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European policies and

instruments to support
service innovation

Typologies as
service innovation policy tool
Dr Jari Kuusisto
European Touch Ltd.

Permanent Representation of Finland to the EU

05 May 2011
Starting point
  Services count for up to 80 % of the economy
  How to develop effective service innovation policy?

Services share
of the economy in terms of
employment and GDP

≈ 70 – 80 %
More effective service innovation policy
  Instead of blanket policy covering 80 % of the economy
  We need targeted policy development and delivery

Systematic policy development

for different types of services

- Industries
- Occupations
- Businesses
- Activities
TF1 typology development work

How to translate academic typologies to a

policy relevant material
The main objective of the work was

•  To increase and deepen the understanding of how to

categorise and typify service

•  These service categories need to be helpful for service

innovation policy development
•  in identifying right tools, instruments and competences to
support and encourage innovation in services.
  Services and service innovation
  Involve wide range of heterogeneous actors & activities
  To be effective, service innovation policy requires targeting
  Typologies offer new perspectives to segmenting of
  Service business and
  Innovation in services
  Typologies as a basis for practical tool that can assist Service
Innovation policy development
Turning academic work to policy tool
Phase 1: Analysis of existing service typologies

Identification & Key finding: Segmenting of

analysis of Together typologies services
16 key service provide a can help
typologies meaningful way to policy design
segment services and delivery?

Phase 2: Policy tool development

Typology Policy tool Service innovation

based service development, policy design and
Innovation utilizing service development tool ->
policy design and typologies More effective policy
development and impacts
How service typologies work?
•  From innovation policy point of view: service typologies slice the 80 %
of the economy into meaningful segments:

1.  It can distinguish categories of services (e.g., different services have

different innovation dynamics)
2.  It is homogeneous within the category (e.g., it exhibits common
innovation dynamics);
3.  It responds similarly to a policy stimulus, and
4.  It can be reached by a policy intervention

Service categories

  The above describe an ideal situation and targets worth pursuing even if all
four criteria may not always be fully attainable.
Benefits of typology approach
•  Typologies can create a basis for improved policy targeting and
impacts by
•  Highlighting distinct business groups that have different industry
structures, needs and requirements, behaviour and innovation activities
•  They enable policy focus on areas where the policy impacts
are most likely significant
  Different types of services have different growth potential, export
prospects, employment capabilities and thus have higher or lower
•  Service innovation policy can be designed for groups with
•  similar policy stimulus needs,
•  behavioural patterns, and
•  innovation activities
Typology based policy development tool

1. Innovation behavior in service industries

•  Industry based variation in innovation drivers and barriers

2. Service activities perspective - KISA

•  Service activities have important role across the industries

3. Service process perspective

•  Variety of processes and innovations, e.g. high touch vs. high tech services

4. Other typology inspired policy perspectives

•  National priorities – Which type of services? Which policy tools?

Improved service innovation policy effectiveness & efficiency

•  Achieved through systematic design and targeted delivery

Benefits of the reference process
•  Provides: a) systematic process and b) check list for service
innovation policy design
•  Four clear steps for policy development
•  Each step focuses attention to different set of relevant policy
•  Policy makers can target and tailor interventions effectively by
•  Type of targeted services (firm, industry, activity, occupation)
•  Nature of the service / service innovation process
•  Identifying typical drivers and barriers to service innovation
•  Presented tool facilitates European co-operation
•  Member states with similar priorities and tools for service innovation
promotion can work together effectively

Thank you!
Supplementary material

See pages 15-21

Innovation behaviour in service industries
•  Service innovation characteristics, drivers and
barriers take different characteristics across the
•  Sectoral innovation characteristics are influenced by
  Industry characteristics as such, e.g. network services based on
extensive physical infra: rail traffic, telephone networks...
  Sources of technology, e.g. ICT, bio-pharma....
  Type of user, e.g., consumers, b2b, demographic group...
  Means of appropriation, how ideas & novel properties are evaluated
and adopted
  Technological trajectory*, due to institutionalisation of ideas, markets
and professions, industry can get 'stuck' within one trajectory, and unable
to adopt to ideas and innovation from outside
  Relative size of firms and its influence on innovation dynamics
*Technological trajectory refers to a single branch in the evolution of a technological design of a product/service
Innovation behaviour - policy perspective

•  Industry characteristics
  Service innovation policy that is sensitive to specific characteristics
and needs of its target industry
•  Industry characteristics related issues for policy
content and targeting
  What are the key drivers and barriers to innovation?
  Internal business level issues
  Industry wide framework conditions
  Structure of the industry
  Aptitude to adopt novel concepts and technologies
  Key technologies and their characteristics
  Customer markets and their readiness to adopt innovative services
  Barriers and drivers to innovation

Knowledge intensive service activities - KISA

•  Analysis of knowledge intensive service activities

and their functions is indicating that
  Service activities exist across the industries
  Statistics cannot easily capture activities / processes
  Different types of KISA can be distinguished and they have variety
in functions.
•  Some examples of typical KISA
  R&D&I activities, management consulting, ICT services
  Human resource management and employment services,
  Legal services (including those related to IPR) accounting, financing,
  Marketing-related service activities.

KISA - policy perspective
  Renewal services - a key policy target
  are directly related to innovation, for instance R&D and strategic
management consulting
  Routine services - can provide broad based access to SMEs
  contribute to improvement of maintenance and management of
various subsystems within organisations, e.g. accounting
  Compliance services - regulation based demand, e.g. Eco-innovation
  help organisations to work within the legal framework and various
other regulatory regimes, e.g. auditing, legal-, and environmental
  Network services - links to open innovation and e.g., clusters
  facilitate communication, knowledge exchange and flexible resource
allocation, e.g. informal personal networks, production- and service
development networks

Service process characteristics

•  Service process perspective highlights variety in

service- and service innovation processes
  Typologies can be constructed around numerous different
dimensions of service process, e.g.
  Customer / technology intensity of service
  Customer intensive services involve high level of personal interaction
and individual tailoring
  Technology intensive services utilize ICT and automation
•  Service processes have different innovation
dynamics and development needs
  Organisational- and employee development
  Utilization of technology
  User involvement and co-creation etc.

Service processes - policy perspective
•  Customer intensive high touch services
  Policy focus on organisational development, employee skills, and
human resource management
•  Technology intensive services
  Focus on technology utilization, hybrid services, software and ICT
development, T-shaped skills profile development
•  Services productivity
  Understanding service productivity and best options for effective
service process development
•  Open innovation, co-creation, user innovation,
crowd sourcing
  Better recognition and support for new forms of innovation
activities, platforms that facilitate participation of new innovation
Typologies and perspectives to services and innovation

Knowledge intensity

Service industry Customer intensity

Services and
Service process innovation Macro level focus

Service activity Micro level focus

Services and technology