cooperation cooperation Research Research programme programme and and project project plan plan

Figure 11 Foresight process structure - Stages, issues and outputs

After the initial decision to launch a foresight exercise, the foresight process consists of four main functional stages. Supporting functions such as information dissemination and project management should be continuous and run parallel to the other stages. The actual foresight process begins with designing the process and defining its objectives. As a result, topic, time frame and research questions should be formulated. Then, the project plan should be made, including the selection of participating organisations, key decision-makers and experts. Preliminary studies should be conducted to gather information that is already available. This means both foresight results from other studies and the latest information on current

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development, on which the participants can construct their understanding of the issues under investigation. The actual foresight study is conducted in foresight vision seminars using specific participatory futures studies methods. At this stage, an analysis of future developments is conducted. The foresight stage should result in the formulation of future visions, scenarios, road maps or innovation ideas, based on how the objectives are defined. The purpose of the action planning stage is to translate visions into collaborative research activity. Firstly, it requires an analysis of the kind of direction that participating organisations are willing to follow. Then an agreement on common research strategy can be reached. Finally, strategic plans should be road mapped into collaborative research plans.

4.5 IMPLICATIONS OF DIFFERENT FORESIGHT PROCESSES FOR VTT


As comprehensive foresight processes seek to set priorities and find new areas of research, embedded foresight can be used to translate priorities into RTD efforts. Innovation foresight (see Chapter 6) aims at creating novel innovation ideas and solution concepts to enhance innovation management. The difference between these process types is that the innovation foresight process is not aimed at defining explicit priorities, but at increasing the variety of innovation ideas and thus feeding strategic processes with well argued suggestions for new RTD activities and concrete suggestions for output and product concepts, for example. Comprehensive foresight can be used to support technology strategy planning at VTT. It can support the establishment of research priorities, but a strategic process is already in place for this function. Hence implementation of comprehensive foresight could mean gathering information on likely developments on present technological areas on a mediumto long-term time horizon. This could be done in a semi-structured fashion, since implementation of a heavy and highly structured foresight process could undermine its reputation and lose the interest of researchers, according to Eerola. However, the most

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important issue in implementing comprehensive foresight is to engage researchers in a dialogue by making their visions explicit. Information that is gathered in this kind of activity should be taken into use in the main strategic processes and hence special attention should be given to building proper interfaces with these decision-making processes. Embedded foresight can be used to enhance the implementation of technology strategy by managing its instruments frontier technologies, technology themes and key technology actions. These are, in practice, research programmes around specific themes. In this context, embedded foresight can be used in initial planning of the focus, preparation of calls for proposals as well as follow-up of ongoing research by updating visions and exchanging information on development. So far, road mapping has been used in the planning of strategic instruments. However, there seems to be far more potential for benefiting from foresight methods. This is because it is the implementation of strategy in the resource allocation process that finally defines the actual strategy by balancing the deliberate and emergent components of the strategy (Christensen and Raynor, 2003). On instruments and the application of embedded foresight see, for example, Salo and Salmenkaita (2002). The innovation foresight process is aimed at creating new ideas for innovations and thus new areas of research. Thus, it is a starting point for further activities and could be run as a project that seeks new opportunities. As with comprehensive foresight processes, an innovation foresight project can be followed by an embedded foresight process that focuses on the implementation of the RTD and other innovation activities. In terms of how broad the scope is in different foresight processes, the following can be noted. Comprehensive foresight processes that aim at priority setting typically start by examining a broad range of issues and topics, ending in a competitive assessment of all of these at the same time. The scope of embedded foresight varies depending on the level of implementation. At the strategic management level, the scope is usually broad, whereas, implemented around RTD programmes, issues tend to be much more focused at the operational level. Innovation foresight, however, deals almost only with focused issues. Study has been narrowed to a specific socio-economic problem, industry, technology or user context.

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Positioning of comprehensive, embedded and innovation foresight processes is illustrated below in Figure 12. These positions correspond to their role in the technology strategy cycle (see 3.1.3 Technology strategy process and Table 3).
Management orientation Decision-making Consensus/Priority-setting Strategic management Broad Comprehensive foresight Creativity Diversity Innovation management Focused Embedded foresight

Innovation foresight Action orientation Strategic Planning Implementation of Strategy

Figure 12 Positioning foresight processes

As it can be noticed, innovation foresight overlaps with comprehensive and embedded foresight processes. Innovation foresight can be, for example, a part of comprehensive exercises by providing focused assessments and ideas for further analysis. However, fair treatment of individual ideas should be guaranteed in the priority-setting context. The impact that innovation foresight has on the strategic process is indirect. The process can be performed independently from the innovation foresight exercise, but innovation foresight will in any case have an impact on its content. Innovation foresight creates new visions and ideas for research. These ideas and opportunities can be discussed during the strategic process, but they can also feed the resource allocation process directly as new initiatives on a continuing basis. New ideas emerge and the fixed targets might change during the implementation period of the technology strategy. Innovation foresight has then the potential to change the technology strategy process into a more emergent one. This implication should also be considered in the context of funding instruments. Some funding could be left floating and allocated only when new promising areas are identified during a foresight exercise. This open allocation policy could then act as an incentive to run
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innovation foresight exercises by promising funding for potential new research areas and innovation ideas. However, to avoid purposeful manipulation and exploitation of the exercise to support some specific courses of action, specific consideration should be devoted to process management and the selection of the participants. Here different types of foresight processes that VTT could take advantage of have been discussed. In Chapter 6, the innovation foresight process is discussed in more detail.

4.6 FORESIGHT, STRATEGY-MAKING, RESEARCH AND ITS RESULTS


In this chapter, a synthesis is made of the role of foresight in strategy-making, types of research and their potential outputs. The elements are summarised and depicted below in Figure 13. The need for research can come from the private or public sector. Important here is that, considering VTT's research, the reason for research is created in different strategic processes.
Client for research Type of study Product Type of research Financed as and resulting in Applications and product platforms Industrial firm Emergent strategy process Innovation foresight Industrial clusters Solution concept Direct needs Comprehensive foresight Deliberate strategy process Priorities on research areas Implementation planning, Embedded foresight Applied research Jointly funded research projects Technologies and services for existing industries Entrepreneurial research Strategic research Publicly funded projects Technologies for public infrastructure Technologies to create new industries

Public sector

Societal priorities

Figure 13 Foresight, strategy-making, research and its results from VTT's point of view

In the case of industrial firms and clusters, research of VTT is guided by either direct needs or visions of future needs that are created in an innovation foresight process. Actual strategy can also be shaped by strategy which emerges through unanticipated opportunities and actions.

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For the private sector, focused innovation foresight projects can be organised to prepare the clients for future challenges. In the direct needs of the private sector, short-term issues tend to dominate and issues that are studied easily are restricted to those around existing business. What products and technologies does our company need? What technologies and services does our industry need? On the other hand, the needs of companies are easily uncovered and therefore the research that is conducted based on these most likely has a real use. From the view point of public sector it is possible to study the future and needs more broadly, concentrating on longer time horizon and focusing on developing the society as a whole. However, it can be challenging to assess the real and actual needs, catalyse shortterm innovation activities and engage the private sector in discussion. All these issues arise from the fact that the government is more like an enabler than an actor which pursues clear and focused goals, as companies do, for example. Initiatives from the private or public sector alone are not sufficient, but they are both needed. Innovation foresight that builds on industrial needs produces innovation ideas and application concepts. When these are developed into technologies and actual prototypes, it should be studied whether the components technology and competence are already available or whether it necessary to develop these enablers before the engineering phase can take place. If these prerequisites are available, it is possible to continue with applied research. On the other hand, in cases where something is missing, the need for strategic research can be assessed. The tools of public sector, such as comprehensive foresight, VTT's strategy process and other development needs of the society create priorities for areas of research. To plan and develop these areas some deeper foresight, for example embedded in RTD programmes, can be conducted.

