Berlin and Helsinki sharing the same capital city potential
In the future, the engines of innovation and growth are focusing more and more in big cities and metropolitan areas. When experts and enthusiasts of a certain industry are working in the neighborhood, or near each other, new ideas are unfolding and innovations get on wings. The larger the city, the more versatile is its economy structure. This fact protects against the problems that one-industry-based cities, like Detroit, have been confronting in recent years.
Moreover, capital cities as metropolitan areas draw immigration. For people from different parts of the world there are in big cities local ethnic communities, which support coping with and prospering in the new homeland. For instance Berlin and larger Stockholm seem to be real idea kettles in this sense, and that’s why they are expected to have a flourishing future.
Helsinki Metropolitan Area, like Berlin and Stockholm, have several strengths in common: they have immaterial and intellectual capital, a creative and tolerant atmosphere, well-educated inhabitants, knowledge-based start-ups, residential areas with distinctive identities and individual characters, and a set of established universities and research institutions. These capital cities also seek actively for new economies and new growth by emphasizing innovation as means for creating emergent markets. Along with this kind of development trends, radical competitiveness is expected to increase.
Networks as a source of strength
Today, highest levels of excellence and innovation strength are sought across all value-adding networks. The scope of expertise is extended through co-operation and alliances also within higher education institutions, not only in business or among companies. That is why three years ago, HTW Berlin and Helsinki Metropolia – both being Universities of Applied Sciences – signed a general cooperation agreement to formally enter into a ‘strategic partnership’.
With a student body of more than 13,000, the Hochschule für Technik und Wirtschaft (HTW) Berlin is the largest university of applied sciences in Berlin. With around 70 compact and practice-orientated bachelor’s and master’s courses in engineering, economics, information technology, culture and design, the range of qualifications it provides is impressive. University rankings have consistently established HTW Berlin as one of the leading providers of a modern and professional education. Enjoying an excellent academic reputation, it has received many prizes for exceptional innovation in the university sector, for internal management reforms, the consultation and service packages offered to small and medium-sized enterprises and start-ups, and for the commitment to gender equality and barrier freedom.
Helsinki Metropolia University of Applied Sciences, Finland’s largest university of applied sciences, educates the professionals of tomorrow in the fields of culture, business, health care and social services, and technology. At Helsinki Metropolia with its nearly 17,000 students and 1,100 full-time employees, people and worlds meet to create insight, expertise and well-being for both the world of work and life in general. Cooperation in and through the vivid metropolitan area, is the key to discover new ideas and solutions to build a better future. Helsinki Metropolia has 65 degree programs, and 14 of them in English. It is most popular UAS in Finland in terms of applicants, second-most popular in terms of attractiveness. It complies with the requirements of the European Credit Transfer and Accumulation System (ECTS) as one of very few universities in Finland.
The step to build a strategic partnership between these two higher education institutions took place after a longer period of student exchange, a joint international Master´s Degree, and other bilateral activities showing that there is a high potential for closer cooperation in the international framework of Europe. Also the fact that the institutions are situated in capital cities facing the same kind of challenges and possibilities, played a significant role.
Added value through alliances
At HTW Berlin and Helsinki Metropolia, an international partnership means that an alliance is built with a foreign university, research institution, or working life organization in order to achieve goals which benefit both parties. A partner of an added value network is called a ‘strategic partner’ once the co-operation relationship is continuous and intensive, so that in the pace of time the contribution of the other party is clearly visible.
When talking about higher education institutions and other non-profit organizations, the objective of these partnerships is rarely direct economic profit; the goal is rather to detract new, underlying needs through the co-operation. The recognition of silent signals and the development work on them increases the knowedge of all participants. Acknowledging the new thus means an added value for both the competencies and the mental flexibility of the organization.
Both in HTW Berlin and in Helsinki Metropolia the discussions with professors, experts and top management convinced that in the future, both universities are able to see the world through innovative angles, learn new things, and generate creative breakthroughs best in interaction with an ally. This was the trigger for starting a new and more systematical phase of partnership between the two higher education institutions.
Many potential forms of collaboration
In the strategic alliance between HTW Berlin and Helsinki Metropolia, practical methods include interest forums, brainstorming sessions, workshops, thematic seminars and annual conferences. In higher education, benchmarking of processes and administrative policies like quality management, yearly planning of teacher work or human resource development, are an important part of strategic cooperation.
In addition, a growing interest lies in mutual research activities. Developing and nurturing new relationships with people and organizations outside the universities of applied sciences has become a critical element of successful and sustainable research programs. Both institutions, HTW Berlin and Helsinki Metropolia, seek to break into new areas and re-invigorate the already well-established strengths in the field of research, and are convinced that this is done best in partnership with each other and each other´s allies. Either partner could, of course, do business without the other, but in ideal cases it would be either difficult or not as rewarding as working in close interaction. To reach this kind of level of intensity, the partnership should be thinking 5−10 years ahead, have a strong written vision and plan the actions on this same timescale.
An effective partnership dynamo is in practice mostly the impact force of the individual, because the organization itself is never energizing. Individuals with enthusiasm are the premise of functioning. The dynamics of seeing and developing partnership opportunities depend on personal relationships. At best, cooperation consists of a guild of top professionals, which is focused on people’s intrinsic motivation.
Criteria for partnership
A genuine strategic partnership has a major impact on the parties’ thinking and planning. In HTW Berlin and Helsinki Metropolia cases, an indication of this is that the top leaders meet each other and support the goals set for the co-operation. Between the parties, there is an open and effective communication at many different levels.
The benefits of the added value network are realized only if the alliance between the two parties shares a very high degree of confidence. This results in an enriching balance between mutually transferable skills, knowledge and practices. It is said that a partnership is like an intimate relationship that needs to be cared for and where open sharing of things carries you furthest!
Between 2010 and 2014, Helsinki Metropolia has invested heavily in strategic partnerships. One outcome of this investment is a set of criteria for choosing partners. Potential partners and international alliances are estimated e.g. by going through a list of questions. The following matters should, for instance, be discussed thoroughly:
Is the partnership planned to be long-term and systematical?
Do both parties significantly benefit from the partnership?
Are the partner’s values and strategy acceptable?
Is there a genuine shared willingness for mutual strategic cooperation?
Do the parties commit themselves to intellectual and financial inputs that the cooperation presupposes?
Does the partnership offer sectorial cooperation, but also generic prospects related to the development of higher education?
Is the partner’s geographical location appropriate for sustainable development and an ecological point of view to travel?
What makes the difference?
Cooperation in the field of research, tuition, student and staff exchange, human resource development, and internationalisation are the bedrock in the partnership between HTW Berlin and Helsinki Metropolia. But there are phenomena, which make it beyond ordinary ‘cut-and-dried’ international cooperation.
Both parties have strong roots in the capital city area of their home countries and each plays a substantial role in the economic, social and cultural life of its city and region. There is a genuine commitment to collaborate to disseminate, implement, exploit and/or commercialise knowledge in these areas, but also a willingness to seek to work together in developing urban solutions, wellbeing in the society, artistic and cultural activities, too. Both parties share the mission of being influential stakeholders in the metropolitan areas, be it Helsinki or Berlin, which are very well to be compared. Acting as innovation drivers especially in the Baltic Sea Region is a natural expansion of the roles of the parties.
The two higher education institutions will also act as socially responsible partners and exchange knowledge and experiences regarding social responsibility issues including efficiency of operations and the impact of operations on the environment, and on the key stakeholders: students, staff, and both public and private sector.
The four-year experience of strategic partnership has shown that there is a mutually shared ambition about a high standard education that makes the HTW Berlin and Helsinki Metropolia graduates fit for jobs in their home countries, but also in Europe and abroad. Combining strong applied research and development with project study and including this into education is for both parties the essential premise as well a permanent, everlasting mission.
Today, there is a clear trend towards working in partnerships and thus build up centres of creativity and innovation. HTW Berlin and Helsinki Metropolia wish to be harbingers, not only in improving their own quality but in being models for the students. The two institutions are open for students from everywhere in the world and want to educate students who feel themselves as citizens of Europe and the world. That is what a strategic partnership is for: opening our capital cities, countries and cultures and let others take part in it and share its beauties and richness.
Matthias Knaut, Vice-President for Research and International Cooperation, Professor, Ph.D., HTW Berlin – University of Applied Sciences, Germany, Matthias.Knaut@HTW-Berlin.de
Tuire Ranta-Meyer, Director, Ph.D. MMus, Adjunct professor, Helsinki Metropolia University of Applied Sciences, Finland, email@example.com
The emission measurement laboratory of Kymenlaakso University of Applied Sciences has a track record of shipping related emission measurements for over twenty years. The laboratory has gathered a lot of onboard experience during this period. This article summarizes some of the practical challenges discovered in course of planning and following through the onboard measurement campaign.
The organization behind the laboratory is Kymenlaakso University of Applied Sciences [referred later as Kyamk]. Kyamk is a university with higher education in both of maritime operations and energy technology. This background produces the innate call for emission control research and development. The fields of development and research include i.e. environmentally friendly energy production and emission control technology.
The emission measurement laboratory of Kymenlaakso University of Applied Sciences was grounded in year 1992. The emission measurement laboratory serves as reliable source of measured data for the needs of various research programmes. The laboratory performs emission measurements in land based power plants and on board ships.
Most of the workload of the laboratory is commissioned by commercial customers; however the participation in research activities is ubiquitous and a vital part of the operation. The laboratory has taken part in several considerable international projects and has completed measurements in well over one hundred vessels with a total of hundreds of engines. The emission measurement laboratory is accredited by FINAS according the SFS-EN ISO/IEC 17025:2005 standard.
Previous project measurement experiences
The Kyamk emission measurement laboratory has taken part in several international projects within last two decades. There are several international projects worth mentioning amongst many: the Mobile project and the recent Snoop and BSR Innoship projects. The Mobile project was managed and conducted by VTT, the Finnish state research organization. The Mobile project included 58 measured engines over time span of several years and it was considered very successful. The Mobile project had a considerable impact of environmental research and legislation in Finland. The Snoop project focused on the ship emissions within Baltic Sea area and it was managed by Finnish Meteorological Institute. The follow-up of the snoop project, BSR Innoship was finished September 2013. An extensive campaign of nine measured ships was conducted in BSR Innoship-project.
Specialized to the practical element
The role of the Kyamk emission measurement laboratory in large research projects has been focused on the practical side of the work, which is conducting the measurements and reporting the results. The laboratory usually does not make scientific conclusions or any deep analysis of the findings. This spawns from the usual organization of the large projects as project groups normally include several fundamental scientific organizations for both basic and advanced research. These organizations do not usually have suitable field equipment or trained personnel for working in the ship environment. This is the niche for Kyamk, as the ability for perform in field operations is the main strength of Kyamk emission measurement laboratory. The diversity of usual project organization results to the current arrangement, which has been a successful and functional division of the labor between practical measurements and scientifically oriented studies.
Agreement with the shipping company
The attitude for emission research of shipping companies can vary a lot. Some companies can be very helpful and even eager to participate, and usually this is the case. In some occasions, however, there is a certain resistance for setting up and conducting the measurements. This is understandable. The measurement crew and the measurement procedure tie up operation personnel which already have a heavy workload. Measurements can also require the specific engines to run at specific loads, or the measurement can require modifications in the running modes of auxiliary equipment (a common example of the latter are the catalyst reactors or water injection systems).
Keeping in mind the need for intense shipping company co-operation the planning of a single measurement run must be started at very early stage. The initial contacts are often taken weeks or even months ahead of the planned measurement run.
One of the basic design elements is the route of the ship. The schedule or the port stop times are often not suitable for the measurement job, and the travel time of the ship sets some limits too. The measurement equipment does not fit for air transport, and this can also limit the measurement window.
The measurement details are usually agreed after the general permission to conduct the measurements is reached. The detailed plan and actions for the ship in question are usually communicated with the onboard crew of the ship. The ship’s engineer always has the final word for the operation. The course of measurement procedure is usually familiar to the technical crew of the ship. Most of the cases there is no need for any special arrangements after the access for the measurement crew is granted. The measurement crew needs to access the engineering section and the chimney premises of the ship, which are normally quite restricted areas.
Measurement process onboard
This chapter describes the generalized set-up of the measurement. The actual measurement procedure follows the appropriate standards and it is not presented here.
The conditions within the ship depend greatly of the type and age of the ship. A brad new car ferry usually does have very different environment than a two decade old bulk carrier. Some details however remain the same: the field measurement work is heavy work, and the passage ways, corridors and ladders are narrow and the exhaust system is hot.
The measurements must be conducted with accuracy and the results must be reliable despite of the environment. This imposes of course some challenges, especially if the surroundings and conditions of the measurement are particularly hard.
Measurement equipment station
The amount of equipment can be quite a lot and the equipment station needs a considerable amount of space. The combination of measurement equipment depends of the measurement details. For example, if there is a need to make simultaneous NOx measurements before and after the catalyst unit, there must be two sets of measuring devices. Also, the calibration of the instruments requires calibration gases in pressure vessels.
The auxiliary equipment and tools must be at hand and easily available. There is actually amazing amount of hardware needed, including rolls of cable and pipeline, chemicals, laptops and so on.
Usually the measurement equipment station is quite near the exhaust channels. These positions are usually small and confined. The electricity outlet can be far away, and the first thing to do is to find a way to plug in. The completion of the station from boarding to standby takes up several hours. The typical setup of the equipment station is illustrated in picture 1.
Connection to the exhaust inlets
The pipelines and tubes for the exhaust sampling are installed simultaneously during the preparation of actual measurement instruments. The distance from the equipment station from the exhaust inlet can be dozens of meters. The passage of the pipeline is not a straight line and usually it passes through a complex maze of ship equipment and narrow boardwalks. The connection and underpinning of the pipelines must be secured and there must not be any bents blocking the gas flow. The vertical offset of the equipment station and an inlet can be several floors.
The exhaust gas is hot and the surroundings of the inlet to the exhaust channels are hot too. The mounting of the pipeline mouthpiece is usually insulated with a piece of fiberglass. This also stops the exhaust gas flow out of the exhaust channel. Example of inlet connection is presented in picture 2.
Control room data gathering
The final calculation for the actual emission measurement report requires data from the control system of the ship. The control data includes various parameters, for example information about the fuel consumption, engine load and run time logs and logs of turbocharger operation. Also, a bunker certificate of the fuel used is requested from the control room.
The output of the control system can be a detailed log with all necessary information or, typically, a minimum set of information for the immediate ship operation purposes. The information can be provided as a data file or a print-out from the operator console. For special purposes there are separate logs which can be accessed by request. An example of separate log is catalyst urea consumption and bunkering log. The control room data acquiring is one of the most challenging parts of the measurement as the ship control systems are designed for actually running the ship instead of detailed data logging. Sometimes the data simply is not available only by monitoring the meters and writing down the values of analogue meters.
The actual measurement begins with the calibration of the equipment. The calibration is repeated when measurement arrangement is changed, and a final calibration is also conducted at the end of the measurement.
The measurement process records measurement information for a determinate period. A reading of current value is usually taken once per minute. The measurement process records data to a data logger and it is assisted by a field computer with special software. The measurement keeps accurate track of date and time, and all measurement values are time stamped. Multiple samples of the exhaust gas are taken and absorbed to liquid for later laboratory analysis.
Measurement follows the measurement plan. The plan defines the order of the measurement targets and assures that all the needed information is gathered and the required samples are taken. Every step of the measurement is also written down manually together with the periodic measurement value verification notes.
At the end of the measurement the gathered data is secured by back-up procedure. The equipment station, pipelines and all other material are packed for the transport. The need to make the measurement period as long as possible sometimes causes the dismantling to be done very late, just before the ship is arriving to the port. The ship may only be loading and unloading passengers and head back to the sea after one hour, which makes the departure of the measurement crew quite rushed.
The emission measurement report is written after the measurement run. Usually there are several samples to be analyzed in laboratory before all the necessary information is ready to be processed to report.
The data gathered form the loggers and computers used onboard is transferred to readable form and the integrity of the data is checked. The time stamps and manual notes are checked. The information is then processed with special calculation templates and the results are written down.
The report is intentionally short. The measured and calculated values are presented as simple as possible. This serves most of the purposes, as the measured amounts of substances are in well-known scale and do not usually need further explaining. Table 1 gives an example of the simplified format of the tables in reports. For special needs there is of course possibility to make many kinds of analysis of the gathered information and include more detailed content to the report.
The measurement results are archived for later use. The measurement archive serves as a reference point for example in comparison of the earlier emissions measurements of same ship or the same engine type.
Table 1. Excerpt of a one table of measurement report.
± 7 %
± 10 %
± 7 %
± 10 %
± 7 %
± 10 %
± 7 %
± 10 %
± 7 %
± 10 %
The scientific research is based on empirical studies. Empirical studies can take many forms or shapes, and one of these shapes is the rare occupation of onboard measurements. Kyamk emission measurement laboratory perceives itself as an instrument in service of higher research by providing the empirical findings and first-hand information from actual situations.
There are several approaches to the marine emission measurements onboard. The methodology used depends on the objectives of the measurement. The Kyamk emission measurement laboratory has chosen to streamline the process and concentrate to elementary tasks. The measurement repertoire is carefully chosen and limited to the necessary and most useful measurement subjects. The process of conducting the measures has developed to a robust and reproducible form.
Ships are a very special working environment. The completion of the of the precise laboratory measurements onboard a ship with dismountable laboratory is, indeed, a challenging line of work.
Jouni-Juhani Häkkinen, Technology expert, Kymenlaakso University of Applied Sciences, Finland, firstname.lastname@example.org
The working life oriented pedagogical models (e.g., Learning by Developing, Problem Based Learning, Innovation Pedagogy), which have been taken in use in the universities of applied sciences, have made a change in the curricula as well as in the methodological implementations of the study programs. However, they also require a change in the models and methods by which guidance and counseling (G&C) is implemented to guarantee effective study processes.
The article focuses on the G&C processes supporting student’s working and competence-based assessment in project-based studies. The results are based on analysis of a tutor teacher’s reflective diary in a development process, which was carried out together with Laurea University of Applied Sciences and the Osataan! project coordinated by HAAGA-HELIA School of Vocational Teacher Education. The development process took place during the academic year of 2013–2014. It involved renewing the G&C process in Laurea’s working life-oriented RDI projects (HankeHops in Finnish) as well as testing and improving tools for the personalization of studies and competence assessment. The “tools”, i.e., assessment forms, are available on the websites of the Osataan! project both in English and Finnish (http://blogit.haaga-helia.fi/osataan/tyokalut/). The project was carried out in three student groups from the Business Information Technology program (Group 1: 6 students, Group 2: 19 students and Group 3: 42 students).
Laurea’s working life-oriented RDI projects are based on their pedagogical model of Learning by Developing (LbD). The role of the teacher supervising the students in projects is crucial. One of the authors of the present article has worked as a tutor teacher and his responsibilities were to organize the various phases of projects, to guide students in recognizing learning outcomes and competence generated by the projects as well as to help the students in understanding the competence areas, setting the goals and conducting self-assessment (see also Lassila & Pohjalainen, 2012).
Team-based guidance and counseling process
Students with personalized study programs need also personalized support time-wise and content-wise. This requires a lot of the teacher’s time resources and makes the G&C process heavy and sometimes even impossible to fit in the full schedules. We were interested in making the teacher’s workload reasonable when supervising the students, while still giving students enough support. We moved from the individual face-to-face meetings to meetings where the whole project group participated in the G&C session. The G&C process was designed to proceed in steps and the sessions were scheduled in advance to fit the critical phases in their project (Figure 1).
The activities of the sessions in the G&C process were:
1. Kick-off Meeting, which included briefing the students about the study process in the project.
2. Initial Personal Study Plan (PSP), which included
connecting the curriculum learning outcomes to the project objectives
identifying an initial outline of the required knowledge base and proofs of learning
connecting the Student’s assessment criteria to the project objectives, knowledge base and proofs of learning.
3. Final Personal Study Plan (PSP), which included updating the information written in the previous step.4. Preparing for the self-assessment (SA), which included reviewing and updating the PSP.
5. Final assessment, which included
assessment by the customer and other project members.
6. Wrapping up, which included
the teacher and students debriefing the project and sharing opinions and experiences
planning the students activities for next the semester (upcoming projects and courses).
Tools to help the teacher to monitor and guide the study processes
We designed tools (assessment forms), which made it possible for the student (1) to plan the actual work tasks and activities in the project in relation to the learning outcomes of the courses included in the project, (2) to plan how the proofs of learning are demonstrated in relation to the activities and deliverables in the project and (3) to assess the gained competences in relation to the assessment criteria.
