Si 05 Technology and Foresight ss18

Service Innovation
Part 5: Technology Evolution & Strategic Foresight
Prof. Dr. Gerhard Satzger, Niels Feldmann, Carina Benz

SS 2018
KARLSRUHE SERVICE RESEARCH INSTITUTE (KSRI)
www.ksri.kit.edu
1 KIT Service Innovation

– University of the State of Baden-Württemberg and National Laboratory of the Helmholtz Association
Karlsruhe Service Research Institute
Research Group “Digital Service Innovation” – Prof. Dr. Gerhard Satzger www.kit.edu
www.ksri.kit.edu
Overview of Service Innovation topics this term
Concepts Methods and Tools Management
1 5 9
Basics of Innovation Technology &

Resistance
and Services Strategic Foresight
2 6 10
Service Design
Types of Innovation Managing Creativity
Thinking
3 7 11
Innovation
Service Innovation
Focus Experiences
Challenges
– Guest Speaker –
4 8 12
Innovation
Collaborative
Processes & Last Slot
Innovation
Diffusion
2 Service Innovation Karlsruhe Service Research Institute

Research Group “Digital Service Innovation” – Prof. Dr. Gerhard Satzger www.ksri.kit.edu
Outline of Service Innovation lecture topics
Lecture Day Date Topic
1 Thursday April 19 Basics of Innovation and Services
2 Thursday April 26 Types of Innovation
3 Thursday May 3 Service Innovation Challenges Tue 14.00-15.30 Bldg. 10.11 R223
Exercise 1 Tuesday May 8 Service Dominant Logic Thu 09:45-11:15 Bldg. 11.10
No lecture Thursday May 10 Public Holiday – No lecture Kleiner ETI-Hörsaal
Exercise 2 Tuesday May 15 Disruptive Innovation
4 Thursday May 17 Innovation Processes and Diffusion
Exercise 3 Tuesday May 22 Diffusion of Innovation
Guest Lecture Tuesday May 22 KSRI Speaker Series: Dr. Sommerhäuser (Bosch)
15:45-17:15 (Building 30.22, Messtechnik Hörsaal)
5 Thursday May 24 Technology and Strategic Foresight
No lecture Thursday May 31 Public Holiday – No lecture
Exercise 4 Tuesday June 5 Strategic Foresight
6 Thursday June 7 Service Design Thinking
Exercise 5 Tuesday June 12 Service Design Thinking – Wallet Challenge
7 Thursday June 14 Focus
8 Thursday June 21 Resistance
Guest Lecture Thursday June 28 Innovation Experience - Guest Speaker
9 Thursday July 5 Managing Creativity
10 Thursday July 12 Collaborative Innovation
11 Thursday July 19 Wrap up + Research Corner
EXAM August 14 EXAM (Planned, please check)

Technology Evolution –
Objectives of this lesson
1
Learn how technology can act as an enabler for innovation and diffusion
2
Understand how technology-based innovation has changed the balance of power
and business models in whole industries
3
Learn how to notice and understand technological trends and their implications
from a company perspective
4
Learn about tools for strategic foresight and how to incorporate results from
technology outlook in it

Service Innovation –
1 Examples: Technology as a Driver for Change
Balance of Power
Speed
New Players
2 Methods: Technology Outlooks
3 Methods: Strategic Foresight

Technological innovation can change the balance of
power dramatically
Battle of Agincourt
25 October 1415
English army: ca. 6.000
French army: ca. 30.000
Who won?
English or French?
Why is this surprising?

Innovations lowering the cost of distributing information
have led to economic, but also social / societal changes
• Shattering power structures (monks)

• Distribution of knowledge
• Social movements (reformation)
Cost of managing
information
Written word:
Separation of information from
human carrier and speech Gutenberg:
Inf. reduced storage cost Printing with movable types,
Cost reduced reproduction cost
Telegraph:
Internet: Transport faster,
Separation of information reduced transport cost
from matter
reduced storage, reproduction
and transportation costs
Time
t
4000 BC 1450 1800 1990 • prosumers
• attention vs. information deficit
• currency vs. quality
Source: IBM Institute for Business Value

