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Demand- and user-driven innovation

policy framework

EPISIS Project Kick off & European Service Think Tank Meeting

Helsinki, September 24. 2009

Ministry of Employment and the Economy

Innovation department
Demand-Based Innovations
Background and objectives
Implementing the national innovation strategy
• Ministry of Employment and the Economy has been assigned to outline
a policy framework for promoting demand and user driven innovation
during spring 2009
• Based on the policy framework, the Ministry will develop an action plan
for the demand- and user-driven innovation policy

Objectives of the project:

• To increase understanding of the demand- and user-driven innovation
and the implications for the innovation policy
• To utilise the latest research-based knowledge in specifying the key
elements of the demand- and user-driven innovation policy
Demand-­‐driven  innova-on  policy

Growing,  and  innova-on  friendly  markets

and  engaging  users

User-­‐driven  innova-on  policy

1. User-driven innovation policy
The role of user in innovation policy
• Users have increased their power over suppliers
• Globalisation and the Internet have empowered users enabling
• Well-informed choices among products and services
• User influence over the content of available products and services
• Active user participation in product and service development
• User and consumer demand are now more sophisticated due to
• Raised awareness and changes in consumption habits
• Extensive utilisation of information and communication technologies
and global access to suppliers
• Widespread education and democratisation of knowledge
Policy objectives
• User-driven innovation policy promotes user-driven innovation in public
and private sectors
• This calls for new policy framework and instruments

• Policy provides stimulus for

• Systematic collaboration / engagement with users in innovation activities
• Better understanding of the benefits of user-driven innovation
• Research and knowledge on user and user-driven innovation
• The development of platforms and tools enabling user-driven innovation
• The development of advanced tools for analysing customer needs
analysis, innovation and market trends
• Design (strategic / user-centric) as enabler for user needs based innovations
• Utilisation of internet tools in analysing customer behaviour
• Business ethnography and other tools for analysis of user needs
• Foresight methodologies
Success through user-driven approach

• Users and user communities are increasingly important for

business success
• New technology development alone is no longer sufficient as value
creation is increasingly based on tailored product-service offerings
• Better understanding of user needs is an increasingly important
source of competitive advantage
• New research and analysis tools as enablers of user-driven
• User innovations represent huge potential across the industries
• Renewal of public sector services
• In development of public sector services, user-driven innovation
policy places active and empowered citizens in the centre of
services renewal
Value for businesses and public sector
• User-driven innovation activities creates competitive advantages
• User needs are in a central role throughout the innovation process
• Better understanding of users and user communities creates many
new opportunities for value creation
• Early identification of emerging market trends can shorten time-to-
international markets
• Commercialisation related risks are lower
• Users can provide almost unlimited external resources through
their inputs in new applications development and content
• User-driven innovations can improve the quality of public
• Increased ability to supply tailored value adding services
• More flexibility through bottom-up service development
User-driven innovation policy -
New perspectives and opportunities
• User-driven innovation policy
• Improves the input-output ratio of innovation activities through
more effective commercialisation
• Enhances the impacts of innovation policy in areas which have not
been covered so far
• Stimulates renewal in products, services as well as discontinuous
discontinuous innovations
• Focuses attention on citizens and their needs as a driver of
renewal for public sector services

User-driven innovation policy provides stimulus for public and

private sector innovation activities carried out by users
themselves, or by producers whose activities involve systematic
collaboration with users
Policy framework
The central elements of user-driven innovation policy

Knowledge and Incentives for user- Infrastructure Regulatory reform

capability development driven innovation improvements
• Better utilisation of public
• Research • Financial incentives • ICT infrastructure sector held data and
- More emphasis on user-driven - New instruments for - Improvements targeting better user information
innovation supporting user-driven quality, trust and more open - Evaluation of data protection
- Development of indicators for innovation architectures and privacy regulations
user-driven innovation - New financing criteria for - Open and interoperable ICT- - Making public sector held
existing instruments enabling infrastructure supporting user- data more readily usable for
• Education better support for user-driven driven innovation especially user-driven innovation
- Users’ role as active and innovation within the public sector activities
responsible participants - Other new types of incentives
- Multi-disciplinary education for open innovation and for • Development platforms • Collaboration with users
and multi-skilled citizens public sector context - Regulatory reform to
and environments for
- Emphasis on arts and design empower citizens influence
related knowledge and skills
public private partnership and ability to make choices
• Building user awareness - Support for networks that
- Strategic design as a business - Stimulus for partnerships in
development tool (e.g. service and channels of influence enable user-driven innovation public service production
design) - Raising awareness of user- activities reaching across
driven innovation among different sectors and branches
- Intellectual property and
citizens, businesses and public
• Intellectual property
intellectual asset management of administration - Renewal of the institutional
in open innovation context sector
framework to make it more
- Stimulus for user influence • Renewal of public sector suitable and supportive for
through empowerment and
• Methods and tools services open and user-driven
improved channels of
- Better availability and use of - Promoting user-driven innovation
advanced methods including development as a mainstream - More consistent regulation of
foresight, business activity within the public sector the intangible value and
ethnography, internet and - Adoption of service design liabilities resulting from user-
user needs analysis principles in the public sector driven innovation activities
2. Demand-driven innovation policy
The role of demand-side initiatives in
innovation policy
• Innovation related activities are now seen in a wider context
• Both demand and supply side factors influence the way innovations
emerge and diffuse on the markets and within the wider society
• Policy focus on innovation related demand factors introduces new
and complementary elements to the innovation policy
• Many types of actors in the society influence demand, diffusion and
acceptability of innovations