When planning the G&C process we considered assessment as an inseparable part of guidance and counseling – in the G&C process the teacher needed information which was provided in the student’s PSP and assessment forms. In addition, the process and tools of assessment depended on the conception of competence: in the LbD model competence is seen as an integrated combination of knowing, understanding, doing and managing situations. Therefore, assessment focuses on student’s competence instead of the knowledge, written work or their project activities. (Raij & Niinistö-Sivuranta, 2011; see also Baartman et al. 2006, 4.) In our development process the student’s competence was assessed in relation to the learning outcomes defined in the curriculum, and personalized in the PSP. The project work in itself (e.g., the action plans, designed products and artefacts) demonstrated the gained competence.
The student was asked to prepare for the G&C sessions by filling the PSP in advance in the beginning of study process, and thereafter to update it on the basis of the teacher’s written feedback and the discussions in the G&C sessions. In that way the plans became more accurate descriptions of the student’s progress. Reading and commenting the student’s PSP often eliminated the need to meet face-to-face as illustrated in the tutor teacher’s diary:
Using the PSP templates with some other students. I like the template and it helps my work as I don’t need to keep too many face-to-face meetings with students. Reading what the student wrote in the document and directly writing my comments on it is a time effective way to provide guidance. Some students are using it very well. (Tutor teacher’s diary 21.10.2013)
When having the whole project group participating in the G&C sessions the feedback could be discussed more time-effectively compared to individual meetings.
The student’s self-assessments with the proofs of learning made it easier for the teacher to make his own assessments:
… Information written by the students in the team-self-assessment, individual self-assessment, and peer-to-peer evaluation quite well match with the subjective evaluation I have been able to make throughout the course. So, giving a grade to a student is almost about validating the evaluation from those three documents. (Tutor teacher’s diary 27.5.2014)
The tutor teacher reflections on the developed G&C process were positive. The teacher found it more interesting as well as less controlling to be able to trust in students’ abilities to manage their own learning process. However, the trust was not “blind”, because the teacher was able to follow the students’ activities and achievements throughout the semester.
Katri Aaltonen, Principal Lecturer, HAAGA-HELIA University of Applied Sciences, Vocational Teacher Education Unit, email@example.com
Antonius De Arruda Camara, Senior Lecturer, Laurea University of Applied Sciences, firstname.lastname@example.org
Societal challenges force all the actors in Lapland to find new solutions for development and service design. Living conditions, huge distances and decreasing number of population in rural areas, require new innovations and collaboration that are tailor-made for the specific conditions of the region. Being a sparsely populated area, Lapland is a challenging context for co-creation and innovations, furthermore, local decision-makers and entrepreneurs need assistance in finding the right development track with economical methods. The distances make participation and involvement in decision-making remarkably difficult. Additionally, networking has become an important factor for competitive entrepreneurial activities; therefore old ways of creating services and products are no longer sufficient. (Jäminki & Saranne 2013a; Jäminki & Saranne 2013b.)
These challenges require active contribution and involvement of the actors in the region. The service debate in Living Labs has been able to approach the themes of societal change, new emerging patterns in value co-creation and developing service design methods that can be used to facilitate development processes. Service design is establishing itself as a practice (Miettinen & Valtonen 2012) and innovative methods used in service design process facilitate users’ participation in service development (Thomas 2008). Experiences also show that technology enables new value-chains, becomes more network-like and gives participants new tools (Eriksson, Niitamo & Kulkki 2005). These principles were applied in the Elävä Lappi Living Labs.
Context Elävä Lappi Living Lab
“Elävä Lappi” Living Lab was established in a real-life setting in rural, sparsely populated pilot environments, Kemi-Tornio city area at the Swedish border and Rovaniemi, the capital of Lapland. The pilot project was financed by the European Regional Development Fund (ERDF) for the period of August 2010 to December 2013. The partners represent all the three universities in Lapland: Kemi-Tornio UAS and Rovaniemi UAS (Lapland UAS after the merger in 1.1.2014) as well as University of Lapland.
The project “Elävä Lappi” was established to pilot and promote Living Lab methods by developing methods for joint, open innovation co-creative processes. The Living Labs follow the principles of the so-called ´Quadruple Helix model´ (see Figure 1) underpinning exchange, shared understanding and local policy development (Arnkil, Järvensivu, Koski & Piirainen 2010). The Living Lab culture is supported by innovative test methods and models which facilitates the inclusion of higher education – i.e. the students and the staff – to the regional project contents.
Physical and Virtual Labs
The physical labs of “Elävä Lappi” proved to be efficient collaboration places for the Living Lab actors. The workshops were tailored in collaboration with all the actors and it was fairly easy to activate the Lappish participants; after all, people are interested in developing their region. However, for some participant involvement was not always easy; the employees from working life and the digital generation found it difficult to attend the face-to-face workshops.
Technology, on the other hand, seemed to offer more easily accessible and affordable collaboration spaces for the above mentioned groups (Jäminki & Nijbakker 2013). Therefore, Web 2.0 tools that served the Lappish context best, were incorporated into the Elävä Lappi Living Lab (see Figure 2).
It has to be pointed out, however, that both the Physical and Virtual labs are important; they only serve different types of participants. The report mainly addresses pedagogical and technological factors of the Labs, since the other results of the Labs have been widely presented in papers and publications (see Merivirta 2013; Jäminki & Saranne 2013a; Jäminki & Saranne 2013b).
Involvement of Higher Education
All the universities of applied sciences have wide responsibilities for the well-being of the region; therefore research, development and innovation (RDI) activities have to be designed to promote the wellbeing of the entire region. The RDI processes in Living Labs were integrated into studies and implemented through real-life innovation tasks, theses and RDI projects. RDI was carried out cooperatively by students, lecturers and representatives of various organizations.
In Elävä Lappi, we piloted Living Lab method and user-engagement both virtually and face to face. For example, there were multiple online inquiries, idea collecting and user researches executed via our website and Facebook page. In addition to these, we organized several workshops that took place in the environment that was aimed to be developed. (See Elävä Lappi 2014.) Shopping Centre Rajalla På Gränsen in Tornio was one of the most important cooperation partners in both virtual and physical Living Labs.
The integration of theoretical and practical issues facilitates the complex learning process. Integration in Living Labs proved to be rewarding but also challenging. The teachers and project staff needed several negotiations before shared understanding of the pedagogical solutions and the project goals were reached.
Implications for The Digital Context
The results gained in the Elävä Lappi Living Labs can be viewed from various perspectives. For the region, the regional developments achieved during the Living Lab activities are prioritized. Decision-makers not only appreciated the shared knowledge but even savings achieved by the use of open source software and the collaboration measures that could be used for targeting the right actions to serve the users.
Another perspective is to see how technology helped to achieve the goals. Web 2.0 is a global phenomenon; however, integration to the Labs requires local tailoring, despite the fact that Lapland operates with international stakeholders. By including the global perspective into the context, true benefits for the regional actors may be identified. To make the changes more visible for the users, the digital criteria set up by UNESCO (2011) and the learning goals of the so-called 21st century were followed.
The results prove that the Living Labs are not only capable of preventing social exclusion by facilitating participation by the help of ICT, actions can even help policy-makers to get reliable evidence of the directions of the actions. Through the ongoing and effective use of media the students had the opportunity to acquire important technology capabilities during the learning activities and the acquired competences can be transferred to working life.
Experiences prove that when regional service design objectives and technology are integrated into the learning context, educational implementation structures have to be reviewed and re-designed (Jäminki & Nijbakker 2013). Service design and online education require the use of technology and the teachers have to be in charge of the online-services; therefore training teachers has to be given a priority. Changes in pedagogical practice involve co-creation, the use of various technologies and online content but it also involves knowing where and when (as well as when not) to use the technology for various activities.
From the pedagogical point-of-view, the principles of online idea-generating-workshops and co-creation methods require a lot of in-advance planning where both the teaching staff and project employees have to bring their expertise. Reaching consensus always requires a lot of communication. Open discussions focus on functional and theoretical underlying principles but even on the use of methodological choices. The actors have to decide which methods and tools best serve the region. The challenge calls for constant collaboration among all the actors; the teachers and the project employees can’t exclude the regional decision makers and alone make the decisions. (Merivirta 2013.) For ongoing communication and decision-making, online tools bring substantial help.
During the Elävä Lappi project as well as in other regional projects that were implemented simultaneously, the acquired knowledge of Living Lab methods and user-involvement was increased among the staff of Lapland UAS and the participants. This new competence is therefore implemented and taken into practice in other courses of the Degree Programmes. Also, by participating the local enterprises and other organizations, the participants acquired awareness of the importance of user-involvement in working life, regardless the type of field or industry. On top of this, it is worth mentioning that user-involvement creates a core development area in the strategies of Lapland UAS founded in 2014.
The Elävä Lappi Living Labs indicated promising ways of regional collaboration and user-involvement and increased the survival of Lapland and prevented the social exclusion of the residents. Living Lab methodology offered tools for reaching shared goals and supported learning as a network phenomenon, influenced by socialisation and technology. Living Labs, supported by ICT, offered solutions that are not only efficient and co-creative but even more economical and user-friendly for all the parties. (Jäminki & Saranne 2013.) Co-creation of services, management and dissemination of knowledge to all the actors helps to develop Lapland.
Seija Jäminki, Lecturer, PH.D, Lapland University of Applied Sciences, email@example.com
Marika Saranne, R&D Manager, M.Sc, Lapland University of Applied Sciences, firstname.lastname@example.org
Jäminki, S. & Nijbakker, P. 2013. Efforts to implement new learning spaces in higher education. The case of Kemi-Tornio University of Applied Sciences. Article 06 September 2013, Open Education Europa. Available at http://openeducationeuropa.eu/fi/download/file/fid/27791. Accessed on 24.4.2014.
Jäminki, S. & Saranne, M. 2013a. “Living Labland” – Co-creative Innovation Lab Integrating Cross-border Co- creation of services to research, development and innovation in Higher Education. A collection of proceedings published from the 4th ENoLL Living Lab Summer School in A collection of proceedings published from the 4th ENoLL Living Lab Summer School in Manchester (UK) August 27th – 30th, 2013,130–149. Brussels: European Network of Living Labs. Available at http://4thenollsummerschool.files.wordpress.com/2013/09/proceedings-4th-enollss13.pdf. Accessed on 25.4.2014.
Merivirta, M. (Ed.) 2013. Tee-se-itse-YHDESSÄ : Käyttäjälähtöisyydellä ja Living Lab -toiminnalla kohti Elävää Lappia. Tornio: Kemi-Tornion ammattikorkeakoulu. Available at http://urn.fi/URN:ISBN:978-952-5897-58-6. Accessed on 24.4.2014.
Miettinen, S. & Valtonen, A. (Eds.) 2012. Service Design with Theory : Discussions on Change, Value and Methods. Rovaniemi: Lapland University Press.
The Creative field is one that is ever growing and developing, and emerging creative talents have to constantly find new ways to work together and build functioning networks. One kind of channel for international networking was provided by Creative Edge project. (Merivirta & Arkko-Saukkonen 2013, 12.)
Creative Edge project took place between 2011 and 2013, and it was funded by the Northern Periphery Programme. The main aim of the project was to introduce local organisations and businesses in the creative field on the international market while simultaneously striving to increase the skills, competitiveness and future opportunities in working life of both young people as well as other actors in the creative field. (Creative Edge 2013.)
Five different partners from four different countries have participated in the Creative Edge project. From Ireland these were the Whitaker Institute of Galway University and the Western Development Commission (WDC), and from Northern Ireland the organisation called South Eastern Economic Development (SEED). From Northern Sweden and Northern Finland, the partners were Film i Västerbotten and Kemi-Tornio University of Applied Sciences (since 1.1.2014 Lapland UAS) respectively. (Creative Edge 2013; The Creative Edge Project Partners 2013.)
During the project, Lapland UAS was responsible of organizing an international Creative Steps workshop.
Towards Creative Steps
Kemi-Tornio University of Applied Sciences has, since 2005, arranged a competition-like event called InnoMaraton, and this concept is further carried in Lapland UAS. It’s central objective is to create interaction between the business world and students. Through assignments, groups of students help the local businesses in the area to develop new business opportunities, enhance the growth process and promote internationalisation. (Arkko-Saukkonen & Merivirta 2013b, 18–19.) InnoMaraton concept increases understanding of know-how, innovation and entrepreneurship through practical work (see Valli 2007).
As a part of the Creative Edge project, Creative Steps pilot was realised in 2013. Creative Steps is an international implementation of the InnoMaraton concept. The implementation took four weeks, two of which were conventional working and the other two were online communication.
For Creative Steps, we wanted to get a group of participants with a large variety of skills in order to be able to create teams with heterogenous skill sets. Newly graduated students, or future graduates, were selected for the project. In total, 15 participants were chosen for the workshop: five from Finland, three from Sweden, three from Ireland and four from Northern Ireland. The participants were divided into four international multi-talented teams.
One client from each of the partner countries involved in the Creative Edge project was chosen and the clients represented different sectors of the business world or working life.
The students practiced business skills and helped businesses develop new ideas for products and services, as well as existing policies or respond to challenges in which the perspective of a creative expert is called for. The Creative Steps pilot project strove to support networking and point out the opportunities to match creative know-how to a number of different needs through experiences (benchmarking, matchmaking). Furthermore, one of the most important objectives was to create opportunities for employment. (Arkko-Saukkonen & Merivirta 2013a.)
The Creative Steps Model
By enhancing entrepreneurial skills, UASs strive to meet the demands of working life. Entrepreneurship is applied to a number of processes such as innovation work and company cooperation. Through planning and implementing the Creative Steps model, the aim was to find out how to build a work life oriented learning process and how this process would further cooperation and interaction between students and working life.
Creative Steps model is a creative and innovative learning process with an emphasis on internationality. The aim is to serve both the economy and the students, while taking into consideration the way it reflects the educational institution.
The Creative Steps process became, through ideation, planning and development, a model that is illustrated by the Figure 1. The comprehensive description of the model is documented in the publication Creative Steps – On the Way to an Idea (Arkko-Saukkonen & Merivirta 2013a).
The first working environment of the workshop was face-to-face working that took place in two different countries; the first week in Finland and the second in Northern Ireland. During this part of the process, team building lead to working with the assignments as the groups met their employers and specified the contents of their assignments.
In the second phase of the process, work continued online. The first phase of the online communication was the creation and development of ideas and creating demo material. The second phase was assembling the material and practising the presentations with the coach and the support person present. The actual presentations were done in iLinc and, apart from the employers, a number of other people were invited to listen.
During the workshop, the role of the teacher was to be a coach and encourage, motivate and guide groups of students during the implementation of the model. In the Creative Steps concept, the teacher’s role expanded into that of a process planner and all the way up to that of a manager.
“Amazing, superawesomefantastic, lifechanging, memorable, super.“ These are only few words that students used while asked to describe their experiences of Creative Steps with one word. (Merivirta 2013b, 116–119.) Based on the feedback from the participants, Creative Steps was first and foremost a once in a lifetime experience that enabled them to learn, develop themselves, network and make friends across borders. (Merivirta 2013a, 113–114.)
The students were given various methods and were allowed to choose which ones they wanted to use (see Arkko-Saukkonen 2013). They were encouraged to plan a schedule themselves and assign duties within their team. The team was responsible for the actual cooperation with the client. The coaches were there to support the process when necessary and provided guidance, encouragement and necessary tools. The freedom of the students culminated in the online communication section of the workshop.
The participants in Creative Steps were extremely motivated, which was also one of the criteria when selecting participants. The largest factor why people applied was the chance to get to work internationally and go abroad. Another big issue brought up during the discussions was the development of one’s own knowledge and showcasing one’s skills. Meeting new people and working together with the assignments were ways of increasing the internal motivation as this creates contacts that can lead to future activity and cooperation.
Team working has its benefits as it generates interaction, the exchange of ideas and collective work. One of the participants stated that: “I think teamwork can really help you in the creative process. The team can help you to find new sides to things and expand your point of view. Different cultural and educational backgrounds enrich the ideas.” (Arkko-Saukkonen 2013, 48).
Another participant summarizes her personal benefits of the Creative Steps participation quite comprehensively: “I feel now that I have a better grasp of the whole industry of business, enterprises and working with real cases and people. I also realized how much creativity can give and make happen. It can be used professionally as a tool to improve or create almost anything.” (Arkko-Saukkonen & Merivirta 2013d, 28).
Through the ideation taking place at the workshop, the clients gained new perspectives to their challenges which can lead to new things, despite the process often being slow.
Networking as a valuable skill in working life
The basic structure of the Creative Steps concept is well-functioning. The workshop was first and foremost an experience and the feedback showed that the participants are certain to recommend it to others. Online communication provided an opportunity to work across borders with Facebook as the most efficient tool as it makes the process visible due to its real-time structure.
Through its work, Lapland University of Applied Sciences vitalises the area, as well as its international networks through long term project work. International work has indeed provided wide cooperation networks that open doors for Lapland UAS to be seen by a wider audience while, at the same time, enabling the application of existing methods. The foundation of this work is the cooperation between businesses and learning through networks.
In the future, the requirements on employees‘ networking skills will be ever higher. The activity of institutions and fields across borders will increase and this will open up a new field of interactivity through online communication. On my experiences, different operational cultures and educational institutions are able to develop a diverse and rich interaction connected to work life oriented activity. At the same time, these kind of activities provide an arena where you can showcase your skill and network with others.
Even though the members of the network often represent a certain interest or organisation, it is important to remember to be aware of the fact that you are still people meeting other people when working in a network, whether we are working face to face or through online communication. People meet each other, not various organisations or interests. This is the basis of everything – trust and joint motivation towards a joint objective. In my opinion, this succeeded very well in Creative Steps.
Anitra Arkko-Saukkonen, Lecturer, Lapland University of Applied Sciences, email@example.com
Arkko-Saukkonen, A. 2013. A Toolbox for Innovation Methods. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 58–73. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Arkko-Saukkonen, A. & Merivirta, M. 2013a. Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Arkko-Saukkonen, A. & Merivirta, M. 2013b. Starting Points and Realisation of the Creative Steps Workshop. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 18–21. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Arkko-Saukkonen, A. & Merivirta, M. 2013c. The Progress of the Creative Steps Workshop Step by Step. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 22–23. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Arkko-Saukkonen, A. & Merivirta, M. 2013d. Searching for Assignments. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 26–29. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Merivirta, M. 2013a. The Reception of the Creative Steps Workshop – The Experiences of Clients and Participants. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 112–115. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Merivirta, M. 2013b. Workshop Participants’ Experiences. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 116–119. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Merivirta, M. & Arkko-Saukkonen, A. 2013. Foreword. In: Creative Steps – On the Way to an Idea. A Model for the Realisation of an International Workshop, 12–14. Publications of Kemi-Tornio University of Applied Sciences. Serie B. Reports 18/2013. Tornio. In address: http://urn.fi/URN:ISBN:978-952-5897-86-9.
Benchmarking project was carried out between the Oulu University of Applied Sciences in Finland and the Fontys University of Applied Sciences in Netherlands. The aim of the project was to benchmark learning and teaching, quality assurance and curricula development in the degree programmes. There were teachers, students and members of the support staff participating to the project. The benchmarking project was successful; the results are useful for the degree programmes and further cooperation is planned.
Background of the Benchmarking Project
Oulu University of Applied Sciences (Oulu UAS) has signed a strategic partnership agreement with the Fontys University of Applied Sciences from the Netherlands. Both universities seek close co-operation in the fields of student and staff exchange, curriculum planning and quality assurance. Oulu University of Applied Sciences educates competent professionals for the needs of working life. There are 8 000 students and 750 staff members. Fontys University of Applied Sciences is a learning community with 40 000 students and 4000 staff members.
With its focus on quality and its similar organizational structure, Fontys was a natural partner to Oulu UAS in the benchmarking project. The benchmarking project was carried out between the Degree Programme in Mechanical and Production Engineering and the Degree Programme in Business Economics from the Oulu UAS and the Degree Programme of Mechanical Engineering and the Degree Programme in International Business and Management Studies from the Fontys. The benchmarking project was funded by the Finnish Higher Education Evaluation Council.
The primary aims of the benchmarking project were to benchmark and share the best practices in defining learning outcomes in the degree programmes and to compare the processes ensuring that expertise, skills and knowledge are achieved by the students. In addition the benchmarking project promoted and strengthened the strategic partnership and cooperation, helped both universities to develop their feedback systems and prepared for the internal and external audits and accreditations.
Implementation of the Benchmarking Visit
The project was carried out by two visits to Fontys University of Applied Sciences in Eindhoven and Venlo. The first visit took place in November 2013. There were four participants from Oulu UAS: one teacher and three students from the Degree Programme in Mechanical and Production Engineering.
The purpose of the visit was to start a project between the Dutch and the Finnish students in the course called International Cooperation Innovation. Meeting face to face in the beginning was a good starting point. The students got to know each other, the campuses and were able to compare the learning and teaching methods in both countries. They also created product ideas together and agreed on contents, responsibilities and timetables of the project. International Cooperation Innovation was later successfully finished online.
The second visit took place in March 2014. There were nine participants from Oulu UAS: five teachers, two students and two members of the support staff. Two teachers were from the Degree Programme in Mechanical and Production Engineering, and three teachers and two students were from the Degree Programme in Business Economics.