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Building on public research priorities, publicly financed strategic research can be started. These strategic research programmes may result in technology for the needs of the public sector or technology for the private sector or emerging clusters. Applied research that conducted on the basis of the private sector's initiative is financed in cooperation between the private and public sector. Here the research produces applications, product platforms and technologies for existing stakeholders. However, it is possible that companies do not want to invest even in promising research if it does not fit the company's strategic portfolio. There is a risk that good opportunities are missed because of a lack of appropriate funding instruments. Public sector research programmes could benefit from private funding. However, at the moment there are no means and instruments to direct funds into research. To create new industrial clusters, it would be beneficial if the private sector, too in addition to public funds could finance research. Then the financial conditions for longer term research interests could lie on more solid ground. A form of research funding that aims at entrepreneurship and creating new ventures could be effective in channelling funds. Hence financing models that support entrepreneurship, like venture capital, could be utilised as a funding instrument. This entrepreneurial research could be organised internally at VTT using different instruments or even as joint ventures with the private sector or as independent start-ups. Then the further development of research could be more easily foreseen.

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5 Foresight at VTT level

"Heavier-than-air flying machines are impossible" Lord Kelvin, British mathematician, physicist and president of the British Royal Society, c. 1895

There are many possible uses for foresight in a research and technology development organisation like VTT. Foresight can have many target audiences at different organisational and societal levels. The following functions at least can be targeted with foresight processes: supporting public policy-making, technology strategy planning, technology strategy implementation, as a catalyst for innovation activities, and strengthening cooperation between VTT and industrial firms.

The main area in which foresight can be applied within VTT is to support the technology strategy process, which determines how the resources are allocated to different areas of research. The other main purposes for a foresight process are to act as a catalyst for innovation activities and increasing collaboration with industry. Firstly, different kinds of approaches to foresight are briefly discussed. Then foresight processes are discussed in the

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context of the case organisation. Secondly, a more detailed concept for a foresight process is developed. Finally, the suggested foresight organisation and its tasks are presented.

5.1 ASSESSMENT OF POSSIBLE OPERATING MODES


Foresight at VTT can be organised in many different ways. Some possible options are discussed here.

5.1.1 Foresight consulting


The lightest type of foresight activity could be acting as a foresight consultant offering foresight process management services, delivering future-related information and organising scenario analyses for industrial firms. Acting as a foresight consultant could be a small business, but regarding VTT's strategic goals, it is uncertain whether foresight consulting would be the optimum solution, even though it could be possible to offer VTT's technological expertise in the exercises. Nevertheless, accumulating knowledge, engaging customers and discussing relevant topics for VTT would be problematic should consulting be a stand-alone activity. Foresight consulting, especially scenario analysis, could be useful for industrial firms, but if they need this kind of service there are already many consultants in the business. Foresight consulting could in practice mean providing process competence for individual foresight needs of industrial firms. Acting as a foresight consultant would enable development of foresight process competence, which could be utilised in initiatives from within VTT. The value added for VTT and from VTT's scientific competence to industrial firms would probably remain limited. However, in larger foresight projects, this kind of consulting would be one element of the whole.

5.1.2 Think tank or observer unit

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Setting up a think tank or observer type of unit, as presented by Becker (2002) would represent an independent information provider approach to foresight. A think tank could act as a producer of future-related information should this kind of information be ordered by customers or VTT's strategic research unit. Implementing this kind of approach could be difficult in terms of creating shared knowledge among VTT's researchers and the whole organisation. The information would be produced, but it is possible that the buy-in for the information will be difficult to achieve. Another challenge would be utilising the knowledge available at VTT if the reports are produced using external networks and single experts. However, some kind of foresight reports would be needed at least as background information in foresight exercises. To address the strategic needs of strengthening customer activity and creating new innovation ideas, an observer unit might not perhaps be a suitable form of foresight activity. However, many functions of foresight are needed at VTT due to many operating forms, customers and information needs. The extent to which these functions should be gathered under one umbrella should be considered at the corporate level. In any case, an independent information provider approach is not suggested.

5.1.3 Integrated foresight activity


Foresight could be integrated into standard management practices at VTT. It could be part of normal strategic processes or a required procedure of research teams. Embedding foresight activities into standard activities could be challenging. It would require much participation and training of people. However, it could effectively bring future-orientation into research management practices throughout the organisation. Bringing the customer perspective into integrated foresight could be difficult, since the focus of the exercise would be difficult to set into customer-centric issues. This would possibly lead to a situation where the themes tend to follow VTT's present activities and thus have a strong technology orientation and, in the worst case, even try to validate

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current activities. Nevertheless, integrating foresight activity into the organisation would be a valid goal, since through more active participation the processes could have a stronger impact on research. Besides, an integrated foresight approach could be used to support technology strategy planning and implementation. As Eerola pointed out in an interview, the current strategy process is formal and relatively heavy to run, so if not well-motivated, additional foresight exercises could become just an extra burden with little interest from researchers. Therefore, some basic foresight procedures, or at least the gathering of current information and visions of researchers, could be useful to promote a foresight culture and create a starting point for gathering foresight information.

5.1.4 Foresight as independent customer projects


In contrast to the integrated approach, foresight exercises could be run separately from other processes in the organisation. Organising independent foresight exercises enables a focus on topics that are relevant for customers and other stakeholders, because the impact of other organisational processes on the foresight exercise design can be restricted. Independent exercises could then be focused to produce results for more immediate needs than more general-level exercises. Knowledge accumulation and organising continuous activity are the main challenges in independent foresight projects. Nevertheless, accumulation of tacit knowledge could be utilised by organising some additional embedded foresight processes to follow RTD activity. Moreover, should more than one project be organised covering overlapping technology areas, the tacit knowledge can be taken into use in later projects.

5.1.5 Organising foresight forums


So far, industry associations in Finland have organised foresight forums which have been structured around industry sectors. These forums have sought to build common visions, agree on main development paths and build coalitions for collaborative activity. However, foresight forums could also be set up around multi-disciplinary areas that are not of interest to any industrial association in particular socio-economic issues, for example.

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Foresight forums could be set up to discuss a specific socio-economic problem or application area with industrial firms from different industries, researchers representing many scientific fields and other stakeholders in the innovation system. Then it could be possible to seek new solutions, identify development areas and build coalitions for delivering them. This could, at best, help to initiate even new industries or clusters. Another approach for forums could be the development of existing value chains and networks. Here actors from different positions in the network could come together to outline future scenarios, identify opportunities and threats, and seek new solutions for the development of their value network or cluster. VTT should take a proactive role in this area and utilise the potential of emergent foresight.

5.1.6 Foresight knowledge base


Setting up a knowledge base to store foresight information is one possible operating mode. It would only provide access to information, not produce any new information, so it can reasonably be applied only as a complementary service. In the knowledge base, information on VTT's foresight studies, as well as studies conducted elsewhere, could be stored. As a tool to guarantee accumulation of explicit knowledge, a knowledge base could be useful. When setting up a knowledge base, links to other databases (such as the EFMN database) and other sources of information have to be taken into account.

5.2 FORESIGHT AND THE TECHNOLOGY STRATEGY PROCESS


In priority-setting, collaboration should be active at the national level with Tekes and universities. According to Alpo Kuparinen, a situation where stakeholders pursue their own interests independently has to be avoided in order to guarantee effective resource allocation at the national level. There is no sense in having separate goals for research and funding at the national level. This is imperative in VTT's strategic processes and it has to be considered when planning for priority-setting foresight exercises. The technology strategy process is divided into two essential phases, planning and implementation. In the planning phase, the main goal is priority-setting between current

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research areas and also identification of new research areas. Here a comprehensive foresight process, as defined by Salo and Salmenkaita (2002), could be applied. As the main objective of embedded foresight processes is to translate priorities into RTD efforts (Salo and Salmenkaita, 2002), an embedded foresight process should be used to support the implementation of technology strategy. Although VTT's technology strategy process is an intra-organisational process, it requires signals from outside, especially from customers. The basis of the technology strategy process is identification of future opportunities. Future opportunities are, for example, specific innovation ideas that can be developed into technologies and products. In the case of strategic research, identification of strategically interesting scientific areas can be seen as a source for future opportunities. But in this areas of strategic interest should be deduced from business opportunities, since technology development should build on business needs. However, examining current business needs could lead to time horizons that are too short. Business opportunities, therefore, should be assessed by not only examining the kind of technologies that current industries will need after a period of time, but also the kind of new industrial clusters that could emerge in Finland in the near future, and their business opportunities supported with appropriate strategic research. Innovation ideas are ideas or future visions of what could be needed in the future. This anticipated need can, in practice, be something that is foreseen as an important technology for the customer, or an application or product for the customer's customer in several years. Innovation ideas represent the visions of opportunities for the future, the identification of which is the starting point for forming the technology strategy and making financing decisions. Innovation ideas can support technology strategy in two ways in planning and in implementation. Innovation ideas can help identify strategic research opportunities, which can then be assessed during the formal technology strategy process. Innovation ideas can enhance implementation of technology strategy by providing initiatives for projects that can be run within the current financing frameworks and technology themes. In both cases, innovation ideas created at the operational level of the organisation feed the technology strategy cycle.

