Posts Tagged ‘corporate’

EFP Brief No. 150: Strategic Capacity Building in Clusters to Enhance Future-oriented Open Innovation Processes

Sunday, May 22nd, 2011

For the purpose of increasing and sustaining business and regional long-term competitiveness, information and training modules were developed to enrich cluster development policies with tools that give incentives for and facilitate ‘outward-looking’ (open innovation) and forward-looking (foresight, technology assessment) activities and thus provide strategic guidance for developing future-proof, open innovation processes. After testing the tools in ICT, mechatronics and life sciences clusters, they are now being applied in a trans-regional foresight approach to develop a joint research agenda for clusters in the economically more and more important creative industries.

Regional Cluster Development to Systematically Boost Innovation

In the globalising knowledge economy, regional clusters are increasingly understood – in particular with respect to their ‘non-regional’ dimensions – as local nodes in global knowledge
flows. The Innobarometer 2006 on clusters’ role in facilitating innovation in Europe confirmed that companies situated in clusters are more innovative and competitive than companies outside. In strategically guided and well-managed clusters, the enhanced innovativeness and competitiveness at the firm level finally results in sustainable regional economic development. Thus, policy-makers at all administrative levels use cluster support instruments to systematically boost innovation and competitiveness of both businesses and regions. The cluster concept captures current discussions of managing (regional) innovation systems and open innovation processes at both the regional and business level. At the business level, management professor H. Chesbrough claims a fundamental shift in innovation paradigms from closed to open innovation and advocates collaborative and open innovation strategies and open business models to take the full benefit from collaborating with external partners. More and more, (in particular multinational) enterprises take into account, in addition to internal resources, the competences of external partners to meet the challenges of  ncreased complexity of research, technological development and innovation (RTDI), growing global competition leading to shortened ‘time to market’ etc. Regional clusters as ‘innovative hot spots’ and local nodes in global innovation networks play an important role for companies looking for external partners to form strategic RTDI collaborations. The business strategy of collaborative and open innovation at the micro-level poses considerable challenges for macro-level innovation policy. For example, new complex interactions and relationships emerge and continue to evolve between public
research organisations and industry, which in turn lead to new ways of organising and managing R&D and innovation by all stakeholders in an innovation system. Thus, horizontal and vertical coordination of policies and support of cross-sectional linkages and networks are imperative for systemic and interactive RTDI policy making. In this respect, (trans-) regional cluster development is broadly seen as an adequate and effective instrument to enhance and coordinate knowledge flows and collaboration between regional stakeholders coming from industry, science and public administration.

Linking Forward- & Outward-looking Approaches

Both the discussions on open innovation business strategies and on systemic regional innovation policies emphasize the vital role of strategic intelligence for innovation and point to the value added of linking forward-looking and openinnovation-focused approaches.
To develop and implement successfully future-oriented collaborative and open innovation processes, businesses rely on strategic economic and business intelligence in order

  • to generate common visions about longer-term market and
    technological developments,
  • to derive promising new products and services and define
    future business models, and
  • to develop and agree on joint innovation projects with
    external strategic partners.

Thus, in a world of open innovation, future-oriented technology analyses – comprising foresight and technology assessment activities – are decisive for strategic knowledge generation and transferring it into new products and services. The faster and easier businesses gain access to strategic knowledge and integrate it in their company strategy, the more successful they will be. This becomes evident in ‘business ecosystems’ where businesses co-evolve their capabilities around new technologies and jointly design a kind of ‘mass customization’ of new products and services to satisfy individual customer needs and to succeed in the worldwide ‘competition for the future’. Though, many enterprises (in particular SMEs) mostly rely on more easily accessible, short-term market information (e.g. from their clients). They often do not know how to sustainably
realise their full market potential by

  • thinking and acting more in a longer-term perspective and
  • developing strategic alliances and networks.

Due to restricted internal resources, most of them would have to use external strategic knowledge if they realise the need to change their business-as-usual approaches. In this context, strategic cluster support instruments can help these enterprises meet future challenges and support strategic capacity building in the region. Strategic cluster support combines forward- and outward-looking approaches (e.g. in cluster foresight type activities) to facilitate knowledge creation processes contributing to long-term competitiveness and sustainable economic development. Specifically, it

  • promotes knowledge exchange and strategic learning processes between cluster stakeholders in order to create a localised and unique knowledge stock,
  • facilitates cross-cluster, trans-regional and transdisciplinary knowledge flows and strategic business linkages to enrich and refresh the local knowledge pool with external impulses and to leverage complementary assets
    and capabilities of clusters in different regions, and enables cross-cluster policy learning and pursuit of common aspects of strategic cluster policies.

Orchestrating Business and Cluster Strategies

The sustainable success of cluster development depends substantially on the concerted actions of many different actors – multiple levels of government and public agencies, companies, educational and research organisations etc. In this context, it is crucial to develop a common vision and to  implement a cluster strategy that

  • reflects the specific needs of the cluster stakeholders,
  • focuses on the most promising international technology and market development perspectives, and
  • integrates a broad range of (European, national and regional) public policies and private sector activities.

Combining forward- and outward-looking approaches also means

  • to provide the regional stakeholders with strategic longerterm orientation by taking stock of available strategic knowledge from both public (e.g. regional foresight) and private actors (e.g. from corporate foresight or roadmapping activities in large companies) and
  • to align business strategies and longer-term regional cluster strategies.