When comparing the learning and teaching activities between the degree programmes, the participants used a benchmarking worksheet, which was prepared in advance. It was easy to write down the best practises, while there were tables and titles already in place in the worksheet. It is also easier to share the gained knowledge with the colleagues.
Main Results in Comparing Learning and Teaching
The teachers from the Degree Programme in Business Economics from the Oulu UAS praised the structure of the curriculum in Fontys. The whole degree programme in Fontys could be visualized very clearly on only one A4 paper copy. Every course is located to certain semester, and the semesters 5, 6 and 8 are dedicated to minor studies, work placement and graduation assignment. In Fontys there are so called semester coordinators, who have the responsibility for coordinating studies in one semester. In Oulu UAS the rough structure of the programme is described on yearly basis, but there is no scheduled forecast for the courses.
In Fontys the students have to acquire internships themselves. However, only companies with more than 15 employees will be accepted. During their work placement the students must complete a project, which the supervisor approves. Project should be useful to the employer and challenging to the student. The length and the time of the training are approximately the same in both degree programmes. In Oulu UAS the students have to acquire work placement independently and there is no limit for the number of company employees. During the training period the student does professional assignments offered by the employer.
There are clear differences between two degree programmes concerning the thesis process. In Fontys the thesis is 28 credits (max 40 pages) and in Oulu UAS it is 15 credits (no page limit). In Fontys the students work in the companies while doing their thesis. The theme of the thesis is defined by the company and it can also be confidential. There is no open access to the final thesis. In the evaluation the thesis will be presented to the company and to the assessment committee. In the Oulu UAS the thesis process involves a three-step, public seminar structure where the student shows the progress of his/her own work to the supervisor teacher and to the other students. Accepted thesis is public and it should be stored in the open national database.
The teachers from the Degree Programme in Mechanical and Production Engineering compared the structure of curriculum. In Fontys there are more project-oriented studies. Work placement is done during one semester, while the students in Oulu UAS do their work placement during two or three summers. One semester is dedicated to minor studies. For a student it is a convenient time for an international exchange. In Oulu UAS the exchange periods can vary, and there is not a clear time slot for it in the curriculum.
When comparing the education resourcing and methods there were differences and similarities. In Fontys the number of teacher’s working hour resource is at average 1 hour per 1 student and 1 credit. It is almost the same as at Oulu UAS, calculated of the teacher’s 1600 hour annual resource. The ratio of students and teachers is 20 students per one teacher at Fontys, at Oulu UAS the ratio is about 25. The normal student group size at Fontys is 30 students, it’s at the same level in Oulu UAS. At Fontys the number of contact classroom hours is smaller than at Oulu UAS, but the teachers use more resources to guide the project based learning.
In both universities there are several courses of innovation and product development. Future cooperation could be realized on those courses as the international student groups innovate, design and build prototypes together. This kind of co-operation has already been started; a mechatronic device designed in co-operation of students of Fontys and students of Oulu UAS was built and tested in the end of May 2014.
The students thought that the most potential practice to be learned from was a course called “Mini Company”. It is a mandatory part of several degree programmes in the business field. It is an excellent way to combine theory from the classes into real life and get involved in the business life where people from the different branches collaborate and are accountable for each other. Groups of students (10-15 persons) establish companies and run them independently for a year. The teachers meet the groups regularly, but they do not conduct any negotiations on behalf of the companies. Instead the students must take care of everything. At the end of the year the company has to be closed down.
The students also commented on the premises. In Fontys there were several colourful and well-equipped working spaces which are intended for both teachers and students. Teachers need also privacy but some of the work could be done in the shared space where the students could ask for consultancy. This makes teachers easier to approach and strengthens the conversation between teachers and students.
The aim of the benchmarking project was to benchmark learning and teaching, quality assurance and curricula development between the Oulu University of Applied Sciences and the Fontys University of Applied Sciences. The benchmarking visits proved to be successful, and the degree programmes can develop their actions according to the results.
Benchmarking worksheet was a useful tool for comparing activities, and it could be used also later on. The project created fruitful and multi-diciplinary interaction, mainly because there were teachers, students and the members of the support staff from different degree programmes participating to the visit. Student involvement was crucial to the success of the project, as they were actively socializing with the local students in addition to participating the official visit programme.
The results of the benchmarking project will be directly exploitable in the design process of the new curricula to be prepared in 2015. The objective in Oulu UAS is to design curricula that provide for effective completion of studies for different types of learners. It is also crucial to involve working life organizations more efficiently to the design process in order to ensure the working life correspondence of the learning outcomes.
Another aspect involves strengthening and further developing the strategic partnership between Oulu UAS and Fontys. The aim is to increase productive cooperation both in student and staff exchanges. This will boost the development of individuals’ international skills increasingly required in the globalizing societies.
Marianne Isola, Quality Coordinator, MBA, BA, Oulu University of Applied Sciences, firstname.lastname@example.org
The project, begun in September 2013, is run in Finland by SAMK’s Well-being Enhancing Technology Research Group (WET-RG) and in Ireland by DKIT’s Department of Computing & Maths. It brings together WET-RG’s research expertise with DkIT’s experience in developing state-of-the-art 3D computer games. It builds on existing research cooperation e.g. WET-RG, who developed GaMeR: Games to support Memory Rehabilitation for older adults, already evaluated in Finland (Koivisto et al. 2013), are conducting comparative trials of this serious game app for people affected by dementia, in a day care centre in Dundalk, Ireland (The Birches 2014). This work also builds on experience gained in previous comparative trials in Finland and Ireland into serious games for primary school maths education (Kiili at al. 2014).
2. Approach taken and key objectives
The approach taken was innovative and explorative. The project combined the strengths and expertise of staff in both colleges and provided the opportunity for on-line and on-site collaboration, discussion, and evaluation of work in progress. This included site visits (involving SAMK physiotherapy and DkIT games students) to the client residential care community (Kuanummen Koti 2014).
The theme of well-being enhancement, especially relating to special needs end users, presented a significant need and an opportunity for cross-disciplinary collaboration. Expert input was sought from SAMK’s Research, Development & Innovation lab (automation), Social and Healthcare faculty and DkIT’s School of Health and Science. The entrepreneurial potential of each game was also given importance from the initial stage to the final game prototype.
The project had three key objectives:
1. “Well-being enhancement”. Teams were given creative freedom to interpret the theme. However, each team needed to show how their game concept could address some specific well-being attribute (e.g. physical dexterity, cognitive capability or mood improvement). In keeping with recognised international best practice, the games needed to employ the principles of Universal Design. Universal Design promotes the design of products, environments, programmes and services to be usable by all people, to the greatest extent possible, regardless of their age, size, ability or disability.” (Universal Design 2014).
2. “State-of-the-art”. Game prototypes utilised state-of-the-art development tools for 3D visualisation, animation, sound and user interaction. A high degree of sophistication and functional capability was demanded. Each game needed to demonstrate technical excellence in all aspects of its design and implementation. A further challenge was to adapt features of the game play and user interaction to be more playable by people with a specific special need or impairment, requiring novel approaches to design and development of user interaction.
3. “Design for Somebody”. User-centric techniques were employed putting the end user at the centre of the process. Teams used an agile software development process and toolset (Scrumwise 2014) allowing careful evaluation of requirements. Iterative prototyping was employed to facilitate further feedback. Expert driven user profiling provided better understanding of special end user needs. The approach of “design for somebody” went one step further encouraging individualised design customisation, including incorporating personal, sentimental content and game artefacts.
3. Game prototypes developed and notable achievements to date
Team “Evoke Studios”: Keith Byrne, Tadhg Deeney, Sean Mc Cooey, Michael Murphy, Nicholas Murray.Their game, “Evoke” (Figure 1) is a third-person sandbox adventure aimed at people affected by mood related conditions such as SAD (Seasonal Affective Disorder). This game was presented at the Irish National Disability Authority Universal Design Grand Challenge, in May 2014, being shortlisted in the top 7 from over 70 final-year student projects.
Team “Team Symbiote”: Peter Duffy, Colm Grogan, Criona Shine, Hugh Thornton, Ze Hou Zhang. Their game, “Nyx” (Figure 2) is an open world puzzle adventure for people suffering from a physical impairment like MS (Multiple Sclerosis) or MD (Muscular Dystrophy). Internationally, this game won the Microsoft Imagine Cup 2013: Global Citizen Competition and nationally it won the 2014 Honeycomb Creative Awards Best Project. The team have been invited to participate in the European Finals of the Intel Business Challenge Europe (IBCE) in September 2014.
Team “Whooful Games”: Lee Byrne, Stephen Fleming, Senyee Lee, Cian Mc Cormack, Patrick O’Halloran. Their game, “Babel” (Figure 3) is an on-line co-operative exploration platformer game, which explores the use of NVC (non-verbal communication) and gestures to support gameplay particularly for people who suffer from social anxiety. To date the game has attracted a large on-line community of players who signed up as part of user testing.
In June 2014 three students, one from each team, travelled to Finland to conduct user demos at the Kuanummen Koti care community open day (Figure 4). The initial reaction to all three games from care staff, clients, family and visitors was very positive. This trip also afforded the chance to promote the project through local and regional press interviews.
4. Outcomes and lessons learned
Well-being enhancement was an inspiring and doable theme. The “design for somebody” approach provided real motivation. Two of the student teams were inspired by the needs of a specific individual (e.g. family member). It also enhanced the entrepreneurial potential of the games as evidenced by judges’ comments in the competitions entered. The project demonstrates it is possible to operate a cross-disciplinary, international cooperative endeavour of benefit to all stakeholders.
The involvement of the Kaunummen Koti care community gave a real world context, design inspiration and personalisation. The opportunity for students to travel to Finland and experience firsthand user reaction was a huge motivator. To quote Hugh Thornton (Team Symbiote), “This project gave us the chance to work with real people on a personal level. It was a reminder to us of the people we are working so hard for. It is reassuring to have a Finnish partner to facilitate testing and validate the work we have done”.
The game prototypes employ innovative interaction techniques at the cutting edge of adapted game design. They will be deployed in a longitudinal trial in the care setting, incorporating game analytics, user observation and structured interviews to further investigate their effect and potential. This will be of interest to researchers from across different disciplines. The quality of the work produced is evidenced by the success achieved both nationally and internationally. Team Symbiote is in a business start-up based on this project. The new company, “Mega Future Games” could be the beginning of a real gaming revolution!
Enda Finn, Lecturer, Dundalk Institute of Technology, Department of Computing & Maths, email@example.com
Andrew Sirkka, Principal Lecturer, Satakunta University of Applied Sciences, Well-being Enhancing Technology Research Group, firstname.lastname@example.org
Sari Merilampi, Project Manager, Satakunta University of Applied Sciences, Well-being Enhancing Technology Research Group, email@example.com
Mirka Leino, Project Manager, Coordinator, Satakunta University of Applied Sciences, Well-being Enhancing Technology Research Group, firstname.lastname@example.org
Antti Koivisto, Researcher, Satakunta University of Applied Sciences, Well-being Enhancing Technology Research Group, email@example.com
Koivisto A., Merilampi S., Kiili K., Sirkka A., Salli J. (2013) “Mobile activation games for rehabilitation and recreational activities – exergames for the intellectually disabled and the older adults” Journal of Public Health Frontier, Vol. 2, No 3, pp. 122-132.
(The Birches 2014) The Birches Alzheimer Day Centre, Dundalk, Ireland. http://www.thebirches.ie (accessed September 2014).
Kiili K., Ketamo H., Koivisto A., Finn E., (2014) “Studying the User Experience of a Tablet Based Math Game” International Journal of Game-Based Learning, 4(1), 60-77, January-March 2014.
The diversity and deepening of co-operation between higher education and region is in the focus of development of higher education in Europe. Higher education institutions (HEIs) play an essential role in society: creating new knowledge, transferring it to students, re-training employees in the firms, and fostering innovations. “The third mission” of HEIs, in addition teaching and research, centres specifically on the contribution to regional development (OECD 2007; Jongbloed et al. 2008). In order to fulfil this regional role, HEIs must engage with others in their regions. Stronger ties and connections between institutions and the world of work is also necessary and needed in order to implement competence-based education (Biemans et al 2004; Wesselink et al 2010).
This article will focus on the Lahti region’s smart specialisation platform, which combined with the Lahti Living Lab concept, has been identified as a European model area. In addition, it outlines LUAS`s future operations in diversity campus, which include the Lahti University Consortium and various development companies and businesses. The approach of the issue is done by the case study (Lahti University of Applied Sciences, Finland).
The goal of Lahti University of Applied Sciences (LUAS) is to be a multidisciplinary, internationally renowned and networked actor that educates responsible professionals and generates innovation, promotes regional competitiveness, and renews the local employment sector. LUAS is involved in the regional development of the wider Helsinki metropolitan area. The strategy of LUAS has been reviewed taking into account the strategic frameworks of European and national research and innovation policies, and regional strategies. LUAS operates in the global innovation system as part of the regional innovation ecosystems of the wider Helsinki metropolitan area and Päijät-Häme. We are involved in the effort to make the EU a smart, sustainable and inclusive economy and to achieve high employment, productivity and social cohesion.
The Lahti region is renowned for the practice-based innovation model. The innovation model is manifested in the following principles:
A broad concept of innovation has been adopted in the Lahti region, emphasising the role of services and processes: the development of innovation capability in the public sector is also integral in this model.
Breaking down the traditional, linear innovation model and searching for innovation through cross-boundary ”intellectual cross-pollination”; key sources of innovation are difference and specifically – related variety – which will facilitate the creation of development platforms instead of supporting narrow clusters.
In innovation, the core capability is a general ability to perceive possible worlds, and the core competence is innovation brokerage, which means the ability to create worlds for intellectual cross-pollination.
Organisations’ personnel hold vast potential for innovation, and each member of staff should have a dual role: to produce a product or service, and to continually consider how it could be made better; organisations should not be left as black boxes of innovation policy – the innovation capabilities of the employment sector should be developed with a concrete set of tools.
Innovations are primarily created in practical contexts, using a variety of different sources of information and leading to solution-oriented processes; development activity is characteristically market and customer driven.
Not everything has to be done in-house; innovation is largely about searching for luck in technologies, an activity that is supported with innovation policy that serves networks – at its core, it is about scanning for technological and market signals and absorbing them in businesses.
One key aspect is the creation of piloting and development environments which are based on heterogeneity in knowledge production; in these environments, the customer is a subject of innovation, not an object.
Institutions of higher education have integrated practice-based innovation as part of their operations and committed to its principles through their networked operating model
The innovation model is developed based on the ’smart specialisation’ framework of reference.
The Lahti region’s R&D profile has been significantly influenced by the lack of state-owned research organisations compared with many other major urban areas. RDI expenditure per capita is significantly lower than the national average. Despite this, the number of innovations generated in the region compared with the RDI expenditure is among the highest in Finland. The three competence focus areas of Lahti are:
LUAS is committed to strengthening the region’s competitiveness and vitality in accordance with the growth agreement proposal drawn up by the region’s municipalities and the Finnish state and to the implementation of the Innovative Cities 2014–2020 programme in the Lahti region. In the future, our operations will focus on diversity campus (Niemi), which includes the Lahti University Consortium and various development companies and businesses. The Niemi Campus will provide authentic development and learning environments, which will connect regional operators e.g. HEIs and international partners to knowledge alliances. It strengthens innovation capacity and fosters innovation in higher education, business and the broader socio-economic environment. It is transnational, structured and result-driven campus, notably between HEIs and business to develop new, innovative and multidisciplinary approaches to teaching and learning; to stimulate entrepreneurship and entrepreneurial skills of students, academic and company staff; and to facilitate the exchange, flow and co-creation of knowledge.
The learning environments are physical and/or functional areas which are created with consideration of the focus areas and profiles and by applying the principles of intellectual cross-pollination and the Living Lab. They provide a collaboration environment where new kinds of concrete opportunities for cooperation can be identified and implemented, such as Interaction Design Environment – IDE!, EcoMill, the House of Design, Fellmannia, Lahti Future Lab and ISKU R&D Center.
The Lahti innovation ecosystem utilizes many innovative tools, processes and concepts. Here also the practice-based piloting ideology has been utilized and the iterative development has been ongoing while they have been in use. In order to achieve the HEIs’s third mission, and to participate into the regional development (Mora et al 2010), and to become a proactive actor of the knowledge-based learning region, HEIs need to further develop co-operation with private, public and third sector stakeholders. One possibility is to build shared learning environments, innovation ecosystems. Traditionally, universities and universities of applied sciences (UAS) have offered separate learning environments for theoretical and practical studies. Today’s challenge has been to bridge this gap and enhance the interface between universities and workplaces.
The new mode of collaboration can be started by answering the following questions: What new operations should be created and emphasised, and what old operations should be reduced and eliminated (Kim & Mauborgne 2005, 52). True collaboration is a long term process which takes place both on organizational and on individual levels. Organisations, HEIs and world of work, set up common goals. The implementation of these goals ensues in the interaction between people: teachers, students, employees and entrepreneurs. This demands interactive meetings, skill to conduct dialogical communication, creation of mutual language and understanding, joint agreements, participatory change management, and shared resource. In addition, partnership requires change in organisational culture, where interaction and diversity are enabled and where multidisciplinarity, flexibility and sensitivity occur. (e.g. Häggman-Laitila & Rekola 2011.)
The aim of this article was to examine elements that occur in collaboration between higher education and world of work. Even though, the results of this case study cannot be generalised, the article gives insight into the co-operation between HEIs and world of work from the knowledge alliances` and future campuses, perspective.
Ilkka Väänänen, Research Director, PhD, Lahti University of Applied Sciences, firstname.lastname@example.org
Biemans, H., Nieuwenhuis, L. Poell, R., Mulder, M. & Wesselink, R. (2004). Competence-based VET in the Netherlands: Background and pitfalls. Journal of Vocational Education and Training, 56 (4): 523-538
Häggman-Laitila, A. & Rekola, L. (2011b). Partnership between higher education and working life – Developing an action model through action research. Refereed Academic Paper. Innovations for Competence Management Conference 19-21.5.2011 Lahti, Finland. http://pro.phkk.fi/kit/articles/Haggman-Laitila_Rekola_article.pdf. Read 24.03.2013.
Jongbloed, B., Enders, J. & Salerno, C. (2008).Higher education and its communities: Interconnections, interdependencies and a research agenda. Higher Education,56: 303–324.
Kim, W.C. & Mauborgne, R. (2005). Blue Ocean Strategy: How to create uncontested market space and make the competition irrelevant. (p. 52). USA: Harward Business School Press.
Mora, J.-G, Detmer, A. & Vieira, M.-J. (eds.) (2010). Good Practices in University-Enterprise Partnerships GOODUEP.
Wesselink, R., de Jong, C. & Biemans, H.J.A. (2010). Aspects of Competence-Based Education as Footholds to Improve the Connectivity between Learning in Schools and in the Workplace. Vocations and Learning, 3 (3): 19 – 38.
Learning center Fellmannia is one of the Lahti University of Applied Sciences campuses, consisting of classrooms, learning spaces, information and library services, student services and a restaurant and a café together with conference services. Fellmannia´s functions are defined as need-based, interactive, innovative and proactive. For this to come true, service concept needs to be systematically developed, taking into account the feedback collected from the users of the premises and changes in service environment.
One way of supporting interactional functions is making students genuine partners in Fellmannia’s everyday actions and development. This has been a working principle for several years now, and the skills of students have been widely utilized in many functions, including technical visualization, interior planning, promotional photography, development of student and personnel welfare services and organizing events.
Fellmannia launched a service evaluation process in 2012, as a part of World Design Capital 2012 -project. Through this evaluation process, data was being gathered on how Fellmannia’s functions and services meet the objectives and what are the needs for further development. Project was targeted to higher education and vocational students and teachers of Päijät-Häme region and other users of Fellmannia’s services. The students were selected as the most important group in the evaluation process.
The process consisted of five workshops, two case-study afternoons and two customer surveys. Through this extensive data collection, few key points were identified, the most important of them being the need for easy to use and transparent feedback system.
It was clear from the beginning that the feedback system will be made together with students. Working with them is a perfect way to engage students to a new system and get to know what kind of feedback system would appeal to users whose feedback is the most important.
The planning of the feedback system started as a multidisciplinary project with Information and Library services, Design Foundation Finland and students from the Institute of Design and Fine Arts and the Faculty of Technology. The technology behind the new feedback system was built by the Lahti University of Applied Sciences Faculty of Technology students. Their contribution was remarkable for the user-oriented development process of the feedback pool.
Feedback pool provides a simple, game-like channel for feedback with no complicated menus or multiphase processes. It is also a practical communication channel between Fellmannia’s users and staff. Both positive and negative user input give valuable insight and tools for improving services.
Feedback pool displays the latest feedback at one glance. Fellmannia’s Feedback pool has separate sections for different services and an open section, where the administrator can ask a topical question.
