This is the first article in a series on open service innovation for space downstream services.
Satellite-based data is becoming increasingly available and precise, and it has worked its way into many applications that support our everyday lives.
The user communities that benefit from this data are rapidly expanding thanks to this increased data access, creating new demand and therefore fostering economic growth.
Wishing to harness the economic potential of this data, governments (especially in the EU) are attempting to kick-start a whole range of downstream space-based services, using enabling technologies such as ICT and collaborative environments as spelled out by the open innovation paradigm, in order to stimulate the creation of commercial downstream services around the available information.
The fast evolving landscape, associated with global challenges, such as environmental and climate change pressures tending to force planetary boundaries, and increased globalization and the rising eastern powers, are questioning the economic models on which western wealth and growth has been based on for the last century.
In this very dynamic context, space and new models, such as the open innovation paradigm, can play a key role to refuel the system and produce a stable growth in the long term. Europe can be at the verge of this revolution, particularly in innovative service delivery, that respond both to the societal needs of its continent, and of the increasing demands worldwide, as outlined in the Agenda 2030 of the United Nations, and its’ associated Sustainable Development Goals.
The Open Service Innovation Model
Open Innovation occurs when companies do not only rely on their internal processes and RD to perform innovation, engaging the whole spectrum of available collaborators and stakeholders to bring new ideas to market. Within this well-known paradigm, the stream of open services innovation specifically studies how to apply open innovation principles to the realm of both products and services management, in order to develop
innovation that better embraces customers’ needs. As products are increasingly becoming commodities, with customers requiring a faster pace of innovation and increasing personalisation, industries are finding that key differentiation and sustainable value creation can only come from focusing on the experience that customers are receiving from these commoditised products and the services that can be built around them.
Even more so, industries that are already based on services are required to re-think their business models to compete in a rapidly changing and increasingly globalised economy.
The first step towards open service innovation therefore requires re-designing business models from product-based to service-based models, built around the concept of customer utility. With knowledge on innovation and manufacturing processes now widely spread into the business community, it is becoming increasingly difficult for companies to differentiate their products from their competitors. Moreover, as the pressures for customisation increase, while competition places pressure on prices, companies are struggling to reap profits only from products. The answer to this dilemma lies in shifting the focus from the products which are being sold to the customer utility which these products offer to the end-users. This understanding will first of all direct new innovation efforts towards the dimensions that really matter to drive sales in the marketplace. Moreover, services built around the product, to maximise customer utility, can be bundled and personalised for each customer, enhancing their overall product experience, without straining the firm’s bottom line.
In order to successfully shift to a service-oriented mind-set, firms should treat customers as a key component of the innovation process, engaging themthrough co-creation processes, where they can help to shape services around their specific needs and provide
real-time feedback on the business models being implemented. This involves developing methodologies and processes to elicit the tacit knowledge that customers have developed while using the product since the early stages and throughout the entire innovation process. This also opens up the boundaries of the firm, and could contribute to bringing new ideas and new points of view into the firm as suggested by the open innovation paradigm.
Indeed the open innovation model is considered fundamental in reaping the rewards of a new service-based business. Open innovation requires the firm’s boundaries to become more permeable, allowing both outside-in flows and inside-out flows of knowledge. Ideas from within the firm that do not fit the current business model can be sold, licensed or made freely available to open up new markets and experimentation by different entities. At the same time, external actors in the value chain can provide their own knowledge to collaborate with the focal firm, and a specialisation should be sought between complementary actors such as suppliers, competitors and key stakeholders in order tocreate more efficient processes, where assets and knowledge can be shared.
The above mentioned changes cannot be implemented without fundamentally changing the mind-set and the structure of the firm. In order to be successful, open service innovation therefore may require the establishment of more open business models, that firms can use to capture value on a fluid market with many actors all sharing knowledge and interests. New technologies, especially in the IT sector, can support this transition and help companies to create new business models with their entire community. From this point of view, the use of platforms to standardise information and to communicate between actors on the marketplace should be encouraged.
So how are open innovation principles currently applied and how could they be further applied in the context of space downstream services, specifically exploring the European scenario? In the next part of this series we examine the Galileo and Copernicus programs and other examples from the current scenario.
Posted by Paola Belingheri
This post is based on a paper presented at the 67th International Astronautical Congress