To summarise, succeeding in linking forward- and outwardlooking approaches and creating a multi-actor, multi-level coherence of strategies and congruent activities means leveraging synergies.  Multiplier effects can be achieved (e.g. bundling forces to boost innovation effectively), and better – because broadly based and mutually strengthening – economic decisions lead to increased and  sustained business and regional competitiveness. These positive impacts can be made sustainable if, in addition to facilitating access to external strategic knowledge, the strategic capacities of the  innovation actors themselves are systematically built up in a way that takes into consideration their different absorptive and knowledge management capabilities.

The Connect2Ideas Approach – Strategic Capacity Building in Clusters

The FP6-funded project Connect2Ideas (June 2006 to May 2008) aimed at fostering trans-national technology transfer – mainly between multinational enterprises (MNEs) and SMEs – by enhancing future- and open-innovation-oriented thinking and acting in SMEs, related business networks and clusters. In this context, the Steinbeis-Europa-Zentrum (SEZ) developed a series of two consecutive workshops on Strategic Capacity Building & Open Innovation and tested it in three regional clusters in Baden-Wuerttemberg, Germany with varying open innovation regimes and institutional settings (ICT, mechatronics and life sciences clusters). The strategic experience and knowledge of MNEs, for instance through corporate foresight, strategic planning and open innovation, should be used to improve strategic capacities also in their business environments (clusters, regions and institutions)

  • to overcome mostly short-term orientation by recognising the strategic relevance of future-oriented collaborative and open innovation activities,
  • to develop common visions concerning future trends and challenges (using horizon scanning techniques with a time horizon of ten years) and, based on these results,
  • to derive joint innovation projects aiming at sustainable long-term cooperation.

Target groups and participants were MNEs (e.g. Siemens, IBM, SAP) with deep roots in the region, SMEs, research and education organisations and other regional stakeholders including representatives from public RTDI funding agencies and public administration.
The preparation phase included

  • identifying and mobilising MNEs, company networks and business clusters and
  • analysing in an innovation audit type approach the strengths and weaknesses of the cluster-related innovation system with specific focus on the barriers to open innovation processes.

Common Vision about Trends and Challenges

The first workshops introduced various methods, concepts and approaches to strategic ‘future management’ and then focused on the development of a common vision about future trends
and challenges using specific foresight and TA elements and techniques such as

  • SWOT (strengths, weaknesses, opportunities, threats)/ STEEPV (social, technological, economic, environmental, political and values) analyses to identify key global trends
  • and (based on local strengths and weaknesses identified in advance) to discuss common longer-term challenges and opportunities, and impact analyses to assess the impact of the most relevant trends with a specific focus on business perspectives: for instance, future markets (customer needs), business models, innovation and value creation processes, requirements with regard to human resources (qualifications, skills) etc.

Future-oriented Open Innovation Processes

Based on the results of the first workshops, the subsequent workshops and follow-up activities focused on the development of joint innovation projects aiming at sustainable longterm cooperation using techniques such as

  • technology watch/scouting to identify existing or wanted technologies in the international business environment,
  • value chain analysis to identify potential international cooperation partners in the respective global value chain and innovation network, and
  • partner search and search for funds to identify potential strategic cooperation partners for the cluster stakeholders including relevant funds (e.g. FP7, CIP, ERDF, national, regional) for subsidising the strategic collaboration.

Success Factors and Outcomes

Critical success factors of the workshop series included the comprehensive preparation in close coordination with the responsible cluster organisations (e.g. preparing a draft SWOT and value chain, motivating the relevant cluster stakeholders, attracting high-reputation external experts for keynote speeches etc.). The quality of the introductory statements of the keynote speakers was also important to stimulate a constructive debate on future trends, specific impacts and open innovation processes. These workshops could only prepare the ground for forward- and outward-looking thinking and acting. Thus, interested cluster actors and stakeholders were provided with ongoing advice and assistance for implementation. The pilot workshops in Baden-Wuerttemberg contributed to increasing the strategic capacity at the firm level as well as at the level of regional economies and decision-makers:

  • They provided a basis for collaborative innovation projects with regional and international partners in the specific cluster and regional value chain (e.g. in the context of the German ‘Excellence Cluster’ competition).
  • The involved ministry decided to continue the workshop series in the framework of its participative regional innovation and new cluster policy. In this respect, the workshops
    served as a trigger for further cluster foresight activities in Baden-Wuerttemberg.

Outlook:
From Connect2Ideas to CReATE

The Connect2Ideas approach highlights the fact that strategic guidance enriches traditional regional RTDI policy instruments by generating a creative atmosphere and a seedbed for ongoing learning processes. Thus, it provides – independent of different local open innovation regimes and   institutional settings – a genuine value added – both for businesses and cluster policies. The Strategic Capacity Building & Open Innovation workshops demonstrate how linking forward-looking and openinnovation- focused approaches can support strategic capacity building in clusters and thus enhance future-oriented open innovation processes at the business and regional levels:

  • Businesses overcome their mostly short-term orientation by recognising the strategic relevance of longer-term perspectives and collaboration with external partners.
  • Regional RTDI policy-makers take into account the specific needs of the cluster stakeholders with respect to future challenges and opportunities, and, on this base, create long-term, sustainable competitiveness perspectives and framework conditions for the innovation systems.
  • Aligning future-oriented business strategies and longerterm regional cluster strategies lead to better, broadly based and mutually strengthening innovation processes contributing to increased and sustained competitiveness.