Comments, opinions and other feedback can be entered into a bubble and all bubbles can be liked by other users, causing the liked bubble to grow. Feedback pool can be operated via pc and mobile devices.
Feedback pool is a registered trademark.
Feedback pool on spotlight
World Library and Information Congress is held annually, being the most important congress in the field of Information and library services. Congress is organized by IFLA, International Federation of Library Associations and Institutions, the global voice of the library and information profession. This year, IFLA was held in Lyon, France and was visited by over 4000 Information -and library professionals around the world.
Feedback pool was presented in this congress as a poster. During two poster presentation sessions, both lasting for two hours, the feedback pool was attracting over 200 visitors wanting to know more about the topic of the poster. Discussions with delegates were fertile and many were even interested in acquiring the pool for their own organization.
Working with students appealed to many coming from academic libraries, for the benefits of such cooperation are clear. With strong student collaboration, the library services are viewed as a potential partner providing an opportunity to present students skills to a wider audience. Furthermore, cooperation is a good way to connect with students and get to know their information needs and their understanding of library services. Thus the collaboration benefits both the library and the students.
Benefits and experiences
The creation of the feedback pool was an important process both to Fellmannia’s staff and students taking part in the project. Students got valuable experience from working with a the supplier, learning multidisciplinary cooperation and project work, and the supplier got the chance to get to know the latest views and ideas student have on the services offered. Students also gave insight to what kind of language should be used when creating services for students. When students form the most important customer group, the service model “for student, by students” will be a continuing principle at Fellmannia.
Service design is an ongoing process in which students are seen as important partners. After the development of feedback pool, students have already been involved in other projects aiming to enhance the customer experience, such as beta testing the information and library services’ new information retrieval system and making a survey on customer satisfaction with one of the information and library services newly renovated locations, Information Centre Campus. Fellmannia has also been a partner in several theses and a place for many students to perform their practical training. In the near future, student co-operation will take yet another step forward with the launching of a new media center created by students, making use of Fellmannia’s facilities.
Riikka Sinisalo, Information Specialist, M. Soc. Sc, Lahti University of Applied Sciences, email@example.com
The upper secondary school library services have traditionally been provided by and developed with the public libraries. In our view also the academic libraries, with their special expertise and digital resources, should take part in the teaching of pre-academic information skills. Students now entering upper secondary school are already digital natives, brought up in a digitally rich environment. However, being born into the Internet era doesn’t automatically make these generations information literate, as a recent study conducted in Finland suggests. On the contrary, these skills are something that needs to be taught (Kiili, 2012).
Collaborating for the Support of Information Literacy
A joint library is usually a library for several independent universities and polytechnics, and its operation is based on a contract between its parent institutions (Palonen et al, 2013: 224). However, we are stretching this definition by also co-operating with the region’s educational institutions of both vocational and upper secondary levels. The Information and Library services are developed and maintained in collaboration with Lahti University of Applied Sciences (LUAS), Salpaus Further Education and Lahti University Campus, with its units of three different universities. This collaboration of different educational institutions has several advantage points, which help make the joint library an integral and natural part of the whole educational continuum.
Students entering vocational or upper secondary education will immediately become familiar with the higher education library services, as each group of new students will be welcomed to the library. Printed collections and most of the services as well as local use of the digital resources of three universities (LUAS, University of Helsinki, Aalto University) are available to all users. The Joint Library also offers information literacy teaching to both students and staff of all educational levels; as a result, our staff has gained extensive experience and expertise in information literacy teaching, making it possible to further develop teaching and guiding methods and tailor them to best meet the needs of the different student groups.
To further promote the development of pre-academic skills, we have recently teamed up with Lahti’s Kannas Upper Secondary School’s new IB-programme which, with its critical, innovative and scientific focus, is an excellent starting point for learning the information skills needed in later academic studies. This collaboration will support the study paths of students from the IB-programme to universities and make sure their knowledge and skills in information literacy are gradually developing together with other areas of their studies.
The Joint Library on Wheels: case Linkku
Although Lahti is the regional center of the Päijät-Häme province, only half of the regions’ population actually lives here: the other half are scattered around the province. So how could the upper secondary school students and other potentials users, who are living in the more remote areas of the region, benefit from the services of a joint library? Our answer is to put these services on wheels.
LINKKU is a smartbus project that tests a multipurpose, mobile service unit in the Päijät-Häme region. The project is being carried out by Lahti University of Applied Sciences, together with Salpaus Further Education, Learning Centre Fellmannia and several of the region’s social and health care service providers. LINKKU visits the region’s smaller towns and villages, providing different services on different weeks.
Amongst other things, LINKKU is also a new kind of learning environment on wheels. With advanced ICT and networks, it makes the licensed digital collections of LUAS available to students, teachers and other learners in the whole Päijät-Häme region. Expert services, such as the Information Skills Clinic, will also be made available either physically, with an information specialist on board, or virtually as an online service. The aim is to create an equal opportunity for learning information literacy, regardless of where one is located.
This new environment also calls for an upgrade in teaching, which is why we are developing new methods of teaching pre-academic information and media literacy skills to upper-secondary school students. The aim is to make learning these skills more interesting and appealing to the Google Generation by using serious gaming and participatory design.
This is also where the previously mentioned collaboration with Kannas Upper Secondary School comes into play. As one part of this collaboration, we are planning to create a futuristic and mobile Information Skills Clinic together with the IB-students. This Mobile Information Skills Clinic will also pilot several new learning games, and the students themselves will participate as developers and testers. These learning games will in time be available online, so anyone can participate, regardless of their location.
It is our view that academic libraries have an important role in supporting and promoting knowledge creation and the development of pre-academic information literacy skills of the so-called Google Generation. In our experience, the best results are made by collaborating widely with educational institutions of different levels, and by creating equal opportunities and new ways for access and learning. At its best, this can be done together with the most important group of our users, the students.
—————– The article is based on the paper The Joint Higher Education Library of Lahti: Confluencing for Academic Knowledge – Supporting the Study Paths from Upper Secondary School to University presented at the IFLA WLIC 2014 conference in Lyon, France. Original paper available at http://library.ifla.org/949/.
Johanna Kiviluoto, Information Specialist, M.A., Lahti University of Applied Sciences firstname.lastname@example.org
Palonen, V., Blinnikka, S., Ohvo, U. & Parikka, S. 2013. Joint Academic Libraries in Finland: Different Models of Integration, in Woodsworth, A. & Penniman, W. (ed.) Mergers and Alliances: The Operational View and Cases (Advances in Librarianship, Volume 37), Emerald Group Publishing Limited, pp.223-242. http://www.emeraldinsight.com/books.htm?issn=0065-2830&volume=37&chapterid=17097126
The aim of this paper is to present the research and development process of the new business model for Hallaus Oy. In this context, a new business model has been given both descriptive and strategical tasks.
The process began when Hallaus Oy recognized a growing demand for highly productized, local renovation services on market. Strategic paper of Renovation Services in Finland points out, that in the field of disconnected renovation services, the supply and demand do not meet. In minor renovation projects, there is demand for one-stop renovation services (Korjausrakentamisen strategian toimeenpanosuunnitelma 2009–2017, 2009, 27).
On the other hand, Hallaus Oy is a young startup company which has a strong desire to grow. However, the company’s willingness to grow should not limit to growing without a purpose. Company must aim at an intelligent grow to stay healthy (Gorchels 2012, 35). Growing should not be too fast, because that creates a hazard for company’s profitability. The strategic growing plan of Hallaus Oy is to network with paraller companies, for example building contractors, and to develop new customer-oriented renovation service products.
Building up a business network started almost immediately after Hallaus Oy was established in 2012. In two separate cases, the customers ordered interior design plans from Hallaus Oy, and after that, hired building contractors independently. The unpleasant result was that the builders could not fulfill required quality standards. Schedules and budgets went over. Some materials were replaced to cheaper ones. Eventually, both customers were unsatisfied. Business network was rapidly aggregated to make sure that these kind of undesirable situations will not occure in the future.
Partner companies of the business network are all located in Heinola district. All partner companies are small and they operate customer-oriented way. Hallaus is a now a design company with its “own” builders. This is very unorthodox way for an interior architect to do business in Finland.
Interior architecture is a part of the creative industries sector. Creative industries is a term with many meanings and they vary in different countries. Interior architecture services is closely connected to other planning services, for example architecture, and of course house construction and renovation.
Table 1 figures the swot-analysis for creative industries in Finland.
TABLE 1. SWOT-analysis for creative industries (Metsä-Tokila 2013, 59)
Dynamic business field
Possibilities to adapt skills in many way
Public sector’s willingness to support
Plenty of educated workforce
Scattered business field
Development is fast, all the actors may not follow
Services and instructions of the public sector may not support the development of the business
New business models
New ways of work and employ
New earning possibilities and logics
Funding does not work or works too slowly
Stiff business limits
Strongly central controlled
Recently the employment trend for interior achitects in Finland has been alarming. According to statistics published by trade union Ornamo, there were 1 260 unemployed interior design jobseekers in March 2013. Year before that the total amount was 989. Unemployment has grown by 28 % (Tiainen 2013, 28).
Construction business and interior design are paraller business fields, which traditionally operate in chains and by project base. During the past years, the biggest construction companies in Finland have tried to figure out why the net profit of renovation has not increased fast enough, even though the volume of renovation projects has multiplied, and is still growing fast. One major reason for the problem has been identified to be the lack of abilities to co-operate (Vainio et al. 2012, 35).
Ministry of environment reports, that the house renovation demand will grow strongly between 2006–2015. The biggest need is at apartment buildings, almost 30 %. In the period 2016–2025 the renovation demand increases in one family houses and rowhouses, while the demand in apartment buildings still stays high (Korjausrakentamisen strategia 2007–2017).
As a result of a one stop shop – model research in Europe, the experiences showed that lead actors for One Stop Shop development in Belgium were not necessarily contractors. Depending on the targeted housing segment, new business development ideas also emerge from prefab-oriented companies, consultants, architect/managers or network actors (Mlecnik et al. 2012). Therefore, a new efficient way to do business can be developed in small companies.
2. Theoretical framework
2.1 Business model and its mission
Every company has its business model, in other words, its core logic that combines company’s supply, revenue logic and a value that it produces for its customers (Vainio et al. 2012, 37).
Figure 1 describes the elements of a business model and their connections to each other.
Osterwalder and Pigneur (2010) and Pulkkinen et al. (2005) present a definition, that a business model is a simplified picture of how a company makes profit form certain business activities – in other words – what is the supply, to whom is it targeted to, and how is it done in practical basis. Business model is a structural solution that combines value creation and value capturing (Pulkkinen ym. 2005, 10). Mason and Spring (2011) point out that a business model is seen as a property of a firm (Mason & Spring 2011, 1032). Its essence and mode can and must be run from inside of a company. A business model must be constantly updated for the purpose to act as a strategic management tool. Business models are not first designed and then implemented, but are more usefully thought of as strategy-as-practice, incrementally emergent and ever-changing (Mason & Spring 2011, 1033).
Torkkeli (2012) notifies that company’s competitivity and profitability can be significantly improved by developing its business model, but developing must be done in all three areas represented in Figure 1. If any of these three key factors is limping, there can not be profitable specialist entrepreneurship (Torkkeli 2012, 18).
Torkkeli combines the main elements of a good business model as follows:
business model serves customer needs better, from a new point of view, or more fulfilling way
it is profitable and protean
it contains key elements, that competitors can not copy or imitate profitably.
(Torkkeli 2012, 20).
Business model should answer the question, which customer needs the business fulfills, what customer problems does it solve (Johnson et al. 2008, 58). It means, that the business model must find confluences with the core of the customer-business- relationship: emotional level. Shaw (2012) points out that emotions account for more than 50 % of a customer’s experience (Shaw 2012, 2).
Baden-Fuller and Morgan (2010) submit that business models act as various forms of model: to provide means to describe and classify businesses; to operate as sites for scientific investigation; and to act as recipes for creative (Baden-Fuller & Morgan 2010, 156). Company’s business model includes certain ingredients, and by certain actions they form an output. The idea of the recipe suggests how the chef, within broad constrants of the principles of cooking and the kind of dish chosen, may create variations and innovations (Baden-Fuller & Morgan 2010, 166).
Entrepreneur’s job is not just to produce and deliver a best possible solution for customer’s problem, but to develop a business model that works. Maurya (2012a) even argues that company’s product is actually not it’s “product”. The whole business model should be defined as a product (Maurya 2012a, 6).
As a summary: It is a company’s job to decide what kind of mission it gives to its business model. New business model of Hallaus Oy describes the company’s mission and strategy and acts as a brand promoting tool. As Vesalainen (2007) says, companies have always searched support from external operators, but a new way to act is to base business models on co-opertation structures (Vesalainen 2007, 154). The major strategic goal of Hallaus is to grow by expanding it’s business network (outsourced growth strategy) and do it in a controlled way, so that company’s profitability stays steady.
2.2 Intellectual capital
Intellectual capital signifies the knowledge and skills that company has. It is difficult to set out a financial definition or value for it. However, intellectual capital is a major competitive tool for a company. It is also an identifying factor that makes all the difference in business. Fields of intellectual capital are categorized in figure 2.
The value of intellectual capital is a complicated matter, especially in situations when a young startup company needs funding. In Denmark, some fast grown and successful companies were examined (Poulfelt 2007). The research study indicated that intellectual capital attributes had a remarkable role in company success. The most important issue was a strong concentration on company’s core competence (Poulfelt 2007, 145). Successful startup companies were also aware of their position in the market. Everyone of them were near customers, and most of them even saw customers as their partners. Companies realized, that a distinct profile, clear vision and business goals are crucial (Poulfelt 2007, 151).
Successful startup – entrepreneurship demands balance between three attributes: business profitability, growth and financial solidity. Laitinen (2007) explains, that the most unwanted situation is when a company grows fast but does not make profit. This combination leads to poor income financing, and it will eventually undermine liquidity and solidity, if the company can not get inexpensive external funding. (Laitinen 2007, 345).
Brand has crucial value for company’s success. Malmelin and Hakala (2008) state that production systems, effectivity or quality no longer are as important competitive advantages as before. Immaterial assets like brand and network, that can be difficultly copied, are increasingly important economical factors (Malmelin & Hakala 2008, 29). In this study, brand is defined as a certain labelled name which is identified in some target groups, and what differs from other labelled names. Brand has visual and communicational identity and image (Koskinen 2010).
Communicational identity demands that a company has a strategic presence strategy in social media, because that is where the customers are nowdays. In successful companies, the brand has been built and purposefully managed for years. Mooney and Rollins (2008) note, that the essence of a brand is chanching: it has become open. The most advanced companies understand that controlling a brand is impossible (Mooney & Rollins 2008, 21). People are communicating widely, fast and actively in social media passing the brand image forward. People have need to be involved in branding process, and the brand must engage the consumer through transparent communication, trust the consumer to co-create the brand message and learn to be guided by impassioned amateurs (Mooney & Rollins 2008, 24).
Mooney and Rollins boil down the brand management of the present as follows:
Be O.P.E.N. – on-demand, personal, engaging and networked (Mooney & Rollins 2008, 186).
Brand will be formed even though it is not purposefully built. From company’s perspective, trying to control everything that is said about the company is useless. Hsieh (2013) asks a justified question, what a company must do if it can not buy the brand? What is the best way to create a brand in a long term? In one word: culture (Hsieh 2013, 164).
2.4 Business network
Networking is a set of co-operation models which make different operators work together. Intensity of networking can vary from voluntary work to strictly specified and followed co-operation rules (Pirnes 2002, 7). Table 2 compares the differences between traditional entrepreneurship and network entrepreneurship.
TABLE 2. Comparisation of traditional entrepreneurship and network entrepreneurship (Toivola 2006, 94)
by building organization
boss – employee,
way to work
Meaning of networks in business
crucial, strategic, win/win-relationships
Networks give many kinds of benefits for a small company. The main benefits are:
Network makes companies work more efficient ways.
Network gives resources that would otherwise be out of reach.
By using networks a company can concentrate on things that are most important in competition.
Network makes companies grow and stay flexible.
Companies can benefit on each others skills in netwoks.
Networks create learning possibilities.
Networks can increase competitivity, get access to new markets and speed up the learning new markets.
(Toivola 2006, 77.)
In the field of renovation business in Finland, demand of small enterprise network has been recognized. Report of Ministery of environment specifies, that in the future, small and middle-sized companies are networked and they operate for customer’s benefit, and plenty of new supply has arisen. Renovation is profitable for both customer and service provider (Korjausrakentamisen strategian toimeenpanosuunnitelma 2009–2017, 2009, 12).
However, Toivonen (2005) thinks that a network only has value as an instrument. He presents, that network should not be an objective, but only an instrument. The aim of the company must be customer orientation and success. Network must be seen as a tool, and that way it should be treated (Toivonen 2005, 25).
Without exception, a team for a construction project is established for one certain case. Long-term development and planning between companies is difficult because of temporary structures. Teams are often build up in tendering situations. That is why long-term co-operation is therefore conflicting with boundary conditions and aims of the current project (Koivu 2005, 52).
The traditional organization structure makes competitivity improvement a challenging job (Koivu 2005, 94). It is paradoxal, that the organization structure of construction business was developed to minimize process idling (waste) but, on the contrary, the traditional way to work actually increases waste.
Varamäki and Tornikoski (2007) remind that company growth through networks is not risk-free. In the worst case
dependency goes up
company’s own profit gets smaller
cumulation of critical success factors inside a company diminishes
image and value do not grow in the same rythm than in internal
quality control requires more work.
(Varamäki & Tornikoski 2007, 173.)
Vesalainen (2007) points out that networking is a right choice for a startup company – especially when the strong need of resources is taken into account. Networking must yet not be automatic decision, but a result of strategic analysis (Vesalainen 2007, 154). As well it is important to reflect company’s growing strategy to competitors.
Johnson, Christensen and Kagermann (2008) recommend companies with new business models be patient for growth (to allow the market opportunity to unfold) but impatient for proﬁt (as an early validation that the model works). A proﬁtable business is the best early indication of a viable model (Johnson et al. 2008, 10).
2.5 Understanding the customer behaviour
Customer behaviour studies have traditionally concentrated on consumers and their behaviour. Recently the service business actions between companies have been examined, and understanding about the motives of the b-to-b customers has risen. Despite of differences in business fields, Korhonen, Valjakka and Apilo (2011) have discovered that even if business client’s actions in trading are based on process management and procedures, the significance of emotions is still strong (Korhonen ym. 2011, 22). People do not transform into top rational decision-makers when they come to work.
Arantola and Simonen (2009) define six sources of information for building customer insight:
customer history data, use of services and background information (personal data, address and a name of the company)
customer and market research, for example net promoter score
customer participation in service development and customer feedback
use of devices, for example website browsing.
(Arantola & Simonen 2009, 21.)
Net promoter score is a customer loyalty metric, that was introduced in 2003. The score measures the loyalty that exists between a provider and a customer. NPS has been criticized on its validity. However, customer behaviour can never be totally understood or forecasted because a half of the customer behaviour is based on feelings. There are always emotional motives that a customer can not or is not willing to tell in measurement situation. In any case, using NPS is much better choice than not using any system at all.
The core of net promoter score is only one direct question: ”In scale 0–10, How likely are you to recommend our company to your friends or colleagues? ” Respondents are categirized in three groups: detractors, passives (or fence sitters) and promoters. NPS is calculated by diminishing promoter’s percentage amount out of detractor’s percentage amount. The score is kind of an index of the net promoter score (Suosittelun johtaminen ja Net Promoter Score 9/2011). NPS can be as low as −100 (everybody is a detractor) or as high as +100 (everybody is a promoter). +50 is seen as en exellent rank.
Meeting and even outreaching customer needs is a matter of life and death for service provider. Quality of the service reflects directly to the quality of customer experience. This is however a two-way process. The service qualities themselves do not create value for customer. The benefits, consequences and influence has impact on customer’s own goals. Value is created when service provider and customer work together. Value is not delivered or produced one-sidedly but it is a result of common process (Arantola & Simonen 2009, 2).
Customer wants to be heard and understood by the company. However, many industrial services are so poor that clients rather expect diminishing of bad service experiences than bringing up awesome new service qualities. (Korhonen et al. 2011, 21). Customer’s expectations towards renovation services are low. When you expect the worst, then an average service performance might be acceptable for a customer. In One Stop Shop-project (Mlecnik 2012) various working groups identified important customer values for business development like better communication, speed, quality, improved comfort, energy performance guarantee and having one single contact point for the renovation (Mlecnik 2012, 1). Concentrating on these values alone could give good results in customer understanding.
Gaining lead customers is a significant way for a company to increase customer insight. With lead customer’s assistance, a company can create and improve new service concepts. Features for lead customers are vision, openness for partnership, willingness to innovate and take risks, and bilateral trust (Arantola & Simonen 2009, 27). Lead customers can be both companies and consumers. Consumers of today have plenty of power in service development through social media tools. Consumers are as well more aware of different kind of alternatives is service production.