Example media industry: traditional „gatekeeper“
model is challenged by decentralized creation of value
Hierarchical Media
News Media Data

Journal TV &
& Providers /
Publishing Movies
Reference Analysts
Self-Organized Media
Open Blogs & Video- Semantic

Publishing Wikis casting Web
2010

Example media industry: Ironically, the “attention
industry” was surprised by the success of “Web 2.0”
Rank
02 / 2004 08 / 2004 02 / 2005 04 / 2005 08 / 2006 03/ 2007 06/2007 09/2007 01/2008
1 yahoo! yahoo! yahoo! yahoo! yahoo! yahoo! yahoo! yahoo! yahoo!
2 msn msn msn msn msn msn msn msn google
3 google google google google google google google google youtube
4 ebay microsoft passport passport myspace youtube youtube youtube live
5 microsoft passport ebay ebay live myspace live live msn
6 passport ebay microsoft microsoft ebay live myspace myspace myspace
7 amazon amazon amazon amazon youtube orkut orkut orkut facebook
8 go offeroptimizer aol fastclick microsoft microsoft microsoft facebook hi5
9 cnn fastclick fastclick aol amazon ebay megaupload hi5 orkut
10 doubleclick doubleclick go google UK orkut blogger blogger rapidshare rapidshare
11 bbc go gator go blogger megaupload hi5 blogger blogger
12 aol alibaba xanga bbc google UK hi5 facebook megaupload megaupload
13 offeroptimizer cnn google UK xanga passport google UK rapidshare friendster fotolog
14 gator bbc cnn cnn bbc rapidshare ebay microsoft friendster
15 searchscout 165.254.12.202 bbc ebay UK craigslist amazon friendster fololog microsoft
16 fastclick aol searchscout searchscout go facebook fotolog ebay ebay
17 premium google UK offeroptimizer gator cnn fotolog google UK google UK megarotic
18 ebay UK gator alibaba google CA alibaba passport passport flickr imdb
19 lycos ebay UK mediaplex comcast megaupload bbc amazon imdb google UK
20 google UK searchscout ebay UK mediaplex imdb friendster bbc amazon amazon
media incumbents user collaboration

Source: Alexa Internet Web Search – top 20 English Language Web Sites

Electronic distribution channel enhance the speed of
innovation diffusion...
Source: Steemit https://steemit.com/steemit/@johnnywingston/reaching-50-million-users-1502424760-550716

… and speed of innovation makes it harder for
established companies to flourish…

... as technologies reshape traditional service industry
processes and allow the emergence of new players...
Technology
Service Industry Human Contact Electronic service
Assisted Service
Stock-availability
Book store Information clerk E-book reader
terminal
Computer
Library Librarian Electronic library
database
Public transport Ticket counter Ticket machine Online ticket

… and trigger new service
business models and new players
1. From physical to digital 2. From download to streaming
Source: Statistica, http://www.statista.com/chart/1075/the-digital-music-revolution/ and http://www.statista.com/chart/3333/us-music-revenues-2014/


Recap: Innovation management is more than R&D-
and/or technology management
R&D Management: Technology Management:

• Focus on scientific and technical • Managing technology portfolio
aspects • Screening and evaluation new
• Systematic, planable, technologies
repeatable • Securing technology potential
• Institutionalized, specialization (patents, people, alliances)
and coordination • Marketing technological know-how
Innovation Management: Design and execution of innovation processes

• Deals with translating inventions into market success
• Also deals with unsystematic and non-repetitive events
• Key issues in decision and implementation:
• Managing Complexity
• Managing Barriers (Knowledge, Intention, Communication)
• Problem decomposition • Information management

• Knowledge management • Motivation
• Generation and evaluation of alternatives • Conflict management
• Process control • Authority allocation
Based on: Hauschildt/Salomo (2007).