Based on the Connect2Ideas experience and in the context of the German (national) ‘Excellence Cluster’ competition, SEZ developed specific training modules for facilitating and improving
strategic cluster development at multiple levels:

  • cluster level: developing a common vision and strategy for the cluster and defining an action agenda that reflects the unique needs and capacities as well as the most promising international technology and market development perspectives;
  • ‘sub-cluster’ level: refining the cluster strategy, adopting the strategy and agenda to the specific needs and capacities of the respective ‘sub-cluster’ network and implementing concrete joint actions;
  • single firm level: training in future-oriented strategic innovation management results in an endogenous base for competitive, business specific roadmaps and strategies.

This triad in developing innovation-related strategies in clusters leads to aligned innovation processes and therefore increases the impact of coordinated RTDI actions. To avoid negative rigidity
and lock-in effects and to create a climate conducive to visionary, out-of-the-box thinking, the knowledge exchange with external partners is an important element in all strategy processes. In this respect, SEZ took up the Connect2Ideas approach and elaborated for the FP7-funded ‘Regions of Knowledge’ project CReATE (March 2008 to October 2010) a methodology to develop a trans-regional joint research agenda for clusters in creative industries sectors. Creative industries already contribute substantially to economic value creation and employment, and their importance is expected to grow further. So far, however, only some regions benefit from the economic stimuli of creative industries. In addition, enterprises in this sector highly depend on transregional and trans-disciplinary collaboration. Addressing both issues, CReATE aims at boosting the sector as a whole in Europe, especially by stimulating future-oriented open innovation processes between the  takeholders of creative industries clusters. The CReATE methodology uses a modified Connect2Ideas approach to define research priority areas decisive for the future innovativeness and competitiveness of the clusters. Agreeing first on regional priority areas (based both on regional excellence and ‘aspirations’), a trans-regional joint research agenda will be elaborated in a coordinated process of interlinked regional and trans-regional phases. By integrating the broad spectrum of stakeholders (including funding bodies), regional and trans-regional project ideas will be developed. The impact aimed for is to improve the innovativeness and international competitiveness of the creative industries in the participating regions, but also to stimulate growth beyond them in the EU. Processes of learning from and dissemination of the approach and findings beyond the project frame will be secured by tailored training workshops on future-oriented strategy development for companies and cluster managers.

 

Authors: Dr Björn Sautter sautter@steinbeis-europa.de
Dr Günter Clar clar@steinbeis-europa.de
Sponsors: European Commission (FP6/FP7), DG ENTR / DG RTD; regional bodies and enterprises
Type: Cluster foresight exercise
Organizer: Steinbeis-Europa-Zentrum, Stuttgart, Germany (responsible for the project parts described in this brief)
Duration: 2006 – 2010
Budget: € 370,000
Time Horizon: 2020
Date of Brief: Septmeber 2008

Download: EFMN Brief No. 150_Open Innovation

Sources and References

Project website Connect2Ideas: www.connect2ideas.com
Project website CReATE: www.lets-create.eu
For further information, please contact
Dr Bjoern Sautter (sautter@steinbeis-europa.de), or
Dr Guenter Clar (clar@steinbeis-europa.de)
http://www.steinbeis-europa.de/340.html

EFP Brief No. 146: Germany 2020 New Challenges for a Land on Expedition

Sunday, May 22nd, 2011

The brief provides a short overview of a project in which Deutsche Bank Research has combined its own foresight expertise with inputs from the bank’s business strategists and external experts in order to develop scenarios for the future development of the German economy and society against the backdrop of intensifying structural change.

Germany on the Path toward a “Project Economy”

Deutsche Bank and its clients require knowledge about the future for their investment decisions. Deutsche Bank Research provides this “corporate foresight”. A multidisciplinary team develops and applies a wide range of methods to identify longterm macro trends. These foresight results, which are achieved on the basis of structured, process-based, quantitative and qualitative analyses, are fed into discussions with strategic management and clients as well as into public debate on broader economic, societal and political issues. The next two decades will be crucial for determining the path Germany will take over the long-term. Will German society be able to cope with the demographic pressures bearing down on the economy and the state’s finances? Will Germany succeed in redefining its role in the rapidly changing global economy and world order? Will Germany be a leader or a laggard on the road to a knowledge economy? Our first step was to sketch four alternative scenarios outlining how the German economy and society may have developed by the year 2020 (“Expedition Deutschland”, “Wild West”, “Drawbridge Up” and “Skatrunde (Playing Cards) with the Neighbours”). In the second step, we used broadly-based trend analysis to examine which of these four future scenarios is the most plausible.

The “Expedition Deutschland” Scenario – Knowledge and Cooperation Are Critical

The core elements of the “Expedition Deutschland” scenario for 2020 (formulated from the perspective of the year 2020) are the following:

In 2020, the “project economy” delivers 15% of value creation in Germany (in 2007 the figure was about 2%). The “project economy” refers to usually temporary, extraordinarily collaborative
and often global processes of value creation. For many companies, this type of cooperation is in many cases the most efficient way of doing business. This is because product life cycles have shortened further; the breadth and depth of the knowledge necessary for developing and marketing successful products have increased rapidly; successful products are increasingly the result of convergence between different fields of technology and knowledge; and many companies and research institutes are even more strongly specialised in 2020 than they were in 2007. Consequently companies collaborate ever more frequently on joint projects, often in the form of legally and organisationally independent project companies. They delegate specialised employees or parts of their organisation to these projects, invest capital or put their knowledge and networks at their disposal. In this way, companies can respond flexibly to the considerably higher demands on knowledge and rapidity in the global markets while sharing the costs and risks. This is often – but by no means always – their key to success: in 2020, too, collaboration generates considerable personal and strategic tensions. Factors that help to reduce the frictions on the technical side are mature, highly standardised information technologies. The project economy is closely intertwined with the traditional way of doing business. In 2020, many companies are continuing to go it alone with the market launch of their products. Often, though, these same companies cooperate in other markets – for instance the innovation-intensive ones – by taking the project economy approach. Germany’s small and mediumsized enterprises (SMEs) benefit in particular from the project economy. SMEs can use their advantages of specialisation and organisational flexibility – and are additionally boosted by a renewed surge in start-up activity. Open innovation processes helped to conquer new markets. In 2020, Germany has caught up with its competitors in markets for cutting-edge technology and knowledge-intensive services. Today, innovation is Germany’s core competence, with “Created in Germany” often being first choice, especially in Asia and the Middle East. Some of the main reasons for this success are collaborative innovation as well as intelligent sharing and exchange of knowledge and intellectual property. A project- economy approach to work has proved efficient especially in the early innovative and thus particularly knowledgeintensive phases of value creation. Moreover, many German corporations (and their local and international project companies) have benefited over the past few years from having more closely integrated the generation of “sovereign customers” into their processes. These customers are well networked via interactive forums and have up-to-date knowledge of prices and qualities in the areas that interest them. By contrast, many business investments in long-term research and development will have fallen by the wayside by 2020. They are often poorly adapted to the more short-lived valueadded patterns of today. Knowledge is traded in efficient markets in 2020. Knowledge
about customers, markets and many other topics is valued and traded much more efficiently today than back in 2007. The operators of such knowledge-based services are flourishing. Intellectual property has become a commonly used asset class:
investors may choose from a broad spectrum of topic-oriented patent funds, copyright securitisations etc. Moreover, intellectual capital has swung into the focus of company valuations:
the capital market now takes interest not only in a company’s traditional balance sheet ratios but also its research efficiency, education and training budget, and cooperation ratings.

The young and seasoned minds that house this intellectual capital benefit from efficient learning markets in 2020. Private operators of learning services prosper. Also, the public universities and other educational facilities have become more efficient following a wave of consolidation. Furthermore, they are more strongly involved in the market for modular education and training.

From Direct Regulation to Co-regulation

Government reduces its intervention and there is more coregulation. Co-regulation closely integrates citizens and companies. On the one hand, legitimation problems have motivated the state and still tight fiscal constraints have compelled it to cede part of its mandate to others. On the other, the regulatory issues have become increasingly complex. More than ever before, the state needs to tap the knowledge of citizens and companies to be able to set suitable framework conditions. Regulatory regimes that emerge in this way are more intelligently geared to the needs of business and society. They are more transparent for people and companies alike and ease the struggle into new markets. In general though the state’s abandonment of parts of its mandate has resulted in social transfers now coming with strings attached. In addition, more and more social services (e.g. long-term care) are organised on a private basis. Germany has become a “stakeholder society” based on reciprocal action.

Successful New Middle Class – Low Earners Lose Out

A new middle class emerges in German society by 2020, but the lower periphery falls behind. The middle class celebrates its comeback. The new opportunities for upward social mobility and the higher risk of social decline, both being the consequence of increasingly global and volatile value creation, have clearly shown the middle class the value of knowledge. Many Germans with a mid-range income therefore invest heavily in education – and thus gain qualifications for the demanding, but at the same time well-paying jobs in the project economy.

Well-educated older people also benefit as they are intelligently integrated in the working world in 2020. By contrast, low earners have only limited access to the new learning markets, and young and old alike often have to fear for their livelihoods. International competition has an even more incisive impact on this group than on others. Many low earners are compelled to organise themselves in self-help networks and many have lost their faith in politicians.

Globalisation, Diversification in Energy Supply  and Digitisation Are Other Key Trends

These elements, however, are interrelated with three other aspects of structural change which are already well under way and which, in our view, have rather trend-like characteristics.

Globalisation leads to new centres of gravity in the international value creation chain. 

   Energy supply shows a broader mix and decentralised production. 

       Digitisation enables networked goods flows in the new Internet. 

Given the structural changes outlined here on the way to “Expedition Deutschland”, we expect Germany’s gross domestic product to grow at an average rate of 1.5% per year up to 2020. From a 2007 perspective, these changes will pave the way to extraordinary opportunities for business, society and politics, but also harbour substantial risks. Some key fields of action for business include, for instance, a structured analysis of collaboration options, a more systematic assessment of intangible investments, broader acceptance of new forms of education and training, and an increase in life-long learning activities.

Innovative Methodology to Deal with High Complexity in Scenario Analysis

The guiding question for our scenario analysis is how will structural change have affected the German economy by the year 2020? In order to answer this question, we applied a methodology based on a simple scenario approach. Normally, one identifies the two key drivers to build a “scenario matrix”. Each field in the scenario matrix represents a different combination of attributes (high/high, high/low etc.) of these two drivers, and one scenario is developed from each of their respective interactions (see Figure 1, for an overview of the different elements of our scenario analysis see box on page 4). In addition to these drivers, whose future development is uncertain, there are a number of trend-like drivers – whose future development is comparatively predictable (in the following they are referred to for short as “trends”) – which impact on all four scenarios. These trends show similar developments in all four scenarios.