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To feed the technology strategy with ideas of future innovations, a specific innovation foresight process is designed. The innovation foresight process supports innovation management activities at the operational research team level in close cooperation with customers. The innovation foresight process is discussed in more detail in Chapter 6.

5.3 FORESIGHT AND CUSTOMERS


VTT's activities with customers are concentrated around technology and application development projects. Customer projects can be started from different positions. Research and technology development projects can be driven by market needs, technology push or identification of future opportunities. Foresight can be applied to projects that are not answering the needs of today but which could be needed in future. A foresight process could then provide a starting point for new RTD projects and programmes with customers either individual firms or industrial clusters. As Salo et al. (2004) argue in the context of the responsiveness of the foresight process, changes in rapidly changing scientific fields and industries could lead to a situation where earlier future visions could prove false, when new market structures and technologies emerge. Furthermore, long time horizon development projects could be compared to RTD programmes discussed by Salo and Salmenkaita (2002). In this context they also suggest that the foresight process could be run continuously to support management of the programmes and thus even RTD projects. Industrial firms may have two links to foresight exercises conducted at VTT. They can be either clients for the study or suppliers of information for exercises for VTT's internal purposes. In the latter case, incentives to participate may be difficult to adjust so that proper participation could be achieved. When industrial firms are clients for the study, the exercise can be customised to answer their needs in more detail. Then, it may be possible to guarantee the quality of the exercise when it comes to intensity of participation. This certainly has implications for both product and process outcomes of the foresight process. In the light of these observations, it seems clear that VTT would profit from foresight exercises designed for the needs of companies. Whether they should be private company

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studies or multi-client studies must be assessed when thinking through the objectives of the study and whether the issues are dealing with systemic or autonomous innovations. Foresight can be used with customers in two ways: as projects or as a continuous activity. Projects, or batch-mode processes, should provide added value for customers addressing their direct needs. A continuous process can later be used to assess, evaluate and stimulate on-going innovation activities and revisit earlier future visions. VTT could also take a proactive role in directing customers' attention to long-term developments as well as the threats and opportunities related to technological developments. This could perhaps best be supported with the help of regularly conducted multi-client foresight studies. (Eerola) If VTT needs further customer participation, for example, to support its possible internal foresight exercises, setting up specific customer projects on relevant topics should be considered. The key issue here is to identify the areas of mutual interest and to recognise the win-win strategies. Then it may be possible to have more focused results where much could be learned both ways.

5.4 FORESIGHT AS A DECISION-MAKING SUPPORT TOOL


So far, foresight activities have been discussed as participatory processes where users of the results also participate in the exercise as producers of information. Foresight can also serve as a prospective process where the output is a statement of likely future developments. This predictive information can be used as background information to decision-making. Prospective studies can also be used as background information in participatory exercises. Typically, the producer of information is a different party from the user of the results. Users of advisory information can be public policy makers, for example the Parliament's Futures Committee, or other innovation policy makers. Another use for advisory background information is to share knowledge on other similar foresight studies. Here the information can be used to stimulate discussion in foresight vision seminars.

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Assimilation of other exercises could become one operating mode for VTT's foresight activity. Its function could be supporting exercises, but also serving another foresight need, namely providing general information on likely future developments. Prospective studies could also help establish links to international communities, if there are similarities in topics and if complementary knowledge and overlapping interests could be found for the future.

5.5 KNOWLEDGE ACCUMULATION


Since foresight exercises can be seen as learning processes, an essential factor in foresight is accumulating knowledge. Knowledge can accumulate in two ways. Participants of foresight exercises accumulate tacit knowledge, and the formal products of the exercise are codified as explicit knowledge (Eerola and Vyrynen, 2002). Tacit knowledge can be created using participatory methods and it accumulates in the minds of researchers. Care has to be taken that codified products are also stored for future use as organisational memory and in the knowledge base. Still, as reminded by Eerola, in order to be useful, tacit knowledge must be cultivated by contextual interpretation, open dialogues including critical assessment and linking of relevant pieces of knowledge. Knowledge can also be accumulated from external sources. From external sources codified information can be acquired by reviewing reports of foresight exercises conducted elsewhere. Tacit knowledge from external sources can be acquired by inviting participants accordingly. Moreover, tacit knowledge can be acquired by participating in other foresight studies. VTT should also pursue this opportunity by offering the expertise of its researchers in foresights organised by others and by participating in international foresight cooperation at various levels. Information learned on how foresight processes have been organised should also be taken into account. Interviews and discussions about experiences of foresight exercises should be arranged in order to gain an understanding of how to organise successful foresight exercises. This is already happening at Nordic and EU levels. International foresight conferences also serve this purpose.

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To learn from earlier exercises, information should be stored in a knowledge base. VTT could organise a database with public access to its own published foresights as well as to other reports that have been reviewed. A major issue in accumulating tacit knowledge is continuous foresight activity. Foresight should therefore become a standard procedure in research management. Depending on the number of customer projects, some internal foresight exercises could also be organised to keep in some kind of touch with future issues. At a minimum, business intelligence information and results of earlier foresights should be discussed and weak signals and trends analysed, if no other customer foresight projects have been organised.

5.6 ORGANISATION
To manage foresight activities at organisational and project levels, an organisation is needed. Since this Thesis focuses on one main foresight activity, innovation foresight, only its organisation is discussed, because further analysis of other operating modes is needed to determine how they need to be organised. In this chapter, an organisation for a VTT-level innovation foresight function is presented. The project level organisation is introduced later in Chapter 6.6.

5.6.1 Tasks and responsibilities


Becker (2002) describes different kinds of foresight organisations in corporations. These are the Collecting Post, the Observatory and the Think Tank (see Chapter 4.3.1). A common factor for these kinds of organisations is that they are seen as information providers. At VTT an important avenue of further development is to organise foresight processes that stimulate innovative activity around VTT and with customers. The studied form of foresight activity (Innovation foresight, see Chapter 6) for VTT means that every exercise is an individual project. Together with having a participative and responsive process, this would imply a need for a project organisation instead of a functional organisation. This same conclusion is supported by Eerola (1996), who argues that in the case of joint studies, the producers of foresight should be an inter-organisational task force or an authorised project group with a common reference frame.

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At VTT, the innovation foresight function's basic tasks are creating a supply of foresight services and managing the foresight exercises. Tasks and responsibilities for this function are presented below in Table 14.
Table 14 Tasks and responsibilities of innovation foresight function
Description Acting as a contact to foresight services within VTT. Participating in VTT' s sales processes by providing information on foresight processes. 2. Foresight project Managing foresight projects and ensuring that they management are properly delivered. 3. Providing the foresight Facilitating foresight exercises. process competence 4. Keeping knowledge base Setting up a database of earlier foresights to accumulate codified information on foresights 5. Assimilating foresight Ordering reports on earlier foresights for input to information foresight exercises. Task 1. Managing sales of foresight exercises Organisation Foresight project manager, sales team of VTT Business Solutions Foresight project manager Foresight expert, consultants As part of business intelligence unit Reports delivered by business intelligence unit

The organisation must take care of sales of foresight exercises. Since foresight exercises are meant to be part of VTT's service offerings to its customers, VTT's sales organisation must have competence on foresight issues. Therefore a member of VTT's foresight organisation should act in close cooperation with the VTT Business Solutions sales team, which is the main sales organisation at VTT. Managing sales encompasses discussions of needs within other sales processes. Managing sales also means acting as a contact link to foresight issues inside VTT. Delivering foresight services within VTT requires coordinating the foresight projects, since the exercises are meant to be produced in-house and in collaboration with customers. Foresight project management's main responsibility is to ensure that the foresight exercises are properly delivered. In order to be able to coordinate the foresight projects and run foresight exercises, the foresight organisation must possess competence on foresight processes. To some extent, process competence can be outsourced to external consultants when running the workshops, but nevertheless the foresight organisation must have competence on foresight processes. That way, delivery and sales of foresight exercises can be guaranteed, as well as development of foresight services and processes, because then learning and accumulation of knowledge is possible.