CEOs identify technology as the most important
external force impacting their organizations
Source: IBM IBV CEO studies (2004 – 2015)

There are two potential drivers for innovation...
Market pull Technology push
... is the development and market ... is the development and market
introduction of a new product or introduction of a new technology-
service induced by customer based product or service initiated by
demands new technologies rather than
Requires the identification of customer needs
latent unsatisfied customer needs Most likely leads to radical
Most likely leads to incremental innovation creating a new market
innovations with lower risk and with high profit potential and high
faster realization risks
Methods: Market research, Design Methods: no dedicated methods
Thinking, Needmining

How can you avoid being surprised by
technological innovations undermining your business?
Activity Focus
Big Picture 1. Technology Outlook
Horizon 5 - 10 years, generic „big picture“
2. Technology Scouting
Horizon >2 years, specific to industry
3. Strategic Technology Analysis

Systematic analysis of technology impacts for company
4. Strategic Alignment of Strategy and Technology

Company
specific Ensuring business and technology strategies and operations are aligned
within company

1. Technology Outlook: Looking at new technologies that
have the potential to impact “life, business and the
global economy”

1. Technology Outlook: The trend book looks at
trends and technologies on a generic level
SOURCE: TRENDONE (2017) Trenbdoook: http://www.trendone.com

2. Technology Scouting is a way to scan technology
environments for timely identification of key
technologies through the use a of network of experts
IBM’s 5in5 looks at 5 technologies that have the potential the change the way
people work, live, and interact during the next 5 years
SOURCE: IBM (2017), The invisible made visible. http://research.ibm.com/5-in-5/

2. Technology Scouting: Tools like the Gartner Hype
Cycle help to position trends on a radar
1. Technology Trigger: A potential technology breakthrough

kicks things off. Early proof-of-concept stories and media
interest trigger significant publicity. Often no usable
products exist and commercial viability is unproven.
2. Peak of Inflated Expectations: Early publicity produces
a number of success stories—often accompanied by
scores of failures. Some companies take action; many do
not.
3. Trough of Disillusionment: Interest wanes as
experiments and implementations fail to deliver. Producers
of the technology shake out or fail. Investments continue
only if the surviving providers improve their products to the
satisfaction of early adopters.
4. Slope of Enlightenment: More instances of how the
technology can benefit the enterprise start to crystallize
and become more widely understood. Second- and third-
generation products appear from technology providers.
More enterprises fund pilots; conservative companies
remain cautious.
The Hype Cycle helps to determine a 5. Plateau of Productivity: Mainstream adoption starts to
trend‘s position on the „maturity“ axis take off. Criteria for assessing provider viability are more
clearly defined. The technology’s broad market
applicability and relevance are clearly paying off.111
Source:
Gartner Inc. http://www.gartner.com/technology/research/methodologies/hype-cycle.jsp

2. Technology Scouting: Gartner Hype Cycle
of Emerging Technologies 2017
Source: Gartner (2017)

2. Technology Scouting: Assessing the maturity of a
technology
The Technology Readiness Level (TRL) scale

was introduced in 1988 by the NASA for
assessing the readiness of future technologies
TRL9: Qualified system in use

TRL8: Qualified system with demonstration in real
environments
TRL7: Prototype / subsystem in use (1-5 years)
TRL6: System/ subsystem model or prototype demonstration
in test environment
TRL5: Component validation in real environment
TRL4: Component validation in laboratory environment
TRL3: Analytical or experimental proof of concept (5-13
years)
TRL2: Technology concept and/or application formulated
TRL1: Basic principles observed and reported (8-15 years
until market readiness)

Source: https://www.youtube.com/watch?v=2B680d-qvhI

3. Strategic Technology Analysis: Scouting workshops
to assess new technology impacts for the enterprise
Technology „speeddating“ and Enterprise

demonstration brainstorming workshops representatives
Technology Organizations Potential use /

involved impact
High-Resolution Evoluce AG Blended Learning
Multi-Touch Surface activities, intuitive user
interface
3D Nanobarcode National Physical Marking high-value

Laboratory (NPL) at objects like diamonds
Teddington, UK to track ownership,
prevent theft
… … … …
Sources: http://www.newscientist.com/article/dn7756-3d-barcodes-to-identify-stolen-valuables.html
http://www.evoluce-screens.com/ and Trend Book: http://www.trendone.de/

3. Strategic Technology Analysis: Trend radar facilitates
a systematical analysis of technology impacts for the
company
Trend-Radar
A A
Assessment of Trends
x
B x B
x
x x
x x
x
x
x
C Mature C
Significant Market impact
Maturing x
Significant Market Impact expected in 1-2 years
Developing
Significant Market Impact expected in 3-5 years
x Trend „X“ A = very relevant