But our scenario question is multi-faceted; the number of relevant drivers and trends is high. To cope with this complexity without losing too much information, we have advanced the above approach: we have aggregated drivers that are thematically related and whose development is correlated into “dynamics” (the trends, too, are aggregated into “trend-like dynamics”, see the figure Deriving scenarios by reducing complexity). Instead of taking individual drivers, we build the scenario matrix with the two key dynamics. Further information and a discussion of the merits and drawbacks of this approach can be found at www.expeditiondeutschland.de/en.

Nonetheless, through interaction with the other drivers, the trends can develop or impact slightly differently or at a different pace in each scenario. 

In the scenario method these drivers are often referred to as “determinants” and the trends as “premises“.

146_bild1

Concept of the “Most Plausible Scenario”

Classic scenario analysis examines alternative future developments – but without highlighting any one of the depicted scenarios as the most probable scenario. For good reason since the scenario method does not in itself deliver any (or sufficient) indications as to which picture of the future is the most probable.

We are deliberately breaking with tradition of future research here: we identified a number of trends or trend-like dynamics that have an exceptionally strong influence and whose general future development can be predicted particularly reliably. They are driving Germany in the direction of one of our four scenarios and therefore make it particularly plausible. We refer to this scenario as the focus scenario and call it “Expedition Deutschland“. These trends relate to developments in a broad spectrum of fields in business, society and politics as well as in science and technology. They partly reinforce each other, a factor that has further encouraged us to focus on this one scenario.[1]

[1] We have systematically analysed the interactions between many of these trends in the earlier project “Global Growth Centres 2020” (see Bergheim, Stefan (2005), loc. cit.).

Our focus on this scenario should therefore not be seen as a normative statement: our message is not that we are placing this scenario in the spotlight because it is the “most desirable” one in our view. But, despite all the plausibility bonuses derived from our trend analysis in favour of this scenario over the other three, the following needs to be stressed:

Our focus scenario is not a forecast. In 2020, Germany will look only in parts like we have described in our scenario. Rather, there will be a mix of elements of all four (and maybe other possible) scenarios.

Elements of our scenario analysis

“Driver”. Important factor of influence on future structural change in Germany whose future development is difficult to predict.

“Trend” (trend-like driver). Important factor of influence on future structural change in Germany whose future development is reliably predictable.

“Dynamic”. Aggregation of (mostly non-trend-like) drivers which are thematically related and whose development is correlated. The future development of a dynamic as a whole (without drawing on additional information) is difficult to predict.

“Trend-like dynamic”. Aggregation of (mostly trend-like) drivers that are thematically related and whose development is correlated. The future development of a trend dynamic as a whole is reliably predictable.

“Scenario”. An, in itself, consistent picture of the future (in this case of the German economy and society) derived from a

given combination of developments of the dynamics considered (and the expected developments of the trend-like dynamics). “Consistent“ means here that the interaction of the various elements has been taken into account.

“Focus scenario”. The one of our four alternative scenarios for Germany in the year 2020 which we consider to be the most plausible owing to the future impact of some of the above “trends“ and “trend dynamics“.

Our message is that, as far as we can judge today, it appears plausible that Germany is more likely to resemble our focus scenario than the other pictures of the future developed here.

Illustration of the Scenarios

We have developed posters to sum up the content and convey an intuitive image of the key messages of our four scenarios. They depict the behaviour of businesses and citizens (as persons), the market playing field (as environment/terrain) and the regulatory framework (as sky/weather) in 2020. To give an example, here we show the poster for the “Expedition Deutschland” scenario discussed above.

146_bild2

Authors: Jan Hofmann  jan-p.hofmann@db.com; Ingo Rollwagen   ingo.rollwagen@db.com; Stefan Schneider     stefan-b.schneider@db.com
Sponsors: n.a
Type: n.a
Organizer: Deutsche Bank Research
Duration: 2006 – 2008
Budget: n.a.
Time Horizon: 2020
Date of Brief: January 2008

Download: EFMN Brief No. 146_Germany 2020

Sources and References

  • expeditiondeutschland.de/en
  • dbresearch.de

EFP Brief No. 145: Constructing Dark Scenarios for Privacy Policy Formulation

Sunday, May 22nd, 2011

In the last few decades, scenarios have provided a way of analysing the implications of alternative futures, especially as they might be impacted by new technologies. This has been no less true of ambient intelligence (AmI), which may be embedded everywhere in the not so distant future. Most of the scenarios developed by AmI enthusiasts have been rather “sunny”, showing how new technologies promise to make our lives more productive and enriching. A European project called SWAMI (Safeguards in a World of Ambient Intelligence) deliberately developed “dark scenarios” to highlight the threats to privacy, identity, trust and security and inclusiveness posed by new technologies. This brief describes the SWAMI scenarios and the methodology used to construct and analyse them.