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The fourth task for the foresight organisation is the setting up a database on earlier foresight results. Information on earlier foresights produced elsewhere, as well as results of VTT's foresight exercises should be stored for future use. However, this function could be embedded in the business intelligence function in order to gain synergy in information management operations. As an input for foresight vision seminars, reports on earlier foresights as well as the latest business intelligence information should be produced. An order for these reports should be made by the project manager once the topic and scope of the exercise have been defined. These reports could then be produced by the business intelligence function or VTT Technology Studies.

5.6.2 Other organisational issues


Here other organisational issues are briefly discussed in order to raise them for consideration when foresight activities are started at VTT. Authority The authority to conduct and participate in foresight is an issue that has to be dealt with at a high organisational level within VTT. When setting up a foresight service and a foresight function, authority issues should be discussed and approved by top management and research directors. In addition, innovation foresight should be promoted through the Business Solutions division and the sales team channel. Thus it could be seen as an effort to promote the work and expertise of the research teams and in this way trust and authority in the eyes of the operating level could be gained. Ensuring availability of resources To guarantee availability of researchers, the cost burden should not be put on the research teams and groups. Instead it should be dealt with at the level which finances the foresight project. Availability of technological expertise depends on availability of researchers and their willingness to participate in the exercises. Currently this should not be a problem other than for lack of interest. Moreover, the nature of the foresight process is such that it

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consists of workshops with several days or weeks between them, so it is not likely that they will require full-time work from the expert members. Willingness to participate should be addressed by creating specific incentives. As mentioned earlier, extra funding for initiatives from innovation foresight exercises could be promised, while considering the possible pitfalls. To relieve participants of the cost burden, a foresight project number for allocating labour costs should be opened. These costs should be carried out by the foresight project. In addition, the importance of foresight from VTT's strategic point of view should be promoted.

5.7 FORESIGHT AS A COMMERCIAL SERVICE


To be a viable service, foresight needs to have a clear earning model. It should satisfy conditions for a viable business, meaning that it must be possible to ascertain clearly the value it creates.

5.7.1 Services to each customer segment


Customer segments and their foresight needs were presented in Chapter 3.5. Here the service offerings for these segments are presented.

5.7.1.1

Future Scouts

Future Scouts' needs consist of obtaining information on signals of change as well as analysis of societal and industrial development. These needs can be addressed by collecting future-oriented information around specific fields of study. Sources of information include reports on earlier foresights and road maps. To provide up-to-date information on how the world is changing, some basic analysis of weak signals (see e.g. Mannermaa, 2004) and megatrends (see e.g. Naisbitt, 1982) can be included. Another service for this segment is organising vision work shops to analyse weak signals of change and technological development trends.

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5.7.1.2

Strategic Planners

Strategic Planners need foresight for crafting strategies. For Strategic Planners, a scenarioanalysis service should be promoted. This could be a series of workshops tailored to needs of individual companies. Also road mapping studies can be initiated for the needs of this segment.

5.7.1.3

Innovators

Innovators want to use foresight to catalyse their innovation activities. For this purpose, an innovation foresight service, as defined in Chapter 6, should be offered.

5.7.2 Earning model of commercial foresight services


Here a value creation and earning model for VTT's commercial foresight services is discussed.

5.7.2.1

Innovation foresight

Innovation foresight creates value for both VTT and participating firms. The value for VTT is that it acts as a kind of selling process and is aimed at creating a demand pull from the markets. Through the demand pull, VTT's research can be guided in a more marketoriented direction. In this case, the likelihood of expending resources on commercially irrelevant research becomes smaller. Innovation foresight is also a management planning tool, since it helps strategic planning and implementation plans through an easier buy-in, which can be achieved through its participative nature. The value for industrial firms lies in creating future intelligence information that can serve as the basis for strategic decision-making and innovation management. It also enables the identification of future challenges and the creation of concrete solutions innovation ideas and concepts for them, increasing communication and strengthening relationships with customers when they are included in the process. In addition, participating in the foresight process is also a means of getting public RTD subsidies, since part of the costs comes out of public funds.

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Since innovation foresight benefits both parties, it is recommended that they both also participate in the expenses. Primarily, the funding should come from VTT, since setting up a foresight organisation brings continuous fixed costs. VTT should also take care of allocating variable labour costs to a specific foresight project financed from the basic funding from the government as part of strategic research funding. The cost for participating firms should be a fixed fee for the foresight vision seminars. The fee is defined according to the specifications and scope of the exercise. Considering collaboration in research, strategy development modules are more clearly a part of the sales process of VTT and their cost should be carried by VTT. Even then, the cost for the companies is the cost for their working time, which is the business model also in other VTT's projects. However, developing the corporate and research strategy for a company opens an opportunity for strategy consulting. The value for the government lies in stimulating activities of the private sector. Assuming this leads to stronger economic activity, it also has implications in terms of tax revenue for the government. As a commercial service, innovation foresight should be packed into the service offerings of VTT's Business Solutions, which will be established at the beginning of 2006. Then the value proposal could be made clearer and the context and type of other service offerings could also be applied in the foresight process design and pricing.

5.7.2.2

Other services

Prospective reports, weak signals and vision workshops and scenario-analysis services are specified for the direct needs of company customers. Therefore they are aimed at creating value for companies. These services are purely commercial services with a predefined price tag. The costs are carried by the client, including a margin for VTT.

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5.8 RELEVANCE TO VTT'S RESEARCH


Foresight must be relevant to VTT's research in order to be strategically reasonable. Relevant foresight activity supports the promotion and development of the research conducted at VTT. When discussing the link between foresight and the relevance of VTT's research, the point is not how foresight could support current research by validating its reasonability. The approach should not start by thinking what kind of foresight should be performed in order to support the development of research. The starting point should be an examination of the kind of needs and opportunities that exist for Finnish industry as well as for European industry. Then, by thinking about how VTT could support the taking of these opportunities the relevance for VTT's research is created. In another words, foresight should be tailored to customers' needs. The results of these foresights then provide the reason and relevance for VTT's research. Because VTT is a research and technology organisation, foresight at VTT must have a technological component, preferably in an area of which VTT has at least some experience. This prerequisite sidelines foresight studies that concentrate only on business futures intelligence. Moreover, the level of the analysis should support VTT's activities. Therefore the focus should not be too much on macro-level support for innovation policy-making; these issues have to be brought to the level of technologies and applications, preferably in a way that helps integration into industries' innovation processes. It can be argued that innovation foresight that aims at creating new concepts and technological solutions for future innovations is relevant for VTT in terms of issues, level of analysis and the desired product and process outcomes. However, the final acid test for relevance will be the judgment of the customers.

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5.9 UTILISING RESULTS OF FORESIGHT AT VTT


Within VTT, results of innovation foresight can be utilised in research management. Future visions and innovation ideas can be used to initiate new research and question the validity of current research. Innovation ideas and cooperation planning will ideally result in research and development project plans and funding applications. This represents a direct effect of innovation foresight results. A more indirect effect emerges during the formal technology strategy planning. Then future visions, learning on new areas of research and identification of opportunities can be brought to the strategic planning. Through the formal planning cycle, results of innovation foresight can then be translated into new research priorities, funding structures and calls for proposals, to the extent that they are considered important enough in the strategy process. As such, innovation foresight is not a sufficient basis for strategymaking and requires additional analyses, especially to avoid domination of short term interests. Innovation ideas that can be developed into technologies and products in near future support the development of applied research. Since strategic research has a much longer time frame, the lead time for developing focused innovations might become too long. Hence innovation foresight could support strategic development indirectly through formal strategy planning where innovation ideas are more easily transformed into applied research. The philosophical difference between these two forms of research can be described, for example, in the following way. Applied research has focused goals and the outcomes of the research can be specified at the outset. A strategic research approach includes more uncertainty. It can be described as betting on some research areas without really knowing the outcomes with certainty, even though it has goals and it is focused on serving a predefined purpose. Strategic research aims to create technologies with which applied research develops solutions to needs. Salo and Salmenkaita (2002) suggest the need for strategic flexibility in RTD efforts under conditions of rapid technological change. Updating earlier visions helps create new information on anticipated future development, which in turn should be utilised by implementing strategic flexibility in VTT's technology strategy.