B = might be relevant C = rather not relevant

3. Strategic Technology Analysis: Identifying
important technologies via impacts to key success
factors
Market Requirements in 5-10 years (Beyond Tomorrow)
Tech 1 Tech 2 Tech 3
Market Requirements in 1-5Tech 4
years …
(Tomorrow) Tech N
Critical Success Factors (CSF)
Today‘s Tech 1 Tech 2 Tech 3 Tech 4 … Tech N
Technologies (Today)
Market CSF1 * ** * ***
Critical Success Factors (CSF)
Requirements Tech 1 Tech 2 Tech 3 Tech 4 … Tech N
CSF2 ** **
CSF1 * ** * ***
Critical Success
CSF3 Factors (CSF) *** ** *
CSF2 ** **
CSF1 CSF4 * ** * *** ***
CSF3 *** ** *
CSF2 … ** **
CSF4 ***
CSF3 Critical Performance Attributes * * * (CPA) ** *
…
CSF4 CPA1 * *** **
Critical Performance Attributes (CPA)
… CPA2 *** **
CPA1 * **
Critical Performance
CPA3 Attributes
* (CPA) * * * *** *
CPA2 *** **
CPA1 CPA4 * ** ** **
CPA3 * ** * *** *
CPA2 *** **
CPA4 ** **
CPA3 * ** * *** *
CPA4 ** **
Key Technologies
Source: Gerybadze, A. (2004) S. 136; translated and adapted

.. and benchmarking against competitors
Technologies Weight Own Competitors‘ Scores Relative technology position

factor score
Comp1 Comp2 Comp3 CompN weak medium strong
Key Technologies
Key Tech 1
Key Tech 2
Key Tech 3
Pacemaker Technologies
Pace Tech 1
Pace Tech 2
Pace Tech 3
Mature Technologies
Mature Tech 1
Mature Tech 2
Mature Tech 3
Key Tech (3-5)
Pacemaker Tech (2-4)
Mature Tech (1-3)
Overall Position
Source: Gerybadze, A. (2004) S. 137; translated and adapted

4. Technology Roadmaps hepl to align a company‘s
WHY? longterm strategy and technology assessment
Strategy
Strategic milestone 1 Strategic milestone 2
WHAT?
Product and Product 1

services Service 1 Service 2
Core
HOW?
Technology
and platform technology
A Core technology B
WHEN? t

Specific limits and critique
1. Technology Outlook
Good at catching predictable cost/capability trends
Bad at catching surprising „game changers“
2. Technology Scouting
Helps opening minds by making technological innovations more visible
Risk to focus on „cool“ gadgets rather than „boring“ back-end improvements
3. Systematic technology analysis approach helps against „ad hoc“ mistakes – but
Can prevent dissent and innovation
Provides a „proxy battleground“ – people invest time and effort in
manipulating the „systematic“ approach
Can create a false sense of security
4. Strategic Alignment
Helps to align business strategy and technology strategy
How to build up relevant knowledge is not yet clear

General limits and critique
Focus on innovation of solution Rational, technology-driven world

components view
The traditional methods for neglects market needs and
understanding the impact of customers
technology are focused on discrete Incentive systems of individual
technological components actors may not support the
This leaves a risk of being surprised technology that would best benefit a
by architectural innovation which company
uses existing components but
changes the relationships between
them in new ways


Strategic Foresight: envisioning the future in 1900

Strategic Foresight is the fusion of futures methods with
strategic management
Strategic Foresight is the ability to create and maintain a high-quality, coherent

and functional forward view, and to use the insights arising in useful
organizational ways. (Slaughter 1997)
Strategic Forsight
=
Strategy: High level plan to achieve goals under
conditions of uncertainty
+ §
Future studies: Studying past and present chances, and
analyzing strategies and opinions with respect to the
future
§ When to use: to guide policy, shape strategy, and to explore new markets,
products and services
Slaughter (1997): Developing and Applying Strategic Foresight