SWAMI Dark Scenarios

While most AmI scenarios paint the promise of the new tech-nologies in sunny colours, there is a dark side to AmI as well. In a way, this dark side is inherent in the very nature of AmI, for instance, the fact that AmI technologies will deliver per-sonalised services to users means that somewhere a lot of per-sonal information needs to be stored about the user. That being the case, there are risks that the user’s personal information can be abused, either accidentally or intentionally. These risks have been recognised by policy-makers and researchers, and were at the heart of the SWAMI project, funded by the Euro-pean Commission under its Sixth Framework Programme.
The project began in February 2005 and finished 18 months later. The SWAMI consortium had five partners: the Fraunhofer Institute for Systems and Innovation Research (Germany), the Technical Research Center of Finland (VTT Electronics), Vrije Universiteit Brussel (Belgium), the Institute for Prospective Technological Studies (IPTS, Spain) of the EC’s Joint Research Centre, and Trilateral Research & Consulting (UK).
One of the tasks of the project was to create and analyse four dark scenarios that highlight the key socio-economic, legal, technological and ethical risks to privacy, identity, trust and security posed by new AmI technologies. They were called “dark scenarios”, a term coined to signify things that could go wrong in an AmI world, because they present visions of the future that we do not want to become reality. The objective of the scenarios was to expose threats and vulnerabilities as a way to inform policy-makers and planners.
The process in constructing the scenarios began with an exten-sive review of existing AmI-related projects and studies. Fol-lowing a workshop with other AmI experts to discuss the most important threats and vulnerabilities posed by AmI, the SWAMI partners had a brainstorming session until we agreed on the rough outlines of four contrasting scenarios. We then developed these outlines into scenario stories or scripts. To ground the scenarios in reality – to ensure that they were not too far-fetched – we did a “technology check” (are the technologies referenced in the scenarios probable?) and a “reality check” (are there press reports of events similar to those mentioned in the scenarios?). Then each partner reviewed all of the scenar-ios in order to eliminate doubtful points, unnecessary wordage,irrelevancies, etc., and to sharpen them to illustrate the points to be emphasised. Once the scenarios were “stable”, we per-formed an analysis of them, including a legal analysis. The scenarios and associated analyses were presented at a second SWAMI workshop in order to benefit from the comments of other experts. This scenario-construction process can be de-picted as follows:

145_bild1

 

The resulting four scenarios, elaborated in our book, Safeguards in a World of Ambient Intelligence (see the references below), are the following:

Dark scenario 1: A typical family in different environments – presents AmI vulnerabilities in the life of a typical family moving through different environments. It introduces dark situations in the smart home, at work and while taking a lunch break in a park.

Dark scenario 2: Seniors on a journey – also references a family but focuses more specifically on senior citizens on a bus tour. An exploited vulnerability in the traffic system causes an accident, raising many different problems related to both travel and health AmI systems.

Dark scenario 3: Corporate boardroom & court case – involves a data-aggregating company that becomes the victim of a theft of personal AmI-generated data that fuel its core business. Given its dominant position in the market, the company wants to cover this up but ends up in court two years later. The scenario also highlights the disparities between countries with AmI networks and those without.

Dark scenario 4: Risk society – from the studios of a morning news programme, this scenario portrays the AmI world as a risk society. It presents an action group against personalised profiling; the digital divide at a global scale and, related to environmental concerns, the possible vulnerabilities of AmI traffic systems and crowd management.

 Elements in the SWAMI  Scenario Methodology

The SWAMI consortium devised a methodology, an analytical structure for both constructing and deconstructing scenarios, not only the SWAMI scenarios, but many other technologyoriented scenarios. The analytical structure comprises the following elements or activities:

Framing the scenario

This first step summarises the scenario in question and explains its context – who are the main actors in the scenario, what happens to them, what they do, how far into the future is the scenario, where does it take place and in what domain (home, office, on the move, shopping, etc). It identifies the type of scenario (trend, normative, explorative) and key assumptions (e.g., intelligent technologies will be embedded everywhere in rich countries, but not in poor countries).

Identifying the technologies and/or devices

Next, the most important AmI technologies and/or devices used and/or implied in the scenarios are identified.

Identifying the applications

The analysis then considers the applications that emerge in each scenario and that are supported by the technologies mentioned in the previous step.

The drivers

The analysis identifies the key drivers that impel the scenario or, more particularly, the development and use of the applications. Drivers are typically socio-economic, political or environmental forces, corporate ambitions or personal motivations (e.g., greed).

Issues

Next, the major issues raised by the scenarios are identified and explicated. A discussion of the issues considered the threats and vulnerabilities exposed by the scenario, their impacts and legal implications.

Conclusions

The final step is a reality check of the scenario itself (how likely is it?) and a consideration of what should be done to address the issues it raises.

Large-scale Data Availability Multiplies Threats and Vulnerabilities

The SWAMI scenarios highlighted many of the threats and vulnerabilities that we foresee afflicting the AmI world. The principal difference (in our view) between an AmI world and that which we know today is the scale of the data available. When everything is embedded with intelligence, when AmI is pervasive and invisible, when everything is connected and linked, the threats and vulnerabilities that we know today will multiply. In an AmI world, we can expect to be under surveillance (“transparent”) wherever we go because the permanent and real-time registration and processing of our presence and behaviour is the precondition – the “code” – of ambient intelligence.

The threats to our privacy, however we define it, can come from many different sources. Here are some of the principal ones that affect us today and we can assume will still be threats in an AmI world:

  • hackers and attackers,
  • function creep,
  • surveillance,
  • profiling,
  • lack of public awareness or concern about privacy rights,
  • lack of enforcement and oversight of privacy rights,
  • erosion of rights and values,
  • uncertainties about what to protect and about the costs of protection and privacy erosion,
  • government and industry are less than forthright about the personal data they collect and/or how they use that data

Is Protection Feasible? – Safeguards

The multiplicity of threats and vulnerabilities associated with AmI will require a multiplicity of safeguards. We grouped safeguards into three main approaches:

  • technological,
  • socio-economic,
  • legal and regulatory.