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Assessing current research through innovation foresight is relatively implicit. When researchers participate in a foresight exercise, they are assumed to adopt new visions of the future. If this invalidates their current work, which is possible, projects may come under reconsideration if something more interesting could replace them. In that case, to enable shifting from one project to another, flexibility in funding should be ensured. Anyhow, the idea of innovation foresight is in the first place to create something new. Thus it can have a reforming effect through more indirect mechanisms. However, as pointed out by Eerola, a situation where persistent work on challenging issues is impossible because of too fast jumping to new issues that seem more promising should be avoided. So far, innovation ideas that fit the strategic portfolio of companies have been discussed. This has been based on the assumption that innovation ideas are transformed into research projects if they fit participants' goals strategically. However, innovation ideas that could have plenty of potential but which do not fit into the client company's portfolio entrepreneurial opportunities are also likely to be developed during the foresight exercise. These entrepreneurial opportunities should not be abandoned without a more detailed opportunity assessment. Entrepreneurial opportunities that get positive assessments should be given a chance to be developed further. These ideas for innovations should be pursued in an entrepreneurial fashion within VTT or with an appropriate industrial partner. In order to make this possible, an entrepreneurial track for research should be opened. This could consist of taking advantage of proper funding instruments, for example venture capital, and using other incubation services, such as team building, education and consulting. Entrepreneurial research could be implemented as joint ventures or other research ventures, aiming at spinoffs. Through entrepreneurial research, it could then be possible to target outcomes that offer new services or technologies to existing industries or even support the initiation of totally new industries. Networking and learning effects of practising foresight should also be utilised. These effects will be realised when visions and strategies are turned into action. Then networks and knowledge of new technologies and customer needs can be used in the usual work of researchers. Utilising networking and learning effects after the exercise could be intentional, but rather than just observing the benefits post-foresight, they should be intentionally
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pursued already when designing the foresight process. In practice, this means that all members of the anticipated network should participate in the exercise. That is how full advantage could be taken when creating and strengthening innovation networks. Codified information accumulated during foresight should be disseminated to the organisation. This will not correspond to knowledge creation through participating in the process, but will help in raising awareness on future developments as well as explaining why certain directions in research are being taken. Codified information can furthermore be stored in the knowledge base to support future foresight processes and also to followup on the foresight exercise performed.

5.10 SUMMARY OF SUGGESTED FORESIGHT ACTIVITIES


Here different foresight operations are summarised. Foresight can be practiced at many levels. VTT as a major national actor on technological issues should participate in various foresights. Different possible activities are presented below in Table 15
Table 15 Summary of foresight activities

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Level Supranational

Activity In tern atio n al fo resig ht an d ro ad m appin g In fo rm atio n to suppo rt tec hn o lo g y po lic y In n o v atio n fo resig ht

Description / example Function Conclusion Nordic ICT road map, Strengthening international Participate / organise h2foresight... collaboration, opportunities only when clear demand for innovation policy Reports on future developments Organising multidisciplinary forums around socio-economic problems Foresight exercise for industrial vision building Making technology road maps for industries Bringing members of a single value chain / network to discuss future development Creating innovation ideas, identify ing business opportunities identification Organising scenario workshops Gathering futurerelated background information Gathering futurerelated information from research clusters Awareness-raising for public On request only . Study policy making foreign results. Creating new solutions and building coalitions for new application areas, creating new industrial clusters Networking, awarenessraising Awareness-raising on technological development, networking Developing operations of already established value networks Suggested, when enough interest and possibility to gather participants. Challenging. Leave for industrial associations Continue

National Industry

In dustry fo resig ht fo rum s

Techn o lo gy ro ad m appin g

O ppo rtun ity iden tificatio n fo r v alue n etw o rks

Could hold a lot of potential. Relatively easy to communicate and implement.

Individual firms In n o v atio n fo resig ht and small clusters

Identify ing future Main service for opportunities for individual companies companies, Developing RTD activities Supporting strategic planning Offer this service as part of strategy consulting Raise firm's awareness on Complementing service future development for individual firms Organise periodically semi-structured, light activity in research clusters. Highly suggested.

Sc en ario an aly sis fo r strateg ic plan n in g Pro spec tiv e studies fo r backg ro un d in fo rm atio n W ithin VTT Co m prehen siv e fo resig ht

Em bedded fo resig ht

U tilising already known information in technology strategy process, stimulating future-oriented thinking U sing foresight within Enhancing implementation technology strategy of technology strategy instruments

VTT's suggested foresight activities cover intra-organisational foresight, offering services to individual firms and clusters as well as organising and participating in national and supranational level exercises. The main activities from this Thesis' point of view are foresight services that are suggested to be offered to industrial firms. In any case, the whole range of possibilities should be considered when there is a clear demand for foresight and when it would seem most natural for VTT to be the responsible stakeholder for organising the exercise. It should be noted that also other forms of foresight activity can be developed.

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6 Innovation foresight

"There is no reason for any individual to have a computer in their home" Ken Olson, President of Digital Equipment Corporation, 1977

6.1 DEFINITION
Since here the foresight process's main goal is to examine the future in a way that aims at developing future innovations, it can be seen as innovation foresight rather than technology or business foresight only. Innovation foresight is defined as follows: Innovation foresight aims at creating ideas for future innovations by providing structured forums for future-oriented concept development. The process combines topics on identifying future needs, technologies, applications and business opportunities to design new product, service or business concepts and incubate strategies and action planning between participants. Innovation foresight is built to support participants' innovation processes by allowing a thematic structure that follows the steps in their respective innovation processes. To demonstrate the main idea of the model, the thematic structure of the process is introduced first and a tool for topic selection is presented. This is done to ensure that the varying practical needs of industrial firms will be served in the best possible fashion. Then the

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structure of the process is briefly discussed. An example of innovation foresight in practice is presented in Appendix 1.

6.2 PROCESS STRUCTURE


Here the structure of the main stages of the whole foresight process (see Figure 14) is briefly discussed, including the role of supporting processes.
Trends, weak signals

Business intelligence

Weak signals analysis

Defining the customer need


Goals

Preliminary studies
Background information

Foresight information

Knowledge base
Reports

Learning Refined visions

Designing the foresight process


Project plan

Foresight vision seminars

Strategy and action planning


Visions, innovation ideas Research plans and partnership

Research

Development and commercialisation


Technology and applications

Figure 14 Stages of the foresight process and related functions

The basis and main reason for innovation foresight is customer need. The foresight process then starts by identifying the needs and making a decision on starting the process. Firstly, the process is designed according to principles discussed earlier in Chapters 4.2.1.1 and 4.4. In this phase, themes and objectives of the study are defined. To provide stimulus for discussion in the foresight modules, preliminary studies have to be conducted. Preliminary studies gather background information on earlier foresight studies in the same field, together with the ongoing foresight exercise plus business intelligence information on the latest developments. The preliminary study report is prepared by a third party and it should be disseminated to all experts and decision-makers participating in the exercise. In the case of VTT, the business intelligence function would be a natural producer of the preliminary study reports, since it employs competent informatics and storage of information.

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At the foresight vision seminars, future studies are carried out. The results of the exercise are then codified and shared with all participants as well as with other decision-makers and R&D personnel involved in the field in participating organisations. To the extent that reports are not confidential, they should also be stored in a knowledge base that can be publicly accessed. Vision seminars are then followed by strategy and action planning modules. There, the strategic implications of future visions and other products of the foresight process are discussed. Strategy is implemented as action plans and, finally, as research. During research projects, information learned about the topics accumulates. Moreover, as time goes on, it is possible to see how the surrounding world has developed and whether the visions are becoming reality. This tacit knowledge and refined future visions have to be captured and analysed. Identification of weak signals of change can be transformed into business intelligence information, which can then be used to revisit earlier strategies. If new developments are identified, foresight seminars should be organised to update earlier future visions.