Scenario technique: Projecting possible types of futures
Scenario Technique
Scenario = Description of
When to use it: possible views of the world
To generate actionable insights by
creating a small set of scenarios for an
organization’s future environment Best case scenario
Scenario A
Critial events /
Discontinuity
Trend scenario
Scenario B
Scenario C
Worst case scenario
Present Short time Medium time Long time t

How to come up with scenarios: 5 scenario technique
process steps
1 Identify the focal Identify a focal area or issue – such as a decision or questions
question that is critical to the future of your company and a time horizon.
Identify areas of influence (e.g., politics, economics, society,

2 Environment technology, environment, markets) and define influencing factors
scanning (e.g. data security, purchasing power, consumer behavior).
3 Define future Identify and define potential future projections of influencing factors.
projections of key (e.g. prices for raw materials could 1) increase, 2) decrease or 3)
influencing factors remain the same)
4 Bundle projections Bundle projections across influencing factors, check for consistency
across influencing and describe the new world in 3-5 scenarios. Elaborate on critical
factors events.
Derive consequences for own activites based on the scenarios.

5 Define strategic Identify strategies that promote desired developments and reduce
implications the probability of undesired developments.

The Stanford Strategic Foresight & Innovation
method provides tools to integrate trends into an
innovation strategy
Tamara Carleton &

William Cockayne
Source:
Carleton, T. et al. (2013) Playbook for Strategic Foresight & Innovation. (http://innovation.io/playbook/)

The Strategic Foresight & Innovation Method:
Context Map
Context Map
The Context Map helps to group the
eight most influential topics around the
innovation challenge
When to use it:

§ To pursue an entirely new area of
research
§ To find group agreement on the
important aspects of a problem
§ To gain fast background for a
particular topic

Context Map (Example)

Progression Curves
Progression Curves
When to use it: Today
To understand the pattern of events for
a particular topic and how these events
have led to its current state
Past
Source:

Progression Curves (Example)

Generational Arcs
Generational Arcs
When to use it:
• To evaluate a new market or expected
market change
• To anticipate major disruptions in
demographic structures
• To analyze a different or younger user
base relative to the current user base
Population
Age Distribution
Source:

Generational Arcs (example)

Future User
Future User Past Today Future

Year: YYYY Year: YYYY Year: YYYY
When to use it:
• Expand existing
Comparison 2:
personas
2. 1.
• Identify user needs Similarities:
Person A Person A
in the future
Start Age Today‘s Age
• Overview of Differences:
similarities &
differences
3. 4.
Comparison 1:
Person B Person B
Similarities: Start Age Target Age
Differences:
Source:

Future User (example from SDT course)
Thomas (26) Thomas (36) Comparison 2:

Similarities
ten years ago today
§ dig. technologies for work
§ trend sensitive
§ live in city by themselves
Differences:
§ car sharing vs. own car
§ attitude towards privacy:
unclear vs. concerned
Comparison 1:
Similarities
§ attend university Mike (36)
Mike (26)
§ live with roommates ten years
§ use internet for research today
from now
?
Differences:
§ iPhone vs. Nokia
§ Netflix vs. DVDs
§ smartphone + Spotify vs.
iTunes + iPod

Future User (example)

Leadership competency is strongly influencing the
usage and success of strategic foresight methods
Two attitudes narrowing the success of strategic foresight:
§ Planning horizons: In todays

business environmnet, a quarterly
deadline often takes precedence over
thinking about the future
§ Difficulties to connect present and

Here
& Now
future: Foresight divisions lose
support funding and headcount
because leadership struggles to see
the connection between the future
and today

Service Innovation Part 5:
Technology Evolution & Strategic Foresight– Learn more
….
Objectives
§ Learn how technology can act as an enabler for innovation and diffusion
§ Understand how technology-based innovation has changed the balance of power and
business models in whole industries
§ Learn how to notice and understand technological trends and their implications from a
company perspective
§ Learn about tools for strategic foresight and how to incorporate results from technology
outlook in it
Research projects at KSRI (examples)

§ Exploration of Data-infused Business Model Innovation and Data-Driven Services
(Ronny Schüritz)
§ Formation of Blockchain-driven Business Networks (Stefan Seebacher)
§ Service-oriented Cognitive Analytics (Robin Hirt)
Additional Literature
§ Henderson & Venkatraman (1993) Strategic Alignment: Leveraging information technology for transforming
organizations, IBM Systems Journal.
§ Carleton, T. et al. (2013) Playbook for Strategic Foresight & Innovation.