Technological Safeguards – Need for Sophisticated Methods for Controlling Data Collection and Use

The main privacy-protecting principles in network applications are anonymity, pseudonymity, unlinkability and unobservability. The main difference between existing network applications and emerging AmI applications is two-fold: first, in the former case, the user has some understanding of which data about him or her are collected, and has some means to restrict data collection: e.g., to use a public computer anonymously to access certain web pages; to switch off his or her mobile phone, to pay cash instead of using a web service, etc. In the latter case, with the environment full of numerous invisible sensors (and video cameras), it is difficult, if not impossible, for users to understand and to control data collection and to achieve unobservability, anonymity and pseudonymity. Intelligent data processing, limiting linkability and implementing strong access control to collected data seem to be the main ways of protecting privacy in such applications. However, such applications present potential privacy threats anyway if the police, intelligence agencies, family members or criminals can search through devices that store personal data.

A second important difference between existing network applications and emerging AmI applications is that neither mobile devices nor web usage penetrates through such strong privacy-protecting borders as walls and the human body, but physiological, video and audio sensors, proposed for AmI applications, will have much stronger capabilities to identify a person and to reveal personal activities and feelings.

Consequently, future AmI applications will require stronger safeguards, many of which are not yet fully developed. Hence,

we proposed research on developing privacy-protecting safeguards such as:

  • communication protocols which either do not require a unique device identifier at all or which require authorisation for accessing the device identifier;
  • network configurations that can hide the links between senders and receivers of data;
  • improving access control methods by multimodal fusion, context-aware authentication and unobtrusive biometric modalities (especially behavioural biometrics, because they pose a smaller risk of identity theft) and by liveness detection in biometric sensors;
  • enforcing legal requirements and personal privacy policies by representing them in machine-readable form and attaching these special expressions to personal data, so that they specify how data processing should be performed, allow a privacy audit and prevent any other way of processing;
  • developing fast and intuitive means of detecting privacy threats, informing the user and configuring privacy policies;
  • increasing hardware and software capabilities for realtime data processing in order to minimise the lifetime and amount of raw data in a system;
  • increasing software intelligence by developing methods to detect and to hide sensitive data;
  • developing user-friendly means for recovery when security or privacy has been compromised.

Socio-economic Safeguards Require Cooperation

Co-operation between producers and users of AmI technology in all phases from R&D to deployment is essential to address some of the threats and vulnerabilities posed by AmI. Among the socio-economic safeguards we proposed were these:

  • standards,
  • privacy audits,
  • codes of practice,
  • trust marks and trust seals,
  • reputation systems and trust-enhancing mechanisms,
  • service contracts with strong privacy protections,
  • guidelines for ICT research,
  • raising public awareness,
  • including privacy, identity and security issues in the professional education curricula of computer scientists,
  • media attention, bad publicity and public opinion.

Legal and Regulatory Safeguards  – Transparency Is Key

SWAMI identified some serious legal problems when applying the existing legal framework to address the intricacies of an AmI environment. We found that most of the challenges arising in the

new AmI environment should be addressed by transparency tools (such as data protection and security measures). Transparency should be the default, although some prohibitions referring to political balances, ethics and core legal concepts should be considered too.

A set of rules needs to be envisaged to guarantee procedural safeguards similar to those currently applicable to the protection of our homes against state intervention (e.g., requiring a search warrant). Technical solutions aimed at defending private digital territories (the private sphere of the individual no matter where he is) against intrusion should be encouraged and, if possible, legally enforced.  The individual should be empowered with the means to freely decide what kind of information he or she is willing to disclose. Such protection could be extended to the digital movement of the person, that is, just as the privacy protection afforded the home has been or can be extended to the individual’s car, so the protection could be extended to home networks, which might contact external networks.

All employees should always be clearly and a priori informed about the employee surveillance policy of the employer (when and where surveillance is taking place, what is the finality, what information is collected, how long it will be stored, what are the (procedural) rights of the employees when personal data are to be used as evidence, etc.).

The status of pseudonymity under the law needs further clarification, whether pseudonyms should be regarded as anonymous data or as personal data falling under the data protection regime.

The obligation of data protection law to inform the data subject about when and which data are collected, by whom and for what purpose gives the data subject the possibility to react to mistakes or abuses, and enables him to enforce his right in case of damage. It would be desirable to provide the individual not only with information about what data are processed, but also what knowledge has been derived from the data. This might imply a rethinking of data protection law.

A means to prevent data laundering could be envisaged which would create an obligation for those who buy or otherwise acquire databases, profiles and vast amounts of personal data, to check diligently the legal origin of the data. An obligation could be created to notify the national data protection authorities when personal data(bases) are acquired. Those involved or assisting in data laundering could be subject to criminal sanctions.

Profiling practices and the consequent personalisation of the ambient intelligence environment lead to an accumulation of power in the hands of those who control the profiles and should therefore be made transparent.

Simply identifying safeguards is not sufficient, of course, so the SWAMI consortium went further and specifically addressed recommendations to the European Commission, member states, industry, academia, civil society organisations and individuals.  The reader interested in more details should consult the references below.

 

Authors: David Wright                                       david.wright@trilateralresearch.com
Sponsors: European Commission / DG Information Society and Media
Type: Field/sector specific
Organizer: B-1049 Brussels, Belgium
Duration: 2005 – 2006
Budget: € 399,797
Time Horizon: 2017
Date of Brief: July 2008

Download: EFMN Brief No. 145_Dark Scenarios

References

Wright, David, Serge Gutwirth, Michael Friedewald et al., “Privacy, trust and policy-making: challenges and responses”, Computer Law and Security Review, Vol. 25, No. 1, 2009 [forthcoming].