• Demand-side innovation policy recognises and targets also

societal issues such as
• Climate change and energy supplies
• Challenges related to ageing population and productivity of public
• Environmentally sustainable processes and consumption
Policy objectives
• Demand-side innovation policy promotes innovation-friendly markets
characterised by growth, innovativeness and rapid diffusion of novel
products, services and processes
• The policy stimulates demand for innovations and/or directs it towards
innovative products and services by
• Influencing consumer and organisational behaviour
• Directing public sector demand towards innovative products, services
and solutions
• Increasing confidence towards innovative products and services

• It promotes market conditions where demand can be an effective driver

for innovation by
• Introducing lead market initiatives in the areas where global demand
and market scalability create attractive opportunities
• Taking a systemic approach in stimulating demand, confidence and
positive attitudes towards innovations
Added value of the policy for the business
• Demand-driven innovation policy seeks to improve the
competitiveness of businesses

• By creating demand and markets for innovations

• By improving the conditions for take-up and commercialisation

of innovations
• e.g. through faster time-to-markets and diffusion of new
innovative products, services and solutions

• By developing systemic approach to the development of

coherent, innovation friendly regulation and norms
Climate change
Energy efficiency, bio fuels

Sustainable consumption
Biomaterials, recycling

Clean air and water

Intelligent systems, sustainable transportation

Health and welfare

Preventive healthcare, digital services

Safety and security

Productivity of public services

Electronic government
Demand-side policy and thematic priorities

Pioneering regulation

Public sector as a lead-user

Public private partnerships

Research and foresights


Usage norms and labelling

Performance targets

Demand-driven innovation policy promotes

innovativeness and diffusion of innovations by stimulating
demand for and by creating better conditions for the take-
up of innovations
Policy framework
The central elements of demand-driven innovation policy

Knowledge and Incentives for demand- Infrastructure Regulatory reform

capability development driven innovation improvements
• Regulatory development
• Foresights • Financing and tax •Systemic demand-side - Future oriented, coordinated,
- Identification of key socio- innovation friendly regulation
incentives innovation policy - Performance based regulation
economic trends and potential - Taxation as a means to create - Improved coordination and
leading edge activities and demanding performance
demand for innovations consistency in innovation based targets as a way to
- Communicating the results to - Financing for R&D and policy design and
wide audiences motivate market actors
innovation projects implementation
- Policy actions to promote and
• Research enable lead-market • Recommendations and
• Pioneering public sector development labelling
- Focus on major societal
- Setting example by increasing - Better achievement of jointly - Increased transparency as a
challenges and developments
public sector led pioneering agreed targets through way to enable well-informed
- Analysis of demand-side
activities improved coordination and consumer choices
innovations and their potential
- Increased resources for governance of public sector of - Usage norms as a way to
demonstration and reference activities influence demand
• Education and training - New development
- Innovative procurement environments and platforms •Public private • Competition
practises for piloting innovative partnerships - Stimulation of well-
- Consumer awareness and products, services and - Exploring new and more functioning, effective markets
readiness to take up processes effective ways to build - Demand and competition as
innovations - Better incentives for innovative partnerships drivers of innovation
- Standards as a means to public procurement - Creating opportunities for new
create stimulus for the market - Opening up of data bases and types of partnerships and • Standards
approval and take up of public sector held content for effective delivery of public - Standards that create markets
innovations commercial use sector services and support innovation
- Introducing digital services and - Development of the standardi-
novel service delivery method sation system and procedures
Demand-­‐driven  innova-on  policy
•  Improves  the  ability  to  adopt  innova-ons
 •  Facilitates  demand  for  innova-ve  products,  services  and  solu-ons
•  Enhances  the  capability  to  interpret  market  needs  and  demand  poten-al
•  Demanding  and  innova-on  friendly  regula-on •  Standardisa-on  suppor-ng  innova-veness
•  Awareness  and  knowledge  development •  Innova-ve  public  procurement
•  Regula-on  as  a  s-mulus  for  compe--on
Innovation friendly markets

Demand,  compe--on  and  innova-on  culture  as  drivers  of  innova-on

User-­‐driven  innova-on  ac-vi-es

•  Awareness  and  knowledge  development

•  Design  as  an  enabler  for  user-­‐driven  innovaitons

•  More  systema-c  collabora-on  with  users  in  innova-on  ac-vi-es

•  U-lisa-on  of  advanced  methods  in  iden-fica-on  and  analysis  of  user  needs  and  trends
•  Developing  innova-on  policy  and  measures  for  promo-ng  user-­‐driven  innova-ons
User-­‐driven  innova-on  policy