Construction industry has been taking advantage of lean tools. The goal is to improve processes by diminishing variation. (Lean-vocabulary 28.4.2013). Another notable lean term is waste. Everything that does not add value to product from the customer’s point of view is considered as waste. It is an activity of which customer would not be willing to pay if he or she knew that it is done. During the last few years, lean methods have been adapted to service development as well.
Especially in construction business – but also in design – the most common approach to business development is searching gain and and decreasing variation, not considering customer’s state in processes (Koivu 2005, 97). If the goal is to create a repeatable standard service, lean methods are suitable for use. Lean streamlines processes by eliminating waste. But it is also waste to outsource a customer from her own project and to see her only as a target of actions. That way a valuale opportunity to learn from a customer is wasted. Besides, waste is produced in temporary project organization structures. People have to use a lot of energy to getting to know each other.
Eric Ries (2011) recommends a three-step build-measure-learn-loop for entrepreneurs. According to Ries, for startups, the information is much more important than dollars, awards, or mentions in the press, because it can influence and reshape the next set of ideas (Ries 2011, 75). Startup company should create and launch a simple product to market (and not waste time to perfection) so the developing process is exposed to customer feedback. This way the operations become customer-oriented by itself (figure 3).
According to Ries, it is important to minimize total time through the loop.
Lean canvas is business planning tool created by Ash Maurya (2012a). It is based on business model canvas tool by Osterwalder and Pigneur (2010). By using business model canvas tool, a company must consider its actions in holistic way: from company’s own, the customer’s and from its partner’s point of view. Maurya (2012b) has refined canvas tool for more suitable for needs of startup entrepreneurs. Maurya says that a lean canvas is created for entrepreneurs, not consultants, advisors or investors. Differences between business model canvas and lean canvas are presented in table 3.
TABLE 3. Business model canvas and lean canvas differences (Maurya 2012b)
Business model canvas
Hallaus Oy ended up to use lean canvas, because it gives a customer oriented insight to business. Lean canvas forces to think customer’s problems first, and after that try to figure out the solutions. Another issue is key metrics which enables learning from business actions.
Benefit of lean canvas is, that it does not only describe things but also helps company to target its actions to desirable direction.
Making a business plan is one of the most important things for an entrepreneur when starting a business. Without a business plan it is not possible to get public starting money or financing, and that way it is compulsory. Instead of a business plan Maurya encourages entrepreneur to use one A4 page lean canvas during the actual business development. It makes it possible to test and develop processes with customers Lean canvas tells more about current situation than business plan, which by its name is based on assumptions about the future (Maurya 2012a, 5).
At lean canvas, business model is developed by three phase process. First phase is to document the status quo and plans of company by using lean canvas. First box to fill is customer problems, because customer is firstly interested in her problems, not company’s solutions to them (Maurya 2012a, 7).
After filling out lean canvas, the next phase is to recognize issues that are most risky for the company. Maurya thinks that the biggest risk for a startup company is to create something that nobody actually wants. Entrepreneur’s first job is to figure out
is there a problem that customer wants to be solved
does she want to pay for solution and
can that problem be solved in general. (Maurya 2012a, 8.)
After these question are answered, it is time to consider the substance of the service product: Do customers want to have it, and are willing to buy it. In this phase the key metrics that evaluate service market suitability must be created.
The third phase in business model development is to test it systematically. After business plan has been documented and risks are evaluated it is time to test it with real customers by using build–measure–learn- loop by Ries.
2.7 Service design tools
Service design is a context, that automatically leads company to more customer oriented way to operate. The main idea of a service design is to make hard values (business transactions) and soft values (things based on customer’s point of view) equally important in business development (Tuulaniemi 2011, 95).
When you place people in the middle
you design to people who actually are going to use services
you minimize the risk to fail because a service is designed based on the actual needs of the customers (Tuulaniemi 2011, 72).
One of the main terms of service design is a service journey. It is a description of the service points located on timeline. Service path consists of service moments. Service path experienced by customer is described in stages, so it can be analyzed and designed (Tuulaniemi 2011, 78 ).
Other pivotal term in service design is touch points. Through these points service is experienced and seen. Touch points are categorized into four different categories: spaces, objects, processes and people. Touch points are places or situations where company and customers meet. They can be interactive moments like meetings or phone calls, or passive moments when customer for example sees an advertisement or visits company website (Futurelab 2013, 2).
Term iterative development is widely used in service design. It means that the solution is built rapidly and repeated until the goal is achieved. Apparently unlike methods, lean and service design, seems to have at least one thing in common: speed.
Valerie Carr works at a service design company in Scotland. She has summarized differences between lean methods and service design (table 4).
TABLE 4. Lean and service design, differences (Carr 2012)
Lean / Six sigma
focused on reducing variation
gaining insights from the outliers
sometimes it’s the generous gesture that wins and keeps customers
intimidating, confrontational language (black belt)
focus on the positive – asset based, what works
management driven – things done to staff
co-design approach – things done with people
focused on learning from past, proven methods
focused on prototyping new possibilities
Analytical process based thinking can not be totally ignored in business development. Roger Martin (2009) points out, that neither analysis nor intuition alone is enough. Martin argues that aspects of both analytical and intuitive thinking are necessary but not sufficient for optimal business performance (Martin 2009, 6). Martin calls this kind of combination as design thinking. Design thinking is the form of thought that enables movement along the knowledge funnel, and the firms that master it will gain a nearly inexhaustible, long-term business advantage (Martin 2009, 7).
In lean, the purpose of process development is not to add value for a single customer. However, to achieve this goal, service design has lot to offer. Thereby an interior architecture company like Hallaus Oy should choose tools that endorse process development (lean) in co-operation of business partners, and accentuate the shared added value for customer (service design).
3. Research context and methods
Hallaus Oy is a small interior architecture company which provides services for both consumers and corporative clients. Hallaus was established in 2009. First three years it operated as a trade name, and since 2012, as a public limited company. Hallaus Oy is a young company which wants to grow fast. In 2012, net sales was 23 000 euros and the company made profit. In second year, the net sales was almost doubled. The aim is to double the net sales in first three years, and the target sales in 2016 is 120 000 euros.
Startup companies in Finland are
Younger. Over the half of the companies are less than 10 years old. Less than 10 % are over 25 years old.
Smaller. 60 % startup companies have less than 20 employers.
In services. Approximately 70 % of the startup companies operate on service sector.
All around the country. 46 % of the startup companies and almost 1/3 of the business is located at Uusimaa area in Southern Finland.
Less international. 14 % of the startup companies operate on export business.
Knowledge intensive. The stuff is highly educated. Untechnical innovations are highlighted; formal research and development action is less frequent.
(Kasvuyrityskatsaus 2012, 9.)
Separate small companies form a network that concentrates on solving renovation problems of the customer. Hallaus Oy rounds up a team for every single project. Renovation sites are various and that is why teams are not the same in every case. The partner network however stays the same. The network includes contractors (builders, electricians, plumbers) and other specialiced designers (architects, engineers, garden planners). In addition, there are supporting services like financing, real estate services and personal organizing services for customers who have far too many things. The aim is to increase the amount of network partners from 20 companies to 40 in 2014.
Table 5 categorizes the customers of Hallaus Oy.
TABLE 5. Customer segments of Hallaus Oy
% of all customers
Households at Päijät-Häme region
Homes and leasure homes
Not enough time or skills to renovate by themselves
No idea of the total costs of the renovation project
No knowledge of the building permits and warrants
No idea where to find qualified executors for project
Consumer segments revenue is not at satisfactory level. The aim is to downsize percentage to 20 %.
Local companies, that otherwise would not use design services at all
Offices, shops, training centres etc.
Renovation project engages time recourses
No vision about the space possibilities
Incomplete understanding of the limitations in public renovation compared to domestic
Limited funds. Small investment should make a huge impact
The amount is average. This customer segment has significant hidden demand for services
Insurance companies, real estate managers, other real estate actors
Condominium and detached house renovation projects
Need for local presence (project management) in accidental renovation projects
Consumer’s individual needs is not core competence in large renovation projects
Variation of skills of the local contractors, it is hard to find the good ones
Customer service and project management takes too much time
The aim is to grow this segment into half of the total amount of customers. Doing business with professionals makes processes more fluent.
Bigger entireties would also make working more predictable in a long run.
Local business network is a significant competitive edge for Hallaus Oy. However, working culture among renovation teams must be made visible. Customers should see how liaison and learning from others makes people motivated and devoted. When this positive working climate reflects to customers and potential investors, it will transact as an attraction factor that can not be easily produced or bought.
Significant amount of the customers of Hallaus Oy have never used interior architecture services before. Services have not been available, or the need for services have not occurred. From this reason, Hallaus Oy has a major role in branding the whole industry in its area of business operation. Area extends about 100 kilometers to north, south-east and east from Heinola. At this area of Southern Savonia, Kymenlaakso and Päijät-Häme regions, there is approximately inhabitants, thousands of companies and several large leasure home communities.
3.1 Objectives of the study
The objective of this study was to develop an innovative and customer focused business model, that
combines paraller business sectors as a business network,
ensures that the critical success factors are going on,
is constantly in progress
The research question of this study was: What are the critical success factors in interior architecture business? A sequel question is: By what kind of metrics can the critical success factors be measured?
Critical success factors are a limited group of things that make the business successful. Those things must go on smoothly so that the goals can be reached (Lecklin 2006, 23). The company chooses factors that it believes are the most important ones, and focuses on making on those things stronger. When company grows up, the factors change. According to Keso, Lehtimäki and Pietiläinen, this kind of strategic decision making demands three kind of business ability:
ability to impose company to business field and create a revenue logic that works
knowledge of the different ways of using service or product, and definition of the use value and evolution needs
ability to build up network that supports business, in other words, to find partners that fit to revenue logic, and to rule network business processes.
(Keso et al. 2006, 243.)
Critical success factors of new business model of Hallaus Oy are defined to be
A fair revenue logic. How must a revenue inside network be arranged so that marketing and customer after-care costs are split fairly?
Increasing customer understanding. Customer understanding management might become a new capability in service business. It could even be a competitive advantage, because it takes a lot of time to build and is awkwardly copied (Arantola & Simonen 2009, 32). How network can share and capitalize its customer understanding?
Ongoing development of new service concepts. Faster and smoother processes make profit for companies and for customers. Companies are required to be more and more agile towards customer needs, and that demands interaction. Tools for ongoing conversation and tacit information must be created. This information can be used for creating new service concepts. How can a constant climate of development be delivered and kept alive?
3.2 Research strategy
This study is an action research. Action research is situational, collaborative, participatory and self-evaluative (Metsämuuronen 2005, 217). Research is based on mixed methology which combines qualitative and quantitative research methods (Kananen 2012, 19).
This research consists two separate materials. First material is a structured survey for Finnish Association of Interior Architects SIO. The survey was executed web-based (Kyselynetti.com) in May 16th 2013. From all the members (637 persons) of SIO, 300 persons were selected randomly. 40 responses were received so the response rate was 13,3 %. The aim of the survey was to gather information of how business development is executed in Finnish interior architecture companies, how important is it to cowork with paraller business branches now and in the future, and what kind of threats and possibilities there might be for interior architects in Finland today. Respondents that are currently working as an entrepreneur were selected to closer analysis.
Data is presented in numeric and graphics. Answers to last open question were grouped and explained verbally.
Other research material is semi-stuctured interviews to business partners of Hallaus Oy. Interviews were executed in October and November 2013 at Hallaus premises. The interviewees (7 persons) were selected among companies that constantly and regularly do projects with Hallaus Oy. Topic for interviews was the critical success factors defined for the new business model. Selected companies represent civil engineering, design and retail sales (furnishings and building materials). Entrepreneurial experience ranged from 2 to 25 years. In three companies there are employees and other four entrepreneurs work alone. Annual sales ranged from 40 000 euros to 1.5 million euros. All companies are located in Heinola. Interviews are pivotal source of data because all the interviewees are obtaining of this research, and were therefore motivated to give information for Hallaus Oy.
Research questions were handled in a free order. Interviewees were oriented to used terminology beforehand. Answers were exactly noted, and after that, grouped as strategic trails. A future board was used as a grouping tool. Future board analyzes relevant factors, acting environment and alternative situations as well as the future. Problem is defined and variables are listed. Every factor gets several options (Vainio 2009, 125). Critical success factore were defined as a problem.
4. Empirical findings
4.1 Business improvement needs at interior architecture
Table 6 presents SIO survey results.
TABLE 6. SIO survey results
1. Do you work (or have you worked) as an entrepreneur or freelancer?
2. Entrepreneur experience in years
over 10 years
3. Business branch of the company is…
4. Do you have hired employees in your company?
No, I work independently
Yes, I have employees
I do not work as an entrepreneur *
*) those who answered that they are not working as an entrepreneur
were not allowed to answer previous questions 5-12.
5. How important are these matters from your company’s perspective?Scale: 1= meaningless, 2= some meaning, 3=quite important, 4= very important
Company must get external support (funding, educational services etc.)
Company premises must be reformed
Company must become international
Company must employ people
Company sales must grow
Company must seek and find new customer segments actively
Conspicuousness of the business field must grow
Company must become more well-known
Company’s profitability must grow
6. Have you had any help concerning your business development?
No, and I don’t think business development is relevant
No, I execute business development by myself
Yes, from puclic sector (ELY-keskus, Tekes, Sitra etc.)
Yes, from Ornamo or other association
Yes, peer support from other entrepreneurs
Yes, from elsewhere *
* Entrepreneur study programme, entrepreneutical degree programme
7. Do you co-operate with other companies?
Yes, with companies operating on a same business sector
Yes, with consruction companies
Yes, with other companies *
No, I don’t co-operate with other companies, or I do it rarely
* Other partners: architects, graphic designers, 3D-modelling companies, engineers, other designers and professionals
8. Amount of co-operation
We co-operate regularly
We co-operate randomly if the project requires it
We rarely or never co-operate
9. Depth of co-operation
I work as a sub-consultant
I buy services from sub-consultants
We work together and everyone has her own area of responsibility
We work together as equal partners
* Other answers: The depth of co-operation varys: sub-consulting two-way, various projects with shared responsibilities. No peer-to-peer customerships but deep co-operation anyway.
10. How do you find a need for co-operation in the future?
Prevalent situation is good
I am searching for opportunities to increase or deepen co-operation with other companies
I am not interestend in increasing or making deeper co-operation with other companies
11. Most wanted business partners for me are:
Same business branch companies abroad
Same business branch companies in Finland
Paraller business branch companies abroad
Other partners *
Paraller business branch companies in Finland
* Other partners: Furniture manufacturers, contractors and constructors, structural engineers and other professionals
30 respondents (75 %) works or have worked as an entrepreneur or freelancer. Over a half, 21 respondents (53 %) had worked that way over ten years already. Experienced interior achitects seems to be interested in business development, and they naturally have a lot of practical knowledge about business. 10 respondents (25 %) were beginners, their entrepreneutical experience was 0-2 years. Their interest towards business matters differs from veterans. It might be fruitful to put these people to same table to talk as mentor-actor principle.
Business improvement needs were examined by scale 1-4. 1 presented value “meaningless”, 2 “some meaning”, 3=”quite important”, and 4=“very important”.
Two main improvement factors were (average):
Company’s profitability must grow 2,96
Company must become more well-known 2,89.
Two least important improvement factors were
Company premises must be reformed 1,85
Company must get external support (funding, educational services etc.) 1,78.
At the moment, construction industry is suffering in Finland. Interior architects have faced the fact, that building costs are decreased with any possible means. Usually this is done by cutting design. Challenge of company’s profitability is that way connected to the big picture of economy.
Getting to be more well-known turned to be second important factor. Interior architects that operate as entrepreneurs should take more intensive grip to marketing and branding challenges of whole business branch.
Question 6 discoursed help in business development. 15 respondents (42 %) told that they are exeduting business development independently. 9 respondents (25 %) told that they had received peer support from other entrepreneurs. Puclic sector actors like ELY-keskus, Sitra or Tekes had helped in 5 cases, and 4 had received help form Ornamo or some other association. Other sources mentioned were entrepreneur study programme and entrepreneutical degree programme. Only one of the respondents notified that help has not been available, and business development is not relevant.
Half of the respondents told that they co-operate with other companies regularly. Random co-operations was mentioned by 8 respondents, and 5 respondents told that they co-operate rarely or never with other companies.
Results to question about the depth of co-operation scattered quite much. Almost half of the respondents told that they work together the way that everyone has her own area of responsibility. This is expectable according to regulations in building and design in Finland. 2 respondents work as sub-consultant, 3 orders sub-consultant work from others and 6 respondents work with others as equal partners. At open answers it was mentioned that the depth of co-operation varies. It is not necessarily a peer-to-peer customership, but the nature of co-operation is tight. One respondant highlighted that all co-operators have a customership with constructor, and only this external customer relationship is significant.
Increasing or deepen co-operation would be a desiderable trend for over half of the respondets. (13 persons, 54 %). Prevalent situation is good for 10 respondents (42 %). Only one person notified that increasing or making deeper co-operation with other companies is not desirable.
It was remarkable to find out that not one of the respondents found foreign collegue companies the most wanted partners. Even paraller business companies abroad did not get endorsement; only one person finds them as wanted partners.
Last question of the survey was an open question about business possibilities and threats for Finnish interior architects. Some respondants criticized the way interior architecture is presented in media – expecially tv-programmes. This raises uncovered expectations and confucion among consumers. On the other hand, some good aspects are seen in publicity as well. Appreciation towards interior architecture is growing, and “for suitably networked professionals there is plenty of work to do”.
4.3 Revenue logic of business network
Revenue logic of Hallaus Oy consists actice and passive revenue streams. Design fees from customers are rated per hour. In addition, percentage comission is charged from business network partners. It covers the costs caused by supervision, marketing and customer care. Moreover some revenue is gained through retail. A customer might want her purchase billed all at once even if products come from different suppliers.
Business partners were unanimous about clarity of percentage comission system. Rules are similar for all. At the same time, few interviewees reminded of the fact that financial benefit is not only, or even primary, goal: network strengthening, shared customerships and learning from partner companies were seen much more significant than mutual money movements. Renovation contractors pointed out that seasonal fluctuation can be reduced as a result of networking. Renovation sites can be shared and scheduled better, personal workload is leveled. Even holidays can be kept together with family at the first time.
4.4 Increasing customer understanding
Lack of customer data gathering and utilization of feedback is a soft spot of many small companies. The entrepreneurs interviewed paraphrased that they all ask for customer feedback. “Even if reclaims are the most booming feedback. If there is silence, then everything is ok, I suppose.”
For customer understanding, it is important that
”Vendor has a face; things are done interpersonally.”
”Initial data of a renovation project is examined properly. If customer has bad experiences from previous renovations, then we automatically are behind in customer satisfaction because we fix errors made by others.”
”Processes of a customer are identified well.”
”Customer data is documented, and files are available for all.”
”Increasing customer understanding must cause increasing service demand.”
From customer’s point of view, it is important that she is aware of things that are happening on her property, she stays informed during the project, and is not outsourced from her own case. All interviewees were able to see this from customer’s angle.
Every interviewee requests customer feedback. Things are discussed, no structured form or electrical technology is used. System exercise was seen very important as long as system use is as simple as face-to-face conversations.
4.5 Service concept development
Customer often has trouble understanding the total costs of renovation project. The most significant reason to reclamations is budget crossing. To avoid this, network co-operation is supreme. Partners know each other’s cost structure, and are thereby capable to estimate total costs of the project in advance. This, together with finished and elegant renovation output, increases trust towards network companies. This trust and happiness must be turned into customer’s willingness to recommend services of Hallaus Oy. Happy customers are the most important marketing channel in interior architecture business.
Selling consultant services is a hard business. Interior architects are often evaluated by cultural expectations. Media has created stereotypes about occupational tasks. Prejudices are strong between professionals as well. Designers do not understand building, and builders have no idea what aestethics is. These, partly gender-related preoccupations should be demolished. Every labour input is significant.
Interviews indicated service consept development as the most significant critical success factor, because through that Hallaus Oy can specialize on its core competence: renovation planning and producing, and by doing that, strenghtening its brand on disjointed market. This can be done rapidly. Transition from consumer-centred service provider to b-to-b- actor is the most significant chance in business model of Hallaus Oy. New service product targeted to real estate actors, SAMU – saneerauskohteiden muutospalvelu (SAMU renovation services), was lauched in April 2014.
Producing new service products leaded network partners to discussion about formal incorporation. In this topic, the opinions were cautious so far.
4.6 Metrics for critical success factors
What comes to revenue logic, analysis of cash flow statement has been started montly, not casually like before. Financial balance must be attended so that liquidity stays high and profitability will grow. Investments to business development activity must be controlled. Hallaus Oy must survey passive revenue streams more closely, so that the amount of work does not grow at the costs of entrepreneur’s personal life. New customer accent and service products also aim at better business profitability.