Contacts for the Service Innovation lecture
Prof. Dr. Gerhard Satzger

Karlsruhe Institute of Technology (KIT)
Karlsruhe Service Research Institute (KSRI)
Research Group Service Innovation & Management
Kaiserstraße 89, D-76133 Karlsruhe, Germany
Phone: +49 (0) 721 608 - 48763

Fax: +49 (0) 721 608 - 48399
Email: gerhard.satzger@kit.edu
(Appointments via Helga Neher, helga.neher@kit.edu, 0721-608-43227)
Carina Benz Niels Feldmann

Phone: +49 (0) 721 608 – 45774 Phone: +49 (0) 721 608 – 46589
Email: carina.benz@kit.edu Email: niels.feldmann@kit.edu
organization


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Service Innovation

Part 5: Technology Evolution & Strategic Foresight

Prof. Dr. Gerhard Satzger, Niels Feldmann, Carina Benz

KARLSRUHE SERVICE RESEARCH INSTITUTE (KSRI)

1 KIT Service Innovation

Concepts Methods and Tools Management

Basics of Innovation Technology &

2 Service Innovation Karlsruhe Service Research Institute

3 Service Innovation Karlsruhe Service Research Institute

4 Service Innovation Karlsruhe Service Research Institute

1 Examples: Technology as a Driver for Change

2 Methods: Technology Outlooks

3 Methods: Strategic Foresight

5 Service Innovation Karlsruhe Service Research Institute

Why is this surprising?

6 Service Innovation Karlsruhe Service Research Institute

• Shattering power structures (monks)

7 Service Innovation Karlsruhe Service Research Institute

News Media Data

Open Blogs & Video- Semantic

8 Service Innovation Karlsruhe Service Research Institute

media incumbents user collaboration

9 Service Innovation Karlsruhe Service Research Institute

Source: Steemit https://steemit.com/steemit/@johnnywingston/reaching-50-million-users-1502424760-550716

10 Service Innovation Karlsruhe Service Research Institute

11 Service Innovation Karlsruhe Service Research Institute

Public transport Ticket counter Ticket machine Online ticket

12 Service Innovation Karlsruhe Service Research Institute

1. From physical to digital 2. From download to streaming

Source: Statistica, http://www.statista.com/chart/1075/the-digital-music-revolution/ and http://www.statista.com/chart/3333/us-music-revenues-2014/

13 Service Innovation Karlsruhe Service Research Institute

1 Examples: Technology as a Driver for Change

2 Methods: Technology Outlooks

3 Methods: Strategic Foresight

14 Service Innovation Karlsruhe Service Research Institute

R&D Management: Technology Management:

Innovation Management: Design and execution of innovation processes

• Problem decomposition • Information management

15 Service Innovation Karlsruhe Service Research Institute

Source: IBM IBV CEO studies (2004 – 2015)

16 Service Innovation Karlsruhe Service Research Institute

Market pull Technology push

17 Service Innovation Karlsruhe Service Research Institute

3. Strategic Technology Analysis

4. Strategic Alignment of Strategy and Technology

18 Service Innovation Karlsruhe Service Research Institute

19 Service Innovation Karlsruhe Service Research Institute

SOURCE: TRENDONE (2017) Trenbdoook: http://www.trendone.com

20 Service Innovation Karlsruhe Service Research Institute

21 Service Innovation Karlsruhe Service Research Institute

1. Technology Trigger: A potential technology breakthrough

22 Service Innovation Karlsruhe Service Research Institute

Source: Gartner (2017)

23 Service Innovation Karlsruhe Service Research Institute

The Technology Readiness Level (TRL) scale

TRL9: Qualified system in use

24 Service Innovation Karlsruhe Service Research Institute

25 Service Innovation Karlsruhe Service Research Institute

Technology „speeddating“ and Enterprise

Technology Organizations Potential use /

3D Nanobarcode National Physical Marking high-value

26 Service Innovation Karlsruhe Service Research Institute

x Trend „X“ A = very relevant