Wright, David, Serge Gutwirth, Michael Friedewald et al., Safeguards in a World of Ambient Intelligence, Springer, Dordrecht, 2008.

Wright, David, “Alternative futures: AmI scenarios and Mi-nority Report”, Futures, Vol. 40, No. 1, June 2008, pp. 473-488.

Wright, David, Michael Friedewald et al., “The illusion of security”, Communications of the ACM, Vol. 51, Issue 3, March 2008, pp. 56-63.

Wright, David, Serge Gutwirth and Michael Friedewald, “Shining light on the dark side of ambient intelligence”, Fore-sight, April 2007, pp. 46-59.

EFP Brief No. 126: “In the Long Run” Best Practices for New Foresight Conditions

Saturday, May 21st, 2011

The objective of this foresight brief is to summarise foresight experiences made by foresight practitioners of international companies attending the conference “in the long run” in Berlin in October 2004. The paper summarises new environmental conditions for corporate foresight and the resulting challenges for foresight work as perceived by the speakers. The paper also gives an overview of best practice solutions for the challenges presented.

EFMN Brief No. 126_In_the_Long_Run

EFP Brief No. 111: Horizons 2020 – Mapping the Future of Society, Economy & Government

Friday, May 20th, 2011

The report “Horizon 2020 – A thought-provoking look at the future” is a dialogue invitation rather than an attempt to provide another “traditional” strategic scenario very often aiming to lay out a roadmap for a predetermined outcome. The report in question differs from this approach in three respects. First, it aims at creating a basis for dialogue with the public at large. Second, it addresses a broad range of topics covering political, social, economical, environmental and technological issues. Third, the report offers two scenarios on the basis of an expert survey.

EFMN Brief No. 111 – Horizons 2020

EFP Brief No. 104: Agricultural Futures in England and Wales and Implications for the Environment

Friday, May 20th, 2011

Agriculture in the UK and Europe as a whole is facing an uncertain future as the factors that have shaped it over the last 50 years are realigned in the face of changing priorities. In this context, this study explored possible future scenarios for agriculture in England and Wales through to 2050 in order to identify implications for the environment and possible policy interventions and research priorities to help promote sustainable agriculture.

EFMN Brief No. 104 – Agricultural Futures

EFP Brief No. 102: Creative System Disruption: Towards a Research Strategy Beyond Lisbon

Friday, May 20th, 2011

Europe is currently facing the challenge of a highly dynamic and fluid policy context. It is confronted with a seemingly accelerating pace of change, both internally and externally. Internally, a culturally diverse, ageing and risk-averse population, a mix of high tech and declining industries and growing environmental and security concerns require governments to design new frameworks for re-search and innovation. Externally, this policy context is influenced by and influences the emergence of key technologies. The speed and the magnitude of their disruptive impact on the economy and society in turn depend on and are embedded in a wide range of socio-cultural factors.

This challenge calls for a substantial leap forward in thinking and mindsets, by moving from incrementally improving on business-as-usual approaches to exploring new paradigms and alternative futures. A redefinition of the “European model” is called for, capturing the minds and spirits, and bringing together the inherent collective strengths of the EU and its 27 member states. It should comprise a combination of strategic responses addressing short to medium and long-term research policy agendas. For this purpose, a Key Tech-nologies High Level Group composed of experts in 15 key technology areas, and led by a chairperson and a rapporteur, was set up by the K2 Unit of Directorate-General Research, to “assess the potential and the emerging scientific and technological research topics in fifteen specific areas, their impact on EU competitiveness and societal fabric, and the potential response of EU and its Member States”.[1]

EFMN Brief No. 102 – Creative System Disruption

EFP Brief No. 101: Corporate Foresight in Small and Medium-Sized Enterprises

Friday, May 20th, 2011

The objective of this research project is to identify the foresight requirements of German small and medium-sized enterprises (SMEs), their corporate foresight activities, to the extent that they exist, and limiting factors for systematic foresight approaches. To this end, an expert survey was conducted with SME decision-makers. Its purpose is to make executives more aware of the indispensability and the potential foresight offers in changing markets and business environments, and supporting them in their foresight approaches.

EFMN Brief No. 101 – Corporate Foresight SME

EFP Brief No. 91: Government and Corporate Social Responsibility 2020

Friday, May 20th, 2011

While corporate social responsibility is increasingly requested in order to respond to current environmental challenges and threats to public health, the ISIS group of the Commissariat Général du Plan of the French Government (“The Plan”) analyses trends in corporate behaviour as well as regulatory principles underlying sustainable development and corporate social responsibility. Beyond this, the ISIS group explores future issues in different sectors in order to illustrate existing junctions and differences. Based on this prospective analysis, ISIS built four strategic scenarios for state intervention to make an inventory of tools to urge enterprises encompassing social and environmental issues in their schemes for economic development.

EFMN Brief No. 91 – Government and Corporate Social Responsibility 2020

EFP Brief No. 88: Summit for the Future 2006

Friday, May 20th, 2011

The ‘Summit for the Future’ is organized on an annual basis by The Club of Amsterdam. It brings together international Thought Leaders to discuss significant, global challenges and opportunities. In 2006 it focused on the subject of risk and the role of risk in society, innovation and global growth. Without risk taking there is no progress, no growth and no prosperity. The Summit provided an occasion to reflect upon the role of risk in enterprise and society, on how the global spectrum of risk is changing, and on the acquisition of new tools and thinking to harness risk as a force for growth in the future.

EFMN Brief No. 88 – Summit for the Future 2006