For increasing of customer understanding, Hallaus Oy now verifies net promoter score rate during renovation project and instantly after it. The situations have proven to be emotionally different to customers. Customers might be critical and anxious during the project, but inevitably happy when the work is done. That is why score must be measured twice, not only at the end.
Build–measure–learn- loop will be a main tool for service concept development in the future. Some previous customers have engeged to service development as well. Via these customers the network culture is presented outward. This supports brand knowledge.
5. Discussion and conclusions
As an outcome of this research, the lean canvas is presented in figure 5.
On creative industries, it is important to search for innovative and even experimental solutions for business development, if you have urge for success. What kind of strenghts could a small professional service business company have, when it comes a time to grow? One good thing is a capability to look things from a different perspective.
In a beginning of a project, in 2012, ten Heinola based entrepreneurs started to practice different kind of business to execute renovation projects. Facilitated by Hallaus Oy, more intence and communicative way to work was imported to renovation sites. This kind of co-operation has naturally existed before: contructor knows a plumber, and so on. What was new is, that actions are administrated by a designer, network has an aspiration towards standardized processes and learning from each other, and the network wants its co-working culture to become visible. Customer was positioned in the middle, and her opinions about the fluency was asked during the process and as well as at the end.
Network assiciation demands commitment and sacrifices from its members. You must open your ideas to other entrepreneurs, be honest and reliable partner in all situations, and respect other people’s labor input. Every member must get a fair and satisfying income. Money is a central part in business, and transparency of a revenue logic is a way to contribute fair network climate. How tight memberships will be composed in the future, and how the group dynamics chances when new companies join in, the time will tell. However, the new business model has already caused positive results: seasonal fluctuation has decreased, learning from each other has enhanced processes, and customers revere the quality of service. In addition the network has overtaken new target customers, and systematic exploiting of customer data has been started. Just convestions about the significance of customer understanding made network companies think and act more customer-oriented way.
Renovation business in Finland is multi-colored and regionally shattered. At Päijät-Häme district, there is plenty of labour, but at Helsinki metropolitan area it is already hard to find skilled and reliable constructors. Costruction business needs renovation education programmes. Otherwise the business is in trouble. Expertise on renovation will disappear through retirement. Learning by doing, interaction skills and entrepreneutical way to work should be well represented in renovation studies.
Throgh the times, building new houses and designing public spaces has given steady income for interior architects. Economical resession in early 2000 has radically diminished building business in Finland. Sadly, interior design is easily cutted out of building projects. That is paradoxal, because the expertice of interior architects consists issues that customers value most: functionality, safety and atmosphere. There should be enough design recources available throughout the project. This is an effective way to improve customer experience.
Designers should make themselves familiar with practical building execution and visit building sites more often. Only way to become a designer who understands customer needs, is interaction with builders and other project members as well as customers. Contractors, from their part, should understand that a designer does not do things similarly every time, because the clients are not identical either. A good designer recognizes customer needs in a holistic way and is capable to justify design decisions in a technical and cost-effective way as well.
Third critical success factor of the business model, ongoing development of new service concepts, turned out to be more important than anticipated. Well-designed, highly productized renovation services can be the key factor that helps Hallaus Oy to achieve its aims sooner than expected.
Topic for further study is to create a web-based data management system for renovation network and customer communication. This idea came up in several partner interviews. Preparation work started right after the interviews. If the project gets financing, the system development starts at spring 2014. Data management system and quality manual are products that can be licenced.
In the future, the aim of Hallaus Oy is to develop its business model towards more intence and diverse co-operation with its network. New business model was launched and it is continuously renovated. One interesting future possibility is to productize and establish a franchise-business chain that provides renovation and design services nationwide.
Susanna Halla, Interior Architect, Entrepreneur (CEO), Hallaus Oy Ltd, email@example.com
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Innovations are crucially linked with the business sphere. Without the competitive market environment and appropriate innovation policy, the enterprises are not able to discover and make the best of new business opportunities through innovation (Schumpeter, 1939, Drucker, 2008). Entrepreneurship under non-stable and risky environment, brings to entrepreneurs new dimension of skill development – not only high level of professional skills, but multipart model of basic managerial skills required for decision-making and risk taking in innovative entrepreneurship as whole. Traditional models of innovative behavior cover only few variables like structure of organization, climate, processes and leadership without dynamic points such as behavior of elements (Lehman, 2002, Burke and Litwin, 1992).
The purpose of the paper is to examine how important role play strategy preferences as quality improvement, human resource care and others in the area of openness for cooperation in innovation and find the answer to the following questions theoretically defined (Kimberley, Cook, 2008): (1) Which factors support innovative environment in the organization? (2) Which kind of organizational values must be used to adopt innovations, under risk and support future cooperation? According to the review of literature that was carried out in advance of any primary research being undertaken, nobody has yet tried to combine this area of values to compare. A detailed analysis of the data is still in process but early indications suggest the following results: (1) According this to suggest recommendations which could be used in the future as a metrics for innovative spirit evaluation. (2) Finally, we believe, that SMEs should be more innovative and competitive when they cooperate, so the entrepreneurs, who support external cooperation, reach more longevity in their products. Small businesses offer their new services and products on the local market, inspired by original global product, so they mostly offer cheaper, home-made imitation of some innovation activity (Pichlak, 2008). In many case studies, firms between 10 to 49 employees are proactive in the process of on-going learning and innovative process. They are still under the pressure from the market to offer unique product or service to survive and to be competitive. They exist qualitative and quantitative barriers to support innovative climate within organization based on owner’s personality, financial sources and others competencies which could cause low innovative activity (Ćwik, 2007).
According to Pichlak (2008) and Ćwik (2007), there are in the paper, specific tasks to solve: (1) What behaviour will support innovative and cooperative behavior of small business? (2) Pichlak (2008) specified types of innovation – which of these should we find in the strategic behavior of small businesses? According to this part of questionnaire we set up two main quantitative-based hypotheses to be evaluated in the case of the innovative spirit in the whole sector.
H1: Enterprise, which was in the period 2009–2011 in decline business phase (without any innovation potential or cooperation vision), will mainly evaluate their priorities of business in grades of 5-7 (average and higher rating) as a priority to survive in the market in most areas.
H2: As a final connection to the innovative approach for businesses, if a company invests more than 5%–10% of their turnover toward innovative activities, they will have high priorities in external cooperation for innovation.
Entrepreneurs as individual entities in the market, require resources such as labor, information, skills and capital for their businesses. They often use friends or informal contacts to acquire these and to contribute to knowledge generation. During a period of economic crisis, the role of the entrepreneur has changed. Entrepreneurship is based on decision making in an environment full of uncertainty whilst pushing businesses into an innovative but risky strategy application and finally acquiring new knowledge (Nijkamp, 2003). Most of previous studies simply describe the effect of new business formation activity on a performance measure with some control variables; however, some studies have applied an explicit production function framework. That also contains indicators for the contribution of other inputs to growth (Wong et al., 2005, Audretsch et al., 2004, 2006). Monitoring the degree of flexibility can encourage greater creativity and focus on strategic planning and management in small and medium enterprises, which is so often underestimated. Subsequent delay introducing changes could cause major changes in behavior and may influence the ultimate effectiveness of the strategy.
Nowadays we deal with changes, which could be managed, mainly with innovations, which assume creative and untraditional thinking. New ideas and vision formation, acceptation of all ideas, formation of model situations – that all form the basis of change command. Most frequently we are finding the conception – systematic innovation – because innovations play basic role in actual economics and social transformation. Above mentioned ways produce a very flexible and opened organization, where people will accept and adapt to new ideas and change through shared vision. Building a learning organization is a means to become an innovative company. As new outputs, innovations may come from new knowledge as well as from the combination of existing knowledge to create innovations (Henderson and Clark, 1990), using combinative capabilities. The strategy is very important because if the innovation is not in a line with the strategy and internal environment, the innovation may fail and thus the learning-innovation link will not be related to performance. The key determinants of innovation are strategic behavior and market-oriented strategy. The organizational and strategic processes, which are have a social character, now replace the technological process. The agents of innovation are executives and professional managers rather than technocrats. Those innovations need to be guided by corporate strategy that the management tries to control. We can say that strategy must be a well-known and long developed concept. However, strategic behavior requires understanding of corporate needs today to create future value rather than control costs. It requires not only manager’s knowledge of their enterprise but also the entire economic chain, markets, and present and future competitors (Vlček, 2002).
Research context and methods
General business environment of the 21st century is mainly characterized by rapidly changing factors which are needed to address. Among the main factors that pushed the growing needs of innovative activities are according Rylková (2011), in particular: (1) Shortening life cycles of products and the need to develop constantly new and better ones. (2)Technological progress (nanotechnologies) is new opportunities for businesses (3) turbulent market globalization and the presence of new competitive threats, which means that missed opportunity becomes threat to businesses. (3) Demands of customers (cheap, quickly, high quality).To be able to withstand in competitive environment, the company must never interrupt development of new products/services. Therefore, when a product or service is successful on the market, innovation, which will replace it, must be worked on. Innovative activities are closely related to the firm’s survival on a globalized market and with competitiveness, which specifically reflects in the continuous process of renewal and improvement of goods and services production, production process and economic potential of enterprises.
In this survey we aim to identify the effect of investment on innovation, strategy preparation and the relationship between financial ratios and the performance of the company. To test the propositions, a field survey using questionnaires was conducted. The questionnaire survey was conducted with owners and managers of small and medium size businesses in the Czech Republic (under 250 employees) operating between the years 2009–2011. The companies fulfilled the criteria of (1) being designated as small and medium sized companies by their number of employees – fewer than 250, and (2) agreeing to a personal visit. Out of the total number of companies (722) entire 89% fall in SMEs according to the categorization (2003/361/EC). Survey finally participated 670 companies.
The questionnaire had six sections to describe dynamic factors, which influence company behaviour; these were strategy performance, crisis and risk management, personnel policy, production and innovation, grants and supporting policy and environmental policy. Data obtained from questionnaires were analyzed through the SPSS statistical packet program. The questionnaire was focused on seven areas of interest (51 questions): Strategic Enterprise Management (6 questions), Economic and financial business development, risk management (11 questions), Personnel policy of the company (7 questions), Production, Service and Innovation (8 questions) Grants and subsidies (4 questions), Energy and material savings and use of renewable resources (8 questions), Priorities in business sustainability (7 questions). Results were coded using a Likert scale (1–5 for non-numerical data and extended 0 to 10 in the last section for innovation potential measurement).
The sample size (n) was calculated by using the formula recommended by Olaru, Dinu, Stoleriu, Şandru and Dincă (2010, p.15).
t….confidence level, corresponding to probability with which the accuracy of the results will be guaranteed, from the statistical tables of the Student distribution
p….prevalence, probability or proportion of the sample components that will explore the problem.
ω…….acceptable margin of error.
The sample size corresponds to recommended minimum value in probability of 0.95. The minimum sample size was computed according equation (1) as follows:
t value in α = 0.05 is 1.96, p value = 0.5559 is counted as proportion of businesses, which will be in a “good – B group” according ČEKIA stability rating for the year 2011 (ČEKIA, 2012), ω = 0.05 is acceptable error limit of 5 %. Minimum sample size = 1.962 x 0.5559 x (1 – 0.5559)/ 0.052 = 379.36 respondents.
Innovative activities are closely related to the company’s survival in a globalized market and with competitiveness, which is specifically reflected in the continuous process of the renewal and improvement of goods and services as well as production processes and the economic potential of enterprises. The last question, which united the image of the services sector for this article, concerned the priority evaluation in the field of human needs, optimization of efficiency in terms of personnel, processes and products, as well as the attitude of the company towards the environment and how it contributes to the reduction of current and future costs, including improving the quality of production.
In this study, the sample consists from 50.1% of limited liability companies, followed by 29.4% of sole traders who slightly exceeded the threshold for representation, other forms not exceeded 19.5% (joint stock companies or without answer). To describe a proper picture of the current situation, we were interested in the average annual gross turnover of the period 2009–2011, which shows us that nearly 29.7% of the companies had an annual turnover of up to 10 million CZK (Czech crowns, nearly 400 000 €; exchange rate 1€ per 25 CZK). On the other hand, 21.7% had a turnover up to 1 million CZK (40 000 €). The third main group of 22.1% of companies achieved turnover up to 100 million CZK.
In the area of company size, there is significant to mention, that in our sample more than 42% of companies stated to have up to 10 employees and 25% of them were between 11 to 50 employees (sole proprietors had a share of 9% only). Support of innovation spirit is also connected with business cycle of the company. Most were businesses that have agreed to be in a growth phase. This phase concerned 50% of respondents. On the contrary, 39.35% of companies claimed that they are in decline. This ambivalence is a very interesting phenomenon and definitely worth it for further analysis.
Although it is continuously recommended, how important in volatile market conditions it is to innovate, our companies from the sample obviously do not comply. Only 30.2% of companies stated that 1% of turnover is invested to their innovation activities. Another category, 1–5% are not much better, full 31.9% of companies investing in innovations only 5% of their turnover. Innovative activities are closely related to the firm’s survival on a globalized market and with competitiveness, which specifically reflects in the continuous process of renewal and improvement of goods and services production, production process and economic potential of enterprises, there was the reason to compare two areas – an investment and revenues from investment (see fig. 1).
As mentioned above the revenues are balanced with costs of investment in significance level of 1%. It is comparable with official statistical data, that usual rate of return ratio in innovation area in service sector is 0.9 to 1.4% from current turnover, after that the investment isn’t profitable (CSO, 2012). It is connected with the type of innovation, which SMEs prefer to provide – their main products (compare with fig. 2) to deal effectively with customer demand.
Potential evaluation for network building
Finally, all factors in area of innovative and sustainable business were taken from previous official national research results (CSO, 2012) and previous studies made by Pawliczek and Piszczur (2012) or Rylkova and Antonova (2012). Seven questions were asked in order to make a judgment within the extended Likert scale of 0–10, with 0 as zero priority and 10 the highest priority. The question about priorities of companies in the field of sustainable business and supporting creativity and the innovative spirit in the company was composed of 7 parts:
The fulfillment of basic human needs (working space, customer and employee satisfaction); (NEEDS)
Prevention of loss and waste (reduction of current and future costs); (LOSS)
Improving the quality of production; (QUAL)
Optimization of resource utilization (labor, raw materials); (RES)
Extended lifespan of products (extending their potential profitability); (LIFE)
In each business, we would find different priorities in relationship with business cycle and strategic change. Overall priorities could be described in followed table:
According simple analysis, the most important priorities for sustainable business are fulfillment of basic needs, performance and quality aspect. As being noticed, 75 % of companies (25th percentile) reach the mark of 6 or 7 from the scale of 10. Finally, the fourth component as prevention of loss achieves the maximum mark in 75th percentile (compare table 1 and 2).
Relationship between two directions – strategy and sustainability confirmed the conflict in planning future of the business and could be seen that values are statistically valuable in α=0.05 only in expanded plan, so in a group of A ranked businesses, in business cycle of growth. In other groups it doesn’t make sense to conclude that those priorities aren’t important. They should be, but they are not in a harmony with other parts of analyzed units (compare table 3 and 4).
Table 3. Business cycle and Sustainability. Independent T-tests,α level = 0.05
As could be seen below (tab. 4), small companies in area believe in their own resources or they do not have any strategy for the future cooperation to support innovative spirit in their local area. A small group, especially in the group of “above” average investors could be seen “spirit of external cooperation” in the form of partnership with Universities, technology centres or in the form of open innovations.
Table 4. Internal and External Sources of Cooperation in Innovations
In our paper, we set up two main areas to evaluate as follows: Enterprises in decline period and their priorities and enterprises with innovative and cooperative potential.
Hypothesis 1: Enterprise, which was in the period 2009–2011 in decline business phase (without any innovation potential or cooperation vision), will mainly evaluate their priorities of business in grades of 5–7 (average and higher rating) as a priority to survive in the market in most areas.
The answer is supported by previous analysis, made in the table 4. Main priorities for businesses in the decline period are (1) The fulfillment of basic human needs (working space, customer and employee satisfaction), (2) The harmonization of the environment, (3) Optimization of resource utilization (labour, raw materials); and Quality. Finally, in the statistically significant areas they achieve marks above 6, so H1 must be confirmed.
H2: As a final connection to the innovative approach for businesses, if a company invests more than 5%–10% of their turnover toward innovative activities, will have high priorities in external cooperation for innovation.
In this phase of survey, growing businesses belonged into the group of innovation investors, who invested mainly into 5–10 % of their turnover. The sample was divided into three main groups of those innovative investors:
First group, investors up to 1% (30.7 % from the sample) of their turnover, there is consisted of the group in decline stage (41.3 %),
Second group (1–5 %, 32.4 % from sample), relatively the most frequent value for companies in a growth stage (56.2 %).
Last group, 18 % from the sample, mostly from businesses in a growth (53.7 %), but a second group formed her – businesses in decline – 34.3 %.
This analysis is confirmed by correlation coefficient (better relationship, and statistically significant = 0.349, sig. = 0.000, α = 0.05 and χ2 test value 63.570, df = 30, sig. = 0.000). The hypothesis 2 we can statistically confirm on α level 0.05. Also, we can add connection with the table 4, priorities in cooperation, where are external factors of cooperation dominating.
Discussion and conclusions
The survival of the business unit not depends only on the area of business, but according the previous analysis, on non-financial ratios, like cooperation, level of project management and others. Very important factor, for future analysis, is to examine an impact of green behavior on innovations and innovation types provided. The importance of these factors rapidly increased in multistage analysis.
The practical value of the non-financial information regarding the correlation between significant factors for business success within innovation implementation is very important for predicting and evaluating current and potential situations. It would be helpful when working with the causalities of failures in business sector, because each innovation process needs a good business plan and must be evaluated (Altman, et al, 2008).
It is very important to understand, that the overall approach of one aim fitting every business unit is not true. In the previous analysis we briefly identified the main drivers of innovative behaviour across the life cycle theory. Previous experience in Germany supports our study with the argument that 57% of their respondents do not have a well-defined innovation strategy, against 19.4 % of non-innovators in 2008 (Bessant, Davies, 2007, p.89).
Innovation in manufacturing is not seen as a separate activity, represented by different characters, but as a set of activities leading to the creation of new complex solutions. Decisive role in increasing the competitiveness of companies (respectively the economy) is played by productivity growth. Driving force of the Czech economy seemed to be, also according to this indicator, mainly manufacturing, however, the service sector, contributed significantly to this growth – businesses increase productivity not only by use of new ”hard” technologies, but also the use of modern information systems, modern management methods, efficient financial services and other including outsourcing these activities. In today’s strengthening trend of economy, increasing interconnection of industry and services is still apparent.
Finally, it should be emphasized there are limitations of the available data giving evidence of innovation activities in the service sector. Available data are still tied to the traditional model of innovative activities related mainly to technical innovation in the industry and R & D activities (Pawliczek, 2011). Characteristics of innovations, way they originate and where their barriers are, however cannot be read in detail of the data. However, this survey was conducted on firms of Czech Republic, especially in the Moravia-Silesian region; so findings might not be transferable to all types of organizations. Thus, it is recommended that further researches can be conducted on small-scale organizations and in different regions for the transfer of findings.
This paper was supported by the project ”Innovation of Educational Programs at Silesian University, School of Business Administration in Karviná” n. CZ.1.07/2.2.00/28.0017.
Jarmila Šebestová, assistant professor at department of Management and Business, Ph.D., School of Business Administration in Karvina, Silesian University in Opava, Czech Republic, firstname.lastname@example.org
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In December 2012, the Danish Government launched the national innovation strategy of Denmark: ’Denmark – Land of Solutions’. A new paradigm for the future policy of innovation was thus initiated.
The innovation strategy is launched to ensure that Denmark’s competitive advantages in research and commerce/business are transformed into new growth and job creation. Concurrently the strategy aims at contributing to ensuring the development of innovation solutions to global challenges and aims at heightening/improving the knowledge transfer between knowledge institutions and companies (Ministry of Higher Education and Science, 2013).
To support innovation projects at Academies of Professional Higher Education and University Colleges the Danish government has allocated 40 million DKK (5.3 million Euro). This funding is initiated in order to support practice based innovation projects and in order to enhance the quality of the educational programmes. Academies of Professional Higher Education like the International Business Academy – IBA – are thus able to enhance and support research and development activities in companies by developing concrete innovation projects, bringing their unique knowledge and competences into play.
Based on the innovation strategy and the IBA’s development contract with the Ministry, and as part of the IBA’s development activities aimed at enhancing the focus on innovation in the educational programmes, the overall development project ‘Applied Innovation’ was initiated. The Ministry of Higher Education and Science financially supported the project.
As the IBA’s overall development project ‘Applied Innovation’ consists of various projects, the case study (and hence this paper) is based on the programme Bachelor of International Sales and Marketing Management. The case study involved 100 bachelor students and the two authors of the paper, both lecturers at the programme in the period of November 2013 to February 2014. The students and lecturers collaborated with the Danish subsidiary of an international company (referred to as the Company). The project spanned three months and was designed to encompass the following phases: 1. Development of the concept ideas; 2. Commercialisation of the concept ideas.