6.3 MODULES
To address the variety of needs and approaches to foresight, a modular design of the foresight process is introduced. By modularity, flexibility is provided to serve the needs of different customers as well as shifting stakeholder interests in each exercise. The innovation foresight process consists of four essential phases: designing the process, preliminary studies, foresight exercises and action planning. In the design phase, the objectives for the process are set and the main lines, such as the participants in the process, are decided. Preliminary studies are meant to lay the groundwork for foresight studies by providing up-to-date background information and stimulation.

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The foresight phase can be used flexibly and tailored to match objectives. Foresight modules can be combined freely to follow the thematic structure of the innovation process. Thus it is possible to address different needs of the client of the foresight exercise. In an innovation foresight process, the action planning phase is a more solid component that should be included in every project, since it is vital that the foresight process leads to action. The action planning phase provides an attachment point to the strategic processes of the participants. Action planning modules also provide a forum for the development of a cooperation strategy for the organisations involved in the foresight process and for road mapping future activities. Foresight exercises can be composed of three modules along the technology market dimension. These modules are technology foresight, application foresight and market foresight. The modular structure of the innovation foresight process is depicted below in Figure 15.
Market needs to technology innovations

Market Market foresight foresight


Applications to innovative concepts

Application Application foresight foresight

Strategy Strategy Development Development

Action Action planning planning

Technology Technology foresight foresight


Technological competence to market innovations

Figure 15 Innovation foresight modules

The Technology Application Market direction can be compared to the technology-push model of innovation processes, just as the opposite direction can be seen as a market-pull type of approach, where applications and corresponding technologies are developed to fulfil emerging market opportunities.

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The final modules of innovation foresight focus on incubation and implementation planning of strategies. Firstly, a strategy development seminar is organised where the strategic needs of each participating organisation are discussed, based on their refined strategies, and a strategy for cooperation is developed as a result. Collaborative actions are then road mapped in the road mapping module before entering the implementation phase and starting collaboration at an operational level.

6.4 FORESIGHT
Foresight modules provide the forum for future-oriented studies. The modules have different topics and purposes, but they should be organised according to the same principles. All foresight modules must have a clear structure and objectives. It must be clear what the purpose of the exercise is and what kind of decision-making it aims to support. This has implications for participant and expert selection as well as for methodological choices. A modular structure makes it also possible to concentrate more on some topics than on others and commit resources accordingly. For example a thorough market foresight exercise can be followed by relatively light application or technology foresight workshops.

6.4.1 Technology foresight


The technology foresight module focuses on the identification of technological futures and the emergence of new technologies. The module is supposed to help identify the future development of technological areas or to find technologies that are needed for specific solutions developed in the application foresight forum. Topics of technology foresight are discussed in Chapter 6.4.4.

6.4.2 Application foresight


Application foresight is a forum that aims at developing product and service concepts. It can be launched after the technology or market foresight modules, but it can also provide a

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starting point for the whole foresight process. The application foresight forum can also be run as a stand-alone activity using the results of previous foresight exercises as inputs to stimulate discussion. The main idea is to combine knowledge on markets and customers with technological competences to create innovative application concepts. Application development is a creative process. Using creativity tools is therefore recommended. It is also important to engage many different interest groups, without forgetting customers and end users. To bring out alternative views, representatives of several technological fields should participate in the conversation as well as those with marketing and design expertise. When developing applications, availability of technologies should be taken into account not all technologies have to be developed in-house. By introducing an application foresight forum, the aim is to support implementation of open innovation (see Chesbrough, 2003), because developing applications requires searching building blocks also from external sources and combining several competencies in the first place.

6.4.3 Market foresight


Market foresight aims at predicting future developments in the markets, industries and the society. The main audience for market foresight is the top management of industrial firms, when the topics address the industry or society level. Alternatively, on the micro level, customer needs could be used as the basis of product concept development. Market foresight exercises could be, for example, industry scenario workshops for top management, vision building on societal development or customer trend analyses.

6.4.4 Topic selection


The topics of foresight exercises are chosen according to the objectives of the exercise. For assistance in foresight topic selection, a range of possible topics is summarised and a framework for foresight theme selection presented in Figure 16. The framework lays out some possible topics for foresight, but other topics may also be addressed.

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Level of detail

Macro, holistic

Broad technology foresight exercise: Critical technologies

Socio-economic problem-solving

Demographic, political and economic developments

Meso

Technology sector future visions

Business model development

Opportunities arising from change in Industry structure

Micro

Analysis of technological futures at a company level

Product and service concept development Solutions to a specific customer need Applications

Customer trends and identification of future needs

Technology

Markets and society

Theme of exercise

Figure 16 Theme selection framework

The framework has two dimensions: the theme of the exercise in terms of technology versus market orientation and the level of detail in the analysis. Technology topics focus on analysing technological future developments. The scope may range from broad technology foresight exercises (for example critical technologies) to analysis of specific technologies or technological sectors. Market topics concentrate on development of society and markets, but are also meant to analyse future trends and consumer needs. Application foresight topics can be constructed in various ways, depending on the role of application development in the foresight exercise. When approaching from the direction of technology foresight, application foresight provides a forum to develop different product concepts based on technologies that already exist or are expected to emerge in the future. After market foresight, application foresight can be exercised in order to develop solutions to the main issues identified around market and societal development. These can be, for example depending on the level of the analysis solutions to socio-economic problems like elderly care or product-service concepts for emerging trends in customer needs.

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Topics from different modules can be combined in a sequence or they can be addressed in parallel. Topics can also be combined vertically between different levels of analysis. Hence it is possible to build a track that leads to useful outcomes in support of innovation processes or product, service and business concepts. This is one main argument for applying a modular structure in foresight process design.

6.4.5 Social dimension


Peter Drucker has suggested that social problems and social change are a major source of opportunities (Drucker, 1974), at least as important as technology. Because VTT is a technology development organisation, technology has to be in the picture. However, this does not mean that the social dimension should be excluded from the analysis. After all, according to Drucker (1974), "it is the function of business ... to satisfy a social need and at the same time serve themselves by making resolution of a social problem into a business opportunity". He continues that "the most significant opportunities for converting social problems into business opportunities may therefore not lie in new technologies, new products, and new services. They may lie in solving the social problem, that is, in social innovation, which then directly and indirectly benefits and strengthens the company or the industry". Green (2005) suggests that society is becoming more context driven than market driven. This more context-aware society will demand a more systems approach to innovation. Moreover, systems innovation implies not more technology innovation but more social innovation, new ways of living, new ways of doing and new ways of being, based on social relevance. (Green, 2005) One approach to foresight could be examining and solving social problems using technology as part of the solution. In that case, analysis should start by examining the social problem, say elderly care, taking a practical view. It could for example be asked: What practical problems do old people face in their everyday life? When some problems have been identified, it may be possible to develop solutions to these problems. One class of solutions could consist of services that utilise special devices. Still, the problem should be

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viewed as a whole so that an examination can be made to determine whether the solution is systemic in nature and the kind of complementary services that could be developed. First of all, the issue is about business opportunities around social problems. Therefore, a business planning approach should be taken into developing solutions. Technological applications can be part of the solution. Examining these applications enables a judgment to be about the kind of research and development activities that should be started in order to deliver the solution. This can then feed innovation processes and the relationship between VTT and industrial firms. The social dimension could also be addressed when taking a technology-push approach. Then evaluating the social impact of technologies and applications could provide a sound sanity check. How is our application going to affect the social context in which it is used? Are there perhaps any prerequisites for delivering the desired impact. Are other social innovations needed? When taking a market-pull type of approach in innovation foresight, the social dimension could be taken into account in two ways: firstly, by examining macro-level social and cultural trends, and identifying issues of social change as the basis of innovation opportunities. Secondly, at the micro-level, social issues could be addressed by studying the context of use rather than just focusing on specific needs and functions.