The project has to be seen as a continuous learning activity and the project was comprised of new exams addressing innovation processes and commercialisation, in addition to the already listed development aspects. The research method of this paper is the case study. The case study is by nature interpretative and is based on an interpretative and constructive epistemology. The empirical evidence of the case study is based on examples of presentations and the documents, which describe the innovative concepts and ideas developed throughout the project. Furthermore the study also tests the explanatory application of some of the theories from the educational programme.
As an overall theoretical approach Piihl and Philipsen (2011, p. 35) ”Linking Teaching Curriculum to Theory”, figure 1 is applied. This approach, as the figure illustrates, consists of two modes: Teaching Curriculum and Theory of Application respectively. Piihl and Philipsen’s (ibid.) objective has been to develop a theoretical framework which ensures a structured way to describe, analyse and clarify the challenges that may occur in designing higher education curricula in order to promote both rigour and relevance. Concurrently Piihl and Philipsen (ibid.) address the need to link relevance and competences. They emphasise the need to design teaching curricula in ways which include the context, e.g. a business, to which the students are expected to contribute upon graduation.
Piihl and Philipsen’s (2011) typology is gauged to be relevant and is applied in the case study presented in this paper, in order to situate some of the bachelor programme’s activities in a framework and broader learning perspective. This enables us to address the IBA’s curricula and theory-of-application, and mirror the case study presented in this paper as an exemplification of the Danish Government’s initiative for enhancing the knowledge transfer between higher education institutions (in this case the IBA), bachelor students and a concrete company.
Below some of the core elements of Piihl and Philipsen’s (2011) typology are outlined in order to tease out the differences between Mode 1 and Mode 2, particularly pertaining to the role of the student.
Mode 1 can be described as the classical approach in which knowledge production takes place at research institutions working within defined disciplines (Piihl and Philipsen, 2011).The IBA bases learning activities on this research-based knowledge and the aim of the teaching is to improve the students’ skills and understanding of existing knowledge: “to make students proficient regarding existing knowledge”. This means that in mode 1 HEIs deliver teaching and the argument is that when graduating the students have obtained a given knowledge and can subsequently function as experts and advisors.
Piihl and Philipsen (ibid.) argue that knowledge production is not restricted to occurring in one place but is closely joined to the application context. Knowledge production occurs in a myriad of places such as universities, companies etc. Mode 2 thus observes knowledge production from the perspective that knowledge is context dependent (Piihl and Philipsen, 2011).
The aim of teaching in Mode 2, is “to reach enterprising student knowledge creation competences through case and problem oriented types” (Piihl and Philipsen, 2011, p. 38). Different types of cases, and problem oriented learning through active co-creation of context dependent knowledge form part of the lessons. However, as Piihl and Philipsen (2011) emphasise, case-oriented learning need to be based on an interpretation of the reality which a case presents. Therefore students also need to test the taught and learnt in a practical context.
Based on the above, the framework for this paper rests upon an understanding of the following:
That the collaboration with the company ensures proximity to practice (context) and industry embeddedness beyond case training.
That the collaboration draws on the students’ transdisciplinary knowledge and skills obtained through modular based and theme-based teaching.
That the module upon which this paper is based is the module Innovation, which has subthemes, and which can be divided trans-disciplinarily (Table 1).
We contend that Academies of Professional Higher Education and University Colleges, and the concrete curriculum, are characterized by having a different approach to knowledge production than that of the general perception as depicted in Mode 1, but not necessarily to the application of the produced knowledge.
The case study
The case study is part of the Bachelor’s Degree Programme in International Sales and Marketing Management at IBA, Kolding in Denmark. The Programme covers a number of overarching subject areas to which the educational elements (themes) are related. The educational elements are compulsory and trans-disciplinary.
The theoretical approach to the subject Innovation consists of a number of trans-disciplinary elements to understand a company’s innovative platform, creative processes and value-based management. The objective is to give students the competences to be able to enter into a company’s work with planning and implementing product and concept development. In doing so a specific company is involved in practice based learning and the context of the Innovation process is based on real life complexity.
This case study focuses on the results of phase 1 – the development of ideas for new concepts. In this phase the applied knowledge and innovation activities were part of both the lectures and part of the work pertaining to the specific challenges presented by the company. Essentially, the assignments rose out of a real need for new ideas and new perspectives, a need which the company faced. Consequently the purpose of the collaboration was to let the students, based on their knowledge, develop new innovative concepts related to the company’s products and services and related to the company’s existing markets and potential markets. Furthermore the project aimed at enhancing the students’ innovative competences in an applied context.
The study curriculum Bachelor of International Sales and Marketing Management
The course element Innovation is part of the semester theme: The background for a Company’s Sales and consists of trans-disciplinary course subjects (Table 1).
Table 1. Overview of course subjects seen in a trans-disciplinary perspective (excerpt from curriculum)
Compulsory course element Innovation 5 ECTS
Sales and Marketing
Product and concept development and processes
Supply Chain Management
Consequences of innovation for a company’s supply chain
Assessment of the innovative platform along with a company’s innovative processes and incentives
International and EU Intellectual Property Rights Law
Project Management and measurement systems
Source: Curriculum BA of International Sales and marketing Management (2011)
The curriculum of this course is based on both relevant and theoretical concepts ensuring that competence-in-practice can contribute to explaining the practical part of knowledge. In spite of differences at different institutions of Higher Education and curricula, the study programme Bachelor of International Sales and Marketing Management is situated within Mode 1 pertaining to knowledge, while remaining firmly rooted in Mode 2.
The case company forms a learning context and is briefly presented below:
The Company has approximately 500 employees. The headquarters and main warehouse are based in Kolding, Denmark. The Company is a subsidiary of a German family-owned company. The core business has a product range for craft and industry that comprises over 100,000 items, ranging from screws, screw accessories and anchors to tools, chemical-technical products and personal protection equipment
Research-based Mode 1 knowledge introduced during the course
In this case study we do not present all the theoretical approaches (Mode 1) to innovation which the students may know about and apply, and which may be relevant to include. Rather we briefly present selected theoretical elements from the relevant curriculum, and study plans viewed from the perspective and scope of the collaboration with the company.
Innovation is often described as changes in what companies offer the world in the shape of products or services, and the way in which the company creates and delivers these offerings – in other words, process innovation. Moving beyond the steady state conditions of ’doing what we do better’ to ‘doing different things in different ways’ becomes the norm, according to Francis and Bessant (2005). This approach to innovation can be criticized for not including markets and business models in relation to the capabilities of the innovations. Tidd et al. (1997) in Francis and Bessant (2005) characterise these omitted models as the four P’s, which Arlbjørn et al. (2010) similarly apply as a point of departure for innovation in a company’s supply chain. Therefore it is relevant to include both analyses of the scope of innovation, and a company’s business model in the context of the potential effect of innovation and concept development on the company.
According to Hamel (2000) a business model is the business concept of a company put into practice. Hamel’s argument is that competition does not occur between products or companies, but between different business models. Hamel (ibid.) emphasises that innovation should also occur as a continuous development and adjustment of business models, and Hamel hereby invites the discussion of innovation within a company not only to pertain to products and processes, but also to be assessed based on the implications for the business concept. When a new business model for example alters the economy in an industry and is difficult to replicate, it creates a competitive advantage (Magretta, 2002). This element is relevant to include in the students’ knowledge and in their assessment of the business models. A pertinent point being that they should not equate business model with strategy cf. Magretta (ibid.).
Francis and Bessant (2005) purport that it must be assumed that an innovative company has to possess ‘innovation capability’. That is to say, both capabilities and capacities that permit it to obtain advantages by implementing more and better ideas than its competitors. In that context, it is interesting to observe and investigate the innovative trajectories a company has pertaining to development and innovation. Tidd and Bessant (2010) define innovation capabilities as capabilities to improve products and services, which can be targeted to four core areas (the four Ps):
Innovation to introduce Products
Innovation to introduce or improve Processes
Innovation to define or re-define the Positioning of the firm
Innovation to define or re-define the dominant Paradigm of the firm.
All four can be pursued at the same time. The four P’s provide a structured approach to examining the opportune scope for innovation.
Innovation capabilities are not cf. Tidd and Bessant (2010) a unitary set of attributes. It may occur that the capability which is needed in order to support some aspects of a company’s innovation conflict with those that support other innovative endeavours. This situation is a pivotal argument which Christensen et al (2000, 2002) present as the innovator’s dilemma in dealing with both sustaining and disruptive innovation (initially seen from a technological perspective).
Disruption as an approach to innovation and concept development
Disruption as an innovation method is widely applied in different contexts with the perspective of creating or generating something that is new (Kim and Mauborgne, 2005; Christensen et al., 2002; Dru 1997). The concept is applied in this case-study predominantly from Christensen et al.’s (2002) definitions and recommendations on application, and is then broadened and applied in other settings.
Christensen et al (2002) point to two general strategies which can lead to ideas bringing forth disruptive growth. The first strategy is based on the fact that a market is identified as a subject for disruption, and the second strategy is based on the disruption of the existing business model. They emphasise that ideas that give rise to the disrupting of new markets are the most prevalent innovation strategy. To test such ideas, Christensen et al (ibid.) present a litmus test, and the results of these can assist managers and executives in distinguishing between disruptive and sustaining ideas. Thus Christensen et al present two types of approaches to innovation: Sustaining versus Disruptive Innovation. They define sustaining innovation as innovation enabling products and services, already valued by customers at mainstream market, to perform better. Disruptive innovation creates a new market, by introducing new types of products, services and concepts.
While Christensen and Overdorf (2000) discuss and create a framework on how companies can evolve capabilities to cope with change, Dru (1997) presents a framework from a marketing and branding perspective on how to create disruptions by overturning conventions. Dru’s framework consists of three steps. The first step consists of identifying the present conventions in the industry and market. The second step consists of being disruptive by questioning how things have been done hitherto, and it is during this process that new ideas develop into new concepts, by disrupting conventions. Considering these different approaches to disruptive ideas, Anthony et al. (2008) argue that disruption can also involve a company in doing what competitors will not do. In the third step, a vision for the new concept, still loyal to the overall brand of the company, is developed and formulated. It may nonetheless challenge the existing business model.
The objective of bringing this knowledge into the learning process for the students has been to present them with the knowledge that disruption, as a method of innovation, can take place in different areas; and also to make them aware that the approach can be applied in a broader perspective and setting, pertaining not just to technological innovations.
Based on a variety of theoretical approaches and on the project learning as presented in the curriculum, the students will be exposed to the context (Mode 2 Theory-of-Application) – Innovation in Reality. They are expected to approach the task not in the role of experts, but in the role of change agents who have to work with problem identification, interpretation, analyses and innovative solutions. Thus they worked intensely for some weeks with a case company on the challenge presented below to develop a concept for tools for a specific B2B market or to develop a concept for measuring tools for a specific market of construction customers.
To provide a reference and insight into the context of the Company the students were presented to the Company according to the frame below. This in order to provide a frame of understanding for the students’ encounter with context of application.
The students are introduced to the Company during a visit to the company. They are introduced to the history of the Company, the values and products. Some students proactively ask questions with clear reference to the literature and attempt at getting close to the headline of the project assignment ‘Applied Innovation’.
Excited to hear about the processes of product development, idea generation and innovation the students are introduced to one of the most important persons in the Company – the innovator who has many years of experience in the Company. Based on the account from a valuable member of staff with a talent for choosing which products should be part of the product line the students obtain insight into how the product development occurs and where the ideas come from.
Most of the ideas come from the morning shower and the students are almost led into the homes of the employee’s bathroom where the morning shower can take forever because the ideas emanate here. The employee has also installed a system allowing him to let the water run and still be conscientious of energy consumption while he just down the ideas somewhere in the bathroom. The account continues and entails trips to Asia in ‘comfortable hiking-shoes’ working his way through numerous exhibition halls and fairs to collect and select tools and ideas – which can be developed further and incorporated in the product line.
The empirical findings present a description and qualitative analysis of five Case Concepts hoping that we will identify differences in their approaches and ways in which they use theory and practice. In the practice-based assignment, the students were asked to develop a well-founded suggestion to solve one of the following challenges, which TheCompany faced: Develop a concept for tools (tooling) for a specific B2B market, or develop a concept for measuring tools for a specific market of construction customers.
The students worked in groups for two weeks, and presented their ideas to a panel of experts from the company and to their lecturers. They then continued into the commercialization process. In this paper we only account for the first part of this project.
In the following we briefly present the business concepts presented by the students.
Case Concept One
Create our own the Company, with three new innovations:
Product busses within different segments. The Company Academy – customer seminars.
Collaboration with technical schools and secondary schools.
A distruptive innovation model (Christensen et al, 2002)
A Blue ocean approach (Kim & Mauborgne, 2005)
Business Model (Hutt & Speh, 2013)
The X-model of Employee Engagement (Blessing & White, 2012)
The Company initiative for Start-Ups. Increase sales through Start-up Package Solutions for new, small-scale potential customers.
The sustaining innovation model approach (Christensen et al, 2002)
Osterwalder’s Canvas model (Osterwalder et al, 2009)
Types of innovation (Hoskisson et al, 2007), The 4P’s of innovation space (Tidd and Bessant, 2010).
Case Concept Three
A further development of the Company’s concept of handheld scanners. To increase the advantages of efficiency primarily for profitable customers and for the Company, hereby engendering increased loyalty and sales.
Theoretical discussion of disruption (Christensen et al, 2002)
What Customer Value Means to Business Customers (Hutt & Speh, 2013)
Case Concept Four
Create increased value to the customers through innovation of both concrete product features, packaging and services.
A brainstorming process, with the clear aim of improving the currently identified weaknesses,
4P’s innovation space (Tidd and Bessant, 2010).
Case Concept Five
“My the Company” – an internet-based personal interface for B2B customers
4P’s innovation model (Tidd and Bessant, 2010).
A disruptive model approach (Christensen et al, 2002) and,
7 P’s of service marketing (Kotler et al., 2009),
Sales Management Competencies (Cron and Decarlo, 2010)
A value added market approach. New technology is used to improve service innovation.
A combination of market-driven and internal capability perspectives
Below we discuss and assess the five concepts presented by the students based on the structure of the concepts and their application of theory in practice and the solutions to the challenges. The assessment specially addresses the perspective of innovation present in the concepts. Furthermore the discussion addresses the potential business implications of the solutions presented by the students. This part of the discussion addresses the outcomes of the innovation process.
Structure and application of theory in practice
We ascertain that the students assume the role as change agents based on the fulfilment of the learning objectives of the curriculum. We can identify explicit references to a trans-disciplinary approach to solving the challenges in all five concepts as they refer to a variety of theoretical models.
The five concepts are structured relatively similarly regarding analysis and in their approach to answering the assignment. The structure of the concepts can be listed logically in separate phases. Phases in the students’ approach: Context of case, problem identification, analytical approach and recommendation.
The structure of the submitted concepts should be assessed in the context of the way in which the assignment is given: the assignment required a structured and well-argued case. Based on the five concepts we can ascertain that the demands listed to the assignments logically produce a rather uniform structure of the case report.
Approaches to solution of the challenge
It is interesting, however, to discuss and reflect on how the students approach the challenge. The empirical data indicate that all five concepts commence from the context. That is to say the company and Mode 2 cf. Piihl and Philipsen (2011). In all five concepts the students then chose a business model approach, whether they chose Hamel (2000) or Osterwalder (2009) as reference, it is quite clear to identify a point of departure in the company and its capabilities (competences and resources). Thus we identify a Mode 2 context in the students’ approach to solving the assignment but based firmly in the context of Mode 1’s theoretical approach.
The nuances and detailed use of theories in the problem solving vary in the five submitted concepts. It is possible to identify great differences in the extent to which the students prioritise theories and create relevant and practical solutions.
The understanding of capability and the significance to the innovation processes of the Company are addressed most in depth in Case Concept One and Case Concept Two. Case Concept Three, Four and Five chose a more marketing-theoretical approach by analysing need and address values in the customers and the market in general.
Only Case Concept One chose to address the risk element in the innovation process and the students conscientiously chose a sustainable innovation whereby they aim at making the most of the company’s current strengths as well as fulfilling the existing needs in the market. The other four Concepts focus more on the fact that the company’s opportunities are greater through innovation than the potential threats of the innovation and change.
Use of innovation theory
Our analysis indicates that the students use innovation theories and models in both their analyses as well as in their own assessment of the innovation solutions. In four of the five Case Concepts we identify explicit application of disruptive and sustaining theoretical references. Case Concept Four is the only Case Concept in which the students do not explicitly refer to the model. It is interesting to observe that the model and approach are applied similarly in the first-mentioned four Case Concepts. We can thus identify a predominantly uniform approach to solving the challenge. In all cases the model is applied to generate ideas and identify solutions to the challenge. As an add-on; the students could have chosen to apply the litmus test in their assessment of their own recommended solution – but none of the five Case Concepts chose to use this test.
Furthermore the students have used another innovation theory in solving the challenge. When it comes to this, Case Concept Five should be mentioned as they with an explicit reference to the 4P’s innovation model aim at creating process innovation. This is done with clear reference to the disruption model approach.
Case Concept One approaches the innovation process quite conscientiously. They start this process by identifying and creating an overview of the Company’s current capabilities and subsequently by explicitly choosing to apply a disruptive innovation approach in order to develop innovation by going the opposite direction. This approach is positivistic and views opportunities. All five Case Concepts apply this approach – Case Concept Two has a more balanced approach to this by also including risk element in their approach to the innovation process.
Case Concept Two has chosen an approach, which aims directly at sustaining innovation. It is interesting to observe that the students deliberately chose a slightly more conservative approach to innovation when they include the risk discussion from the very beginning. Their approach to solving the challenge is that it is most expedient; easier and almost risk free applying the sustaining innovation approach. As the only Case Concept of the five Case Concepts this group of students chose a more pragmatic business development approach through the conscientious choice of sustaining innovation. It is possible to argue for this choice based on both a theoretical and a very practice-based approach. It is also the only Case Concept that has this approach and thus the students differentiate themselves from the other groups. Their choice can be seen as expressing a lower level of innovation ambition compared to the other groups. It should be noted, though that the ambition to create value to small and newly started customers is quite ambitious and value creating – also to the Company.
Case Concept Four also uses an innovation approach by using sustaining innovation. The point of departure differs to Case Concept Two, which also applies sustaining innovation (Christensen et al, 2002). Case Concept Four generates innovative ideas from their strength and weaknesses analysis, which has been conducted preliminarily. Thus their point of departure differs but it is interesting to observe both Case Concepts and their usage of the analysis as input in the idea-brainstorming phase.
The approach to innovation through using the technology development can be seen in Case Concept Three. In this Case Concept an existing product/service (hand scanner) is added efficiency advantages aiming at increasing the customers’ loyalty and the Company’s revenue. Case Concept Five also applied technology as a driver for innovation development. The strength of the approach of Case Concept 3 is that it conscientiously and in a structured manner approaches the innovation process through the perspective of technology. The disadvantage can be that the innovation is minimal but it is beyond the scope of this paper to assess whether this is the case here.
Case Concept Five apart from technology disruption also applies a perception on innovation that it is not only product oriented. The innovation in Case Concept Five has an explicit focus on development and renewal of process and services in the Company based on the 4P’s innovation model (Tidd and Bessant, 2010).
This case study accounts for a concrete development project in ‘Applied Innovation’ focusing on how higher educational teaching initiatives support applied sciences and support the students’ competence-in-practice. The objective of the project has been to increase the focus on innovation in study programmes in general and specifically in the study programme Bachelor of International Sales and Marketing Management. This study programme already contains an ECTS accredited innovation module cf. the curriculum. Furthermore the project deliberately aimed at enhancing the students’ innovative competences in a practice-based context.
The applied innovation in this case study differs from the knowledge the students have obtained from lectures. Based on the empirical observations we have conducted in the context-of-application in the company and with the company as a source we conclude that the innovation in the company and the innovative trajectories can be situated within a strong focus on products and a longitudinal focus on individual innovative capabilities. Furthermore we do not have observations providing us with data based on which we can reach conclusions regarding the total capabilities of the company. We were able to observe peripheral links to the international network of the company; however, this does not form part of the current case.
Meeting a reality where the ideas are formed in the morning shower or from years of experience was a very different encounter with practice than the theoretical knowledge base the students brought with them from class. Even if the innovation observed in practice presented itself quite differently from the students’ theoretical knowledge base, our analyses illustrate that the students still avail of the knowledge obtained from class when encountering practice. Based on this knowledge base and the context the students, as change agents, are able to develop new concepts for the Company. As change agents, the students work from an understanding of the context and apply their hitherto acquired learning while still learning.