6.5 ACTION PLANNING


Strategy development and action planning modules are needed to convert visions into action. At this stage, commitment is built through shared goals and action plans, which are supposed to be the main outcome of this phase of innovation foresight. Action planning consists of a strategy development and an action planning module.

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6.5.1 Strategic planning


Strategy development has two dimensions - strategies of each participant and cooperation strategy. After creating visions of the future, each organisation should revisit their strategies and choose the pivotal focus of their organisation's development areas. What is essential in this context is how to continue cooperation in the innovation network and move from the fuzzy front end to the later stages of the innovation process. For this purpose, a strategy development module is introduced. Building on new strategies, a cooperation strategy should be formed to define the future focus areas of VTT and its partners. Outcomes of strategy development are statements of what future focus areas are and how to coordinate the future collaborative activities.

6.5.2 Action planning


In the action planning module, the strategies of the participants are mapped into cooperative actions. The outcome is a road map that presents plans, which organisation develops what, and when. The purpose of this module is to convert strategies into action plans.

6.6 ORGANISATION
An innovation foresight project should engage all relevant stakeholders. However, they should be participating in a role which corresponds to their position in participating organisations as well as the best expertise. The stakeholder groups of an innovation foresight projects are: the management of participating organisations, including top and research management the project manager for the exercise

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a foresight expert, who has competence in foresight process and methods engineers and researchers from participating organisations, who are supposed to work with the same issues later on other experts potential customers and end-users other stakeholders

The structure of an innovation foresight project organisation is illustrated in Figure 17.


Authorities Authorities requesting requesting foresight foresight exercise exercise Top Top management management

Oversight Oversight committee committee Research Research management management

Main Main working working group group Project Project management management Foresight Foresight expert expert Research Research management management Business Business division division mgmt mgmt Participant Participant of of each each organisation organisation

Secretariat/ Secretariat/ support support staff staff Innovation Innovation foresight foresight function function at at VTT VTT

'Light 'Light touch' touch' committees committees and and other other informal informal networking networking

Expert Expert sub-committees, sub-committees, panels, panels, etc. etc. Customers Customers Engineers Engineers and and researchers researchers

Foresight Foresight workshop workshop discussions discussions Broad Broad participation participation

Strategy Strategy and and action action planning planning Top Top mgmt mgmt Research Research mgmt mgmt

Preliminary Preliminary studies studies Business Business intelligence intelligence function function

Figure 17 Innovation foresight project organisation

6.7 IMPLEMENTATION OF INNOVATION FORESIGHT


Innovation foresight exercises can be implemented in two ways: private company studies where participants have non-competing interests, and as more open forums that can also include competing organisations. Types of innovation foresight exercises can be outlined with these two approaches and taking into account whether the goal is to serve existing businesses or to create new industrial clusters. This last variable can be considered significant especially in the case of radical innovation. Implementation of innovation foresight is illustrated with four types of studies depicted in Figure 18.

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Studies with participants having non-competing interests enable thorough analysis of issues that might be sensitive for the company. Here systematic analysis following the model of an explicit foresight process can be used to produce ideas for innovations from the perspective of a single company. These kinds of studies can be arranged to serve the needs of existing business. When an option for entrepreneurial research is included, innovation foresight becomes a potential source for the creation of new businesses and solutions for emerging industries that do not yet have a voice in the discussion.
Industrial cluster served

New

Innovation foresight with option for entrepreneurial research

Socio-economic problem-solving

Existing

Innovation foresight for existing business

Opportunity identification for value networks

Openness Private study Joint study

Figure 18 Implementation of innovation foresight - types of study

Joint studies can be organised as problem-oriented forums, which in turn can be organised around specific issues. These issues can be future socio-economic problems or opportunity identification for existing value networks. Forums that focus on socio-economic problems should engage a wide range of organisations from different industries and scientific fields. This kind of forum should seek to identify practical problems and develop solution concepts for new services and products, which can then act as a basis for development coalitions. Problem-oriented innovation foresight forums aim at creating new industrial clusters. Opportunity identification for existing value networks consists of a forum that brings together actors of an already established value network or value chain. Here the objective is to study the future development of the network and collaboratively find new ways to
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improve its operations and prepare for future challenges. The goal of this kind of forum is to contribute to the development of existing clusters and shape them to future conditions. As a practical example of implementing innovation foresight, a concept for a private company study focusing on autonomic product innovation is presented in the Appendix 1.

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7 Conclusions

The main objectives of this Thesis were to identify the kind of foresight activity that VTT should organise. This was approached by studying VTT's and its customers' needs for foresight, briefly observing the kind of foresight activities that are already organised in Finland, and reflecting these in a theory of foresight. Foresight can benefit the activities of a public research and technology development organisation at several levels. It can stimulate innovation activities and inform strategic processes, but it can also be used to build networks and strengthen relationships with industrial firms. In this Thesis, the context is defined as to how foresight can support VTT's innovation process. Foresight can influence VTT's innovation process through three different channels. Firstly, foresight can be used to identify future opportunities for industrial firms and thus create a need for VTT's research services. Secondly, foresight can support planning and implementation of VTT's technology strategy, which defines the focus areas where VTT's innovation activities concentrate. Thirdly, foresight can create content by providing visions and ideas on future innovations for the concept development phase of the innovation process. Funding instruments of research are defined in a formal technology strategy process. Foresight can support this process in different ways. In the planning phase, specific priority-setting-oriented comprehensive foresight processes can be organised. Embedded foresight activities can in turn support implementation of the strategy and priorities, for example in planning technology themes and key technology actions. The technology strategy process can also be approached more indirectly by feeding it with innovation ideas

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and future visions. Anyhow, VTT needs to develop proper ways to integrate various types of foresight knowledge into its technology strategy process. Three customer segments were identified for foresight services that VTT should offer. These are named Future Scouts, Strategic Planners and Innovators. Their needs for foresight service differ in terms of its functional use and how the service can be delivered. These segments should be addressed with specific service offerings. For Future Scouts, VTT should offer reports that build on earlier foresights and road maps. In addition, some vision workshops and weak signal analysing sessions could be arranged. Strategic planners use foresight as a tool in their strategic planning processes. For their needs, VTT should offer industry scenario workshops and a road-mapping service. Innovators use foresight to catalyse their innovation activities. Here future-oriented ideas on new innovations could be useful to create new initiatives and options for further development. For innovators' needs, an innovation foresight service should be promoted. Innovation foresight can be implemented as private company studies or forums that are structured around value networks or socio-economic problems. From VTT's perspective, technology or market foresight alone is not an adequate tool for the needs of VTT and its industrial customers. Examining applications helps to create focus and a concrete use for the study. Moreover, creating innovation ideas includes a strategic analysis of how the future visions should be taken into account in the case of the client organisation. As reported in the literature, this has been a significant problem in the case of technology foresight exercises in which turning the visions into action has been difficult. In addition, innovation ideas provide an option that can form a basis for starting collaborative research and technology development activity. However, choosing the strategic focus areas for foresight and research cannot be based only on ideas and the direct needs of industrial firms. In summary, innovation foresight is suggested as VTT's main activity, because (1) creating innovation ideas can help bring customers' needs into VTT's strategic planning, (2) innovation ideas and solution concepts can provide a starting point for collaborative research and development activity, (3) individual projects enable a focus on customercentric topics serving clients' needs, and because (4) individual practical foresight exercises

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are relatively easy to implement and thus (5) a future-oriented culture and practices can be promoted within VTT. Backed by several arguments, this Thesis also suggests that a permanent foresight function should be set up to run innovation foresight exercises. For example, according to Torsti Loikkanen, "long-term staffing and resourcing would enable the development of foresight process competence and service quality". In addition to innovation foresight exercises, setting up a foresight knowledge base is suggested in order to store codified information for future use. Innovation foresight has also implications for instruments of technology strategy. Strategic flexibility (see e.g. Salo and Salmenkaita, 2002) in resource allocation should be considered to change the direction of RTD activities, if necessary, and to provide incentives to participate in the exercises by promising funding for new ideas that have been considered to have potential in foresight exercises. To implement strategic flexibility, an open allocation policy for funding should be considered. Should this be difficult to arrange, in the beginning a specific priority fund could be used to finance initiatives from foresight exercises after annual budgets have been fixed. Finally, further development of innovation ideas and solution concepts which are deemed to have high potential would benefit from promoting an entrepreneurial track for research, consisting of an option for launching a start-up company from within VTT, or functions supporting new business creation and venture capital funding.

Max Jakobson (2003) has written: "Historical experiences show how little we know about future. We can only be sure that something will happen that nobody has foreseen will happen." However, we can improve our odds by being alert and using systematic methods. Foreseeing innovations is trying to imagine the environment in which we live in the future, and then trying to innovate to create that future. How well we can succeed remains to be seen, but there is always a need for imagination, vision and drive to do things better.

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Miles, I. (2004) 'Three Worlds of Foresight', EU-US Seminar: New Technology Foresight, Forecasting & Assessment Methods, Seville May 2004 Murtoaro, J. (2005) 'Use of problem structuring methods in strategic decision-making', Master's Thesis, No 9652, Helsinki School of Economics Naisbitt, J. (1982) 'Megatrends', Warner Books Nanus, B. (1992) 'Visionary Leadership - Creating a Compelling Sense of Direction for Your Organization', Jossey-Bass Publishers, San Francisco Nonaka, I. (1991), The knowledge-creating company, Harvard Business Review, NovDec, pp. 96-104. Phaal, R., Farrukh, C. and Probert D. (2004) 'Technology road mapping - A planning framework for evolution and revolution', Technological Forecasting & Social Change, vol. 71, pp.526 Pirttimki, A. (2005) 'Foresight in a public research and technology development organisation', Conference Paper, Foresight Management in Corporations and Public Organisations - New Visions for Sustainability, Helsinki, June 9-10 Porter, Alan et al. (2003) 'Technology futures analysis: Toward integration of the field and new methods', Technology Futures Analysis Working Group, Technological Forecasting & Social Change 71 (2004), pp. 287-303 Sallner, Patrik (2005) 'What do we need to know about the future?', European Futurists Conference, Lucerne, July 10, 2005 Salmenkaita, J-P and Salo, A. (2004) 'Emergent foresight processes: industrial activities in wireless communications', Technological Forecasting and Social Change Salo, A. and Cuhls, K. (2002) 'Technology Foresight - Past and Future', J. Forecast. 21 Salo, A. and Salmenkaita, J-P. (2002) 'Embedded foresight in RTD programs', Int. J. Technology, Policy and Management, Vol. 2, No. 2, pp.167-193.

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Salo, A. and Gustafsson, T. (2004) A group support system for foresight processes, Int. J. Foresight and Innovation Policy, Vol. 1, Nos. 3/4, pp.249269. Schumpeter, J. (1934) 'The Theory of Economic Development', Harvard University Press Slocum, N. (2003) 'Participatory Methods Toolkit - A practitioner's guide', available at http://www.unu.edu/hq/library/Collection/PDF_files/CRIS/PMT.pdf Tegart, G. and Johnston, R. (2004) 'Some Advances in the Practice of Foresight', EU-US Seminar: New Technology Foresight, Forecasting & Assessment Methods, Seville May 2004 Trott, P. (2005) Innovation Management and New Product Development, 3rd edition, Pearson Education Tuomi, Ilkka. (2002) 'Networks of Innovation: Change and Meaning in the age of the Internet', Oxford University Press VTT website - http://www.vtt.fi/vtt/inbrief/mission.htm, cited May 19, 2005 Wikipedia, http://en.wikipedia.org/wiki/Innovation, cited September 30, 2005 Personal interviews: Mikko Kara, Executive Director, VTT (February 10, 2005) Hannu Tuominen, Director, Vaisala Plc (February 16, 2005) Jouko Suokas, Executive Director, VTT, (February 25, 2005) Lars Gdda, Research Director, M-Real (February 28, 2005) Pekka Ketonen, Chairman and CEO, Vaisala Plc (March 2, 2005) Olli Vent, Research Manager, VTT (March 9, 2005) Erkki KM Leppvuori, Director General, VTT (April 13, 2005) Seija Koppinen, VTT (April 25, 2005) Annele Eerola, Senior Researcher, VTT (April 26, 2005, various dates) Magnus Simons, Senior Researcher, VTT (various dates) Torsti Loikkanen, Research Manager, VTT (August 9, 2005) Alpo Kuparinen, Vice Director General, Ministry of Trade and Industry (August 28, 2005)

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Mika Naumanen, Senior Researcher, VTT (September 13, 2005) Rauno Heinonen, Research Manager, VTT (September 7, 2005) Petri Kalliokoski, Senior Researcher, VTT (various dates)

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Appendix 1 Product Innovation Foresight service concept

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Appendix 1 Product Innovation Foresight service concept

Innovation foresight is a service concept developed for VTT Business Solutions. It is implemented as a workshop series for a single company. In this appendix, the innovation foresight concept, with the focus being on product innovation, is presented to clarify the concept in practice.

7.1 IN BRIEF
The goals for a product innovation foresight exercise are as follows: 1. Identify future needs and key problems in the market 2. Develop product concept drafts 3. Choose concepts with the most potential to be developed further, and 4. Agree on further collaboration between participants An innovation foresight workshop is targeted at the "Innovators" customer segment. A potential client company for the study could be a medium-sized company, for example a manufacturing company that needs new innovations. In the client organisation the main target audience are research and development management, business unit management and engineers, but if possible the participation of top management is also recommended. From VTT, expertise is provided from many scientific fields by involving several researchers. The workshops cover two working days and the time needed for homework.

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7.2 PATH OF ANALYSIS


To illustrate the themes that are covered in the exercise, a path of analysis is depicted below (see Figure 19) in the topic selection tool introduced in Chapter 6.4.4. The analysis consists of five steps. Firstly, markets are analysed starting from the societal level. Then, based on industry and market level studies, key problems and customer needs are identified. Based on these needs, product concept drafts are created. Finally, technological analysis is conducted to define the key technologies that are needed to implement the concept.
Level of detail

Macro, holistic

Broad technology foresight exercise: Critical technologies

Socio-economic problem solving

Demographic, political and economic developments

Meso

Technology sector future visions

Business model development

Opportunities arising from change in Industry structure

Micro

Analysis of technological futures of core technologies at a company level Technology

Product and service concept development Solutions to a specific customer need Applications

Consumer behaviour trends and identification of future needs Theme of exercise Market

Figure 19 Path of analysis in a product innovation foresight exercise

7.3 WORKSHOPS
Stages of the exercise are summarised below in Table 16.

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Table 16 Summary of the exercise - stages and methods used Stage 1. Preliminary studies 2. Identification of change drivers at societal level 3. Market and industry-level foresight 4. Product need identification 5. Product concept creation Description Review of earlier road maps and market studies Identifying weak signals and megatrends using brainstorming PESTE analysis Creating market / industry-level scenarios (10 years?) Summarising scenarios as one vision for the company Analysis of key problems and needs of chosen scenarios Identification of product need variables Describing product level scenarios Creating functional concepts Choosing most attractive alternatives market potential feasibility Technology concepts: How could these functions be implemented? What kind of attributes do they require? What technologies have created similar attributes in other fields? What kind of technologies could be needed? Selecting key technology areas. Technology foresight and assessment How will selected technology areas develop in the near future? Are the required technologies already available? Selection of technologies for each concept Assessment of further actions Which concepts will be chosen for further development? Deciding on common research strategy and focus areas Planning future activities Road mapping collaborative activities

6. Technology option analysis

7. Strategy and action planning business and product portfolio analysis decision on which concepts will be developed further decisions on further collaboration

The exercise is implemented as two separate one-day workshops and a strategy and action planning negotiation. The workshops are named the Vision workshop and Innovation workshop. The Vision workshop aims at defining a future vision for the client company based on industry-level scenarios (stages 2-3). The Innovation workshop then concentrates on creating ideas for new product concepts (stages 4-6). Later, the client company and VTT meet in order to discuss how to proceed in development activities.

Pirttimki, Antti. 2005. Foresight in a Research and Technology Organisation. Master's Thesis.