We purport that the curriculum of the Professional Bachelor of International Sales and Marketing Management warrant that the context of any given learning activity should form part of the design of the learning activity. This has to be done in order to achieve and ensure the intended learning, cf. the curriculum, in which the study programme is strongly based within the knowledge typology Mode 2 and a theoretical foundation of Mode 1. We raise the question whether this is done adequately and as Piihl and Philipsen argue how the students experience such learning activities in their studies. This is an interesting point as IBA has the objective that a series of the exams held at the IBA should take place in collaboration with the context that is to say business and industry. In the case study project ‘Applied Innovation’ the exam was developed and we were able to create a context between two independent exams in order to create continuity and a longer period for the students to train and rehearse. In this case this meant that students apart from working with idea generation in phase one were able to continue working and address commercializing their ideas in the second phase of the project.
Being in touch with the context (business and industry) is part of the curriculum and the students have two internships during their study programme. We assess the case study project as a whole to fulfil the learning objectives listed in the curriculum, the development activities of IBA and the objectives of the Ministry and provide us with more inspiration to how innovation may form a greater part of the IBA’s curricula in total. The development activities of IBA and the objectives of the Ministry may also inspire us, lecturers, to maintain the intended learning objectives and continue to develop and solve the challenges of designing learning activities that balance the various forms of knowledge production in order to ensure the students from Professional Bachelor of International Sales and Marketing Management will be able to contribute to the context-of-application.
Joan Pape Rasmussen, Assistant professor in International Marketing and Business Communication and Branding, International Business Academy, Kolding, Denmark, email@example.com
Lars Jespersen, Assistant professor in Strategic Management, Innovation Management and Organisation, International Business Academy, Kolding, Denmark, firstname.lastname@example.org
Nygaard, C., Courtney, N., Holtham, C (2011). A Research-based Approach to University Curriculum. Development in Beyond transmission – innovations in university teaching (pp 27-43). Oxfordshire: Libri Publishing.
Osterwalder A., Pigneur Y., Smith A. (2009). Business Model Generation, Self Published
Tidd, J., Bessant, J. (2010). Managing Innovation. West Sussex, England: John Wiley and Sons Ltd.
Companies are continuously facing challenges in changing global markets. This means that the manufacturing processes must be optimised; there is a constant need for higher product development speed, manufacturing flexibility, eliminating waste and to improve controlling processes. (Azharulm & Kazi 2013.) Many companies have chosen Lean, which originates from Toyota Production System (TPS), in order to improve or even to rescue their company, but many have failed. For example, only less than ten percent of the companies in UK have accomplished a successful Lean implementation (Bhasin 2012.) Many have turned into external consultants and struggled to sustain the results after the consultants have completed their projects. Instead of using external help, Toyota has a different approach towards Lean. TPS is an integrated system where each team member, leader and every worker in each level own, operate and continuously improve their processes. (Liker & Convis 2012, 144).
The original problem of the case company, Lahden Autokori Oy, was poor reliability of deliveries. There was no clear picture of root causes of the problems, but a lot of strong opinions which department caused most of the deviations. The bottlenecks needed to be identified in order to make the process flow again. On the other hand, to be able to eliminate the bottlenecks, the abnormalities in the processes must first be detected (DeLong 2011.) In order to find the bottlenecks and root causes the research method was built around the idea of finding the deviations by seeing them visually. This article explores how the research results support the fact, that the company is lacking of cross functionality and how it could benefit from Lean. Being cross functional has different dimensions and definitions. One of the definitions, which is used for cross functional management, is “working together for the benefit of the company” (Chuda 2013, 157). Ford & Randolph (1992, 269) define it as involving people from two or more different departments/different areas to undertake a task on either a temporary or permanent basis. “TPS is a system where everything is connected“ (Modig & Åhlström 2013, 139.)
Many studies have examined Lean methods and tools, and how to implement Lean successfully. The case company tried Lean transformation in year 2009, but failed. The case company filed for voluntary bankruptcy in September 2013 just after the research results were completed, however, it got a second chance and is owned by Scania CV AB (starting at 1st of May 2014). Scania has been practising Lean since 1997, and it’s evitable that the LAK will undergo its own version of Lean transformation as a method to survive in the business. This article gives a concrete picture, through the case study, of how to identify the need for cross functional management and what kind of Lean methods and tools should be implemented. The literature review introduces the philosophy behind the Lean, and emphasises the use of visualization. The Lean leadership is introduced as an integrated system for daily management, where KPIs are reported from bottom up to give a clear picture of expected versus actual results. As the objective is to change the organisation’s management system, the Lean transformation approach is presented. After the literature review, the research method is presented followed by the analysis and conclusions.
2. Literature review
The literature review focuses on Lean by first introducing the matter of flow through three laws of Lean (Modig & Åhlström, 2013). Visualization is important part in Lean when recognising the abnormalities in the processes, therefore some visual tools are presented (Mann 2010). As KPIs help to measure the process and to identify when and what is going wrong, this chapter introduces visual KPIs, and emphasises them as a way to raise accountability among the operators. In the end, Lean transformation and the success factors are presented.
2.1 Lean and matter of flow
Lean is about having a series of activities or solutions to minimize waste and non value adding (NVA) operations and improve the value added (VA) processes (Azharul & Kazi 2013, 171). In Lean, high flow efficiency is prioritised over high resource efficiency (Modig & Åhlström 2013, 127). When the focus in the organisation is not in the flow, it can result from lack of cross functionality, when the organisation may consist of sub-optimised departments, which operate in isolation. These isolated departments often focus on maximising their own resources. (Modig & Åhlström 213, 99.) According to Bhasin (2012, 441) in most organisations, sub-cultures can be found. If the aims and the needs of the departments are not the same, there is a risk of ending up in a situation where the departments have different goals.
There are three main laws which prevent units to flow in the processes: Little’s law, variation and bottlenecks. (Modig & Åhlström 2013, 31). The formula of the Little’s law is: Lead time = Work in progress (WIP)/Cycle time. Lead time is total amount of units or people in the process and the average time for how long it takes to complete a single production unit or serve a person. Lead time is related to the boundaries set around the process. (Modig & Åhlström 2013, 34 – 35.) When there is an increased focus on flow effiency, the lead time naturally shortens and there are less inventories, which means that there is less cash tied in the process. The second law focuses on reducing variation from the processes. Variation exists everywhere as it’s the law of nature and based on normal distribution. However, when it comes to demands (customer needs) and to supply (the organisation’s resources), in order to reach the consistent processes, variation should be controlled and minimised. (Modig & Åhlström 2013, 100-101.) The third law focuses on minimising the waste by eliminating the bottlenecks and focusing on the flow through having a control over the process. (Liker & Convis 2012, 91.)
2.2 Visualising the metrics, finding the normal state
It is crucial to measure right things, at the right time in the supply chain process, in order to have immediate corrective actions. (Azharul et al.2013, 170). Companies often fail to develop appropriate performance measurement metrics (KPIs) related to efficiency as the metrics are usually based on finance. (Gunasekaran et al. 2004; Gunasekaran et al. 2007.) In Lean management, the KPIs are visualized and controlled, and the purpose is to focus on the process to make it easy to compare expected versus actual performance (Mann 2010, 53). Based on Azharuls (2013) study the time-related measures are the most significant for Lean performance evaluation and measurements. In fact, time is a crucial concept in TPS, where all the workers are expected to perform value-added work in perfect synchronization and in takt. (Liker & Convis 2012, 91.) For example, in the case company takt time is one day, meaning that the bus (work in progress, WIP), is moved from one station to another once a day, and one bus per day is produced.
In Lean, visualization is strongly emphasized. The methods and tools are based on the visual effects in order to see what is normal and what is not normal. Basic lean tools such as 5S, Value Stream mapping and Kanban are all based on visual effect (Masaaki 1997, 63; Väisänen 2013; Hanover 2011). The first basic and commonly used method is a Japanese method for housekeeping – 5S. It includes five stages: sort, straight, shine, standardize and sustain. The goal of 5S is to improve continuously order and cleanliness, which is seen as a base for eliminating waste, and helps to identify the abnormalities in the process (FactorySystems 2014.) Value Stream mapping is a method, where a chosen process is visualized by drawing the process phases including work in progress (WIP), process time, waiting time and inventories. It’s used for identifying the bottlenecks, and it gives a good picture of the present state of the process. (Väisänen 2013.) Kanban too, as 5S and Value Stream mapping, supports the idea of improving the flow. Kanbans are signals, which indicate what work needs to be done and when. (Hanover 2011.) In order to stop and notify the abnormalities, one needs to recognize and see the normal state first (DeLong 2011). All the three methods mentioned above support to see the normal state. In addition, statistical tools can also be used visually, for example Control charts, Pareto charts and histograms. The purpose of all of these methods and tools is to find the vital few (bottlenecks), and eliminate them in order to decrease variation in the processes and eventually stabilize and control the process.
2.3 Lean transformation
The success of Lean transformation normally depends upon organizational characteristics, which means that there is no such approach as “one size fits them all” for implementing Lean (Shah & Ward 2003). There is no universal formula how to implement Lean, but some general rules apply. According to Monden (2012) implementation should start (before the techniques) with making a schedule, setting a goal and providing education and after that the first technique 5S is implemented (Monden 2012, 28). Having carefully crafted implementation plan for the change is a key for succeeding in implementing Lean, as otherwise organization might get distracted by the daily challenges and other problems they’ll face. (Chaneski 2005; Monden 2012; Bhasin 2012.) The purpose of the plan is to manage the Lean implementation and to keep the people focused on the plan. Another key factor is to involve the key people from the organization. These people should have enough power and should be responsible for the processes. The plan should be visible for all the stakeholders, and it works as a road map for the organization. The third key factor for the success of Lean transformation is belief and taking the courage to step on the Lean path, as people will change, if they see and witness the benefits. (Chaneski 2005; Bhasin 2012.) In addition, Monden (2012) emphasizes the meaning of upper management being involved in implementation, and also having a project team comprising all the organization levels. Implementation should start with selecting a pilot project, and eventually move from downstream processes to upstream processes, meaning from lower levels to the top level of an organisation (Monden 2012, 25 – 28.) Bhasin (2012) would engage all the employees to implement the changes, and develop the skills in order to remove any fear and anxiety towards the transformation. Success in implementation lies with the people, and the organisations can not afford to have any negative sub-cultures, if they wish to succeed (Bhasin 2012; Womack et al. 2005).
Every organization needs a vision and a set of goals to be reached. In conventional supply chain management, the managers focus is on following the key performance indicators (KPIs) through periodic reports (weekly, monthly etc.) The reports can be sub-optimized and are written from that particular department’s point of view, when there is a risk of bias reporting. The goal is to meet the schedule, whatever it takes, which leads managers to invent their own ways to succeed. (Mann 2010, 10 – 11.) At Toyota, the goals are determined by the board of directors, a process from top to down. To make it down to up process, Toyota has implemented daily accountability process through KPIs connected to the main KPIs determined by the board. The system is visualised and bases on kaizen (continuous improvement). At each level the targets and KPIs are connected to the main goal. (Liker & Convis 2012, 148 – 149.) The targets and goals are discussed on a daily basis at each level of organisation with a carefully planned agenda. (Mann 2010, 23 – 104). The leadership is integrated in daily accountability meetings, where KPIs are compared expected versus actual. The targets come from top and the actuals come from down making the organisation communicate cross functionally. The method is called leader standard work (Mann 2010, 23).
3. Research context and method
The research method chosen is an empirical action research, including a quantitative method approach and observations. In an environment where there is the suspicion of lack of cross functional management, action research method with quantitative method approach was seen as the best method to avoid any misunderstandings by presenting the findings as numeric facts. (Dick 2014.) The idea of the action research method was built around leader standard work presented by Mann (2010, 37 – 39), but covering only the upper level of the organisation; The method covered meeting practice held twice a week, where the responsible operators (i.e. upper level managers and directors) were accountable for raising deviations and being responsible for taking actions. The method was followed through a visual tool (white board), where all departments had their response times visualised based on the schedule/takt. The method was called TITO. The original idea of the method is from Scania Slupks, Poland, and the original name of the method is “Get orders to flow”, created by J. Dabrowska-Balasz. The idea of the tool was to take first steps towards cross functional communication and tie the organisation more closely together by discussing through the KPIs (response time).
In figure 1 the visual tool is presented. Each bus or a batch of buses has an own card, which is located on the white board according to the time schedule of the whole supply chain process, from order to delivery. The white board is divided into two sections: one where the orders flow, and the other section where the deviations and warnings are written and followed. The first section of the white board is divided according to the response times to show when each operator should have completed their work. Section 1 in figure 1 includes four phases: luovutus (delivery), valmistusvaihe (production), hankintavaihe (purchase), suunnitteluvaihe (designs). If operators knew they’re delayed from the schedule, they had to announce either a warning (yellow magnet) or a deviation (red magnet) and put the magnet on the card. Red magnet (deviation) indicates that the delivery date is in real danger. Yellow magnet (warning) indicates that the delivery date might be in danger. In section 2 the deviations and warnings were written on the board and followed according to the agreed follow-up dates. The research data was collected through section 2.
The aim of the analysis was to find the bottlenecks from the supply chain process in order to see what prevents the flow, and why the deliveries are being delayed. The analysis revealed a lot more: not only the bottlenecks, but also the lack of cross functional management in the organisation. The most important findings through the data and observations were:
The theoretical process lead time, the time from order to expected delivery, was 62 days, not 80 days as previously expected. The total process time of manufacturing the buses was actually 22 % less than expected.
Two of the departments were indicated as bottlenecks in the process: Sales and R&D/Design. The defined response times, for both of the departments, are at the early stage of the supply chain process, and if the response times were not met, the problems accumulated at the end causing severe consequences.
The amount of deviations, which caused the actual delays of the deliveries, was three times greater than the amount of warnings, and more importantly, the deviations were accumulated at the end of the production process, where they were more critical with respect to on time delivery.
Even though the response times were defined and agreed, it was noticed during the research, that the operators, who had to deliver the drawings or another deliverables, were not fully aware of their response times. It was also observed, that the response times were not followed regularly. Also there were no adequate systems to support the following of the response times.
All of these findings conclude, that the organisation is lacking of cross functional management. This will be more discussed in chapter 5.
4.1 Theoretical lead time, variation
Variation is one of the Lean laws, which prevent the unit to flow (Modig & Åhlström 2013.) The variation of the time, when order as received into the internal supply chain process, varies a lot. This is explained in the figures below.
Figure 2: The theoretical lead time, histogram Figure 3: The theoretical lead time, boxplot
In figure 2, there can be seen a huge variation of theoretical lead time (starting from the point when the order comes in the process and ending when the bus is expected to be delivered). The bars in the histogram are spread widely, and the blue curve in the figure is very flat. So, the figure shows, that the orders were received into the process between 180 and 30 days before the bus was expected to be delivered. It is clear, if there is only 30 days time to deliver a bus instead of agreed 80 days, the organisation struggles to have the information, materials, drawings etc. in time. Figure 3 confirms the fact, that the most of the orders were received a lot later than expected. The boxplot shows (grey box with black lines on each side), that more than 75% of the orders are received into the process less than 80 days before the expected delivery. Both of the figures (figure 2 and 3) indicate the significant fact, that the organisation lives in an false assumption, where it has 80 days time to complete a bus, but the reality states, it only has 62 days in average.
4.2 Bottlenecks in the process
The bottlenecks were identified in time line and also in departments.
In figure 4 the amount of deviations and warnings can be seen in time line. There are two spikes (inside the red circles), one at the end of the production line, but also at day 40 – 45. Having such an amount of deviations and warnings at days 40 – 45 indicates mostly that the drawings were not completed in time by the design/R&D department. At the end of the production line the deviations were mostly announced by the production manager, which meant that the problems were not indicated earlier during the process.
There are two departments, which can be identified as the bottlenecks in the process: Sales and R&D/Design. R&D and Design departments are very close to each other and the functions are mixed, therefore these two should be observed as a one department. Sales and R&D/Design departments make total of 71% of the deviations and warnings in the process.
Figure 5: Amount of deviations and warnings R&D, Design and Sales are the bottle necks. Figure 6: The solution time: Sales and R&D are the worst when seeking for solutions.
In figure 7 the pie chart shows the amount of deviations and warnings per department. The average time to have a solution was 8 days (green line in figure 8). In figure 8 it can be seen, that Sales has a quite big variation in having the information for the rest of the organisation in time, even though the boxplot (the grey box) is located under the green line. In Sales (figure 8), the grey box without the black line indicates that 50% of the problems have been solved before 8 days, but in some cases it has taken even 40 days to have the final information. Also R&D struggles to have their solutions in reasonable time. In fact, the problem solving has taken constantly more than 10 days, as the grey box is located above 10 days. The root causes in general, for the deviations and warnings, were mainly missing information or the order was received too late (less than 80 days), also the drawings were late due to the lack of resources and naturally due to lack of information.
4.3 Amount of deviations and warnings
The amount of deviations and warnings were analysed. Total amount of deviations were 100 and warnings 32.
Figure 7: Bottle necks in time line, yellow warnings Figure 8: Bottle necks in time line, red deviations
In figure 5 and 6 the amount of deviations and warning can be seen. There are three times more red deviations (N=100) as there are the yellow warnings (N=32). Red warning means that the delivery will be delayed and the yellow means that the delivery date might be in danger. Warnings have been mainly identified at the time where the drawings should have been completed (40 – 45 days), but the deviations have been clearly accumulated at the end of the process, meaning just before the bus is delivered. Both of these findings conclude, that the process is not controlled, which is seen as poor reliability of the deliveries.
4.4 Response times
The research method was based on response times and following them. If the response times were not met, the responsible operator had to announce them. At first, people felt very uncomfortable about visualizing the problems and to announce deviations and warnings. Earlier the organisation culture was used to handling the deviations in their own departments, in their own offices, so the TITO-method was a real cultural shock for the organisation. Operators felt that they were being blamed, when deviations and warnings were brought up. There needed to be a change in the organisational culture. One of the main findings of the case study was that the operators did not have tools to follow the schedule and takt time, or some of them were not even aware of their actual response times. In addition the agreed response times have been agreed many years ago and therefore there is a suspicion of if those are valid anymore. This was based on the fact that warning signs were not detected and announced early enough; therefore they were announced as deviations by the production manager.
5. Discussions and conclusions
The findings of the research indicate the fact, that the case company is missing effective cross functional management. The fact of having less time than expected reflects of lack of control in the process. There were no common rules in the organisation, in this context there were no common response time rules. Agreed common response time rules would help the organisation to control the variation. According to the observations, the Sales department does not know the deadlines for each change the customer would like to make, and this was considered to be one of the most critical issues in causing the deviations in the process. The changes were made too late in order for the entire supply chain to react. Additionally, the other departments were also lacking adequate control in their response times, which in fact defines the response times (deadlines) for the Sales also. This is indicated, when most of the deviations were found during the production process and then announced by the production manager. The deviations were, for example caused by the missing drawings, missing information, or issues which were not caused by the production itself. Lacking adequate control of the response times, means lacking of process management. There were no systems to identify the problems, or even if some departments had their own systems, the systems did not provide information for the other departments. There were no cross functionality between the control systems. Instead of identifying which department is guilty, the research concludes, that the organisation lacked common tools, methods and culture of managing the process cross functionally. None of the departments is guilty.
The case company has started to develop a new way of managing the internal supply chain process, which means changing the old cultural habits. There are a lot of positive indicators to support the organisation to succeed according to the literature review. These are: support from upper management, engaging the internal staff to implement the changes and the real motivation. (Monden 2012; Bhasin 2012). The support comes from Scania, which has implemented Lean already since 1997, and the motivation derives from a will to survive in the business. The organisation has realised, it needs to change.
There are three main issues to be improved in the organisation. First, the organisation should implement leader standard work from downstream to up-stream (Mann, 2010). With leader standard work the organisation has daily follow up meetings in each department, and the actions are visualised. Secondly, the KPIs should be integrated and reported in the daily meetings. For the case company, the response times are the most critical at this point and those need to be followed in order to control the process and detect the deviations and warnings earlier. KPIs should be reported from down to up, not just by the supervisors, creating accountability through the organisation. Also the response times agreed years ago, should be re-evaluated. Third, there should be examined other cross functional processes in the organisation and start to improve them. There are different cross functional processes, where the unit flows through the entire organisation, for example whenever a design change or a new innovation is implemented. These processes should also be controlled through visual planning and KPIs.
All of these three points focus on controlling the process by empowering people through reporting the KPI’s and to be accountable for their daily actions in order to achieve the targets. By having a control over the processes, abnormalities can be easier detected and improved. So, eventually the aim is to control, improve, eliminate waste and finally make the unit flow, which will lead the company to have a better reliability of the deliveries and eventually decrease the actual lead time. After the cross functional management is implemented in the organisation, the company is ready to implement other Lean techniques, like 5S is strongly recommended.
Miia Nietosvuori, Master’s student of International Business Management, Lahti University of Applied Sciences, email@example.com
Azharul, K. & Kazi, A. 2013. A methodology for effective implementation of Lean strategies and its performance evaluation in manufacturing organisations. Vol. 19. pp. 169 – 196. [Accessed February 2014] Available: www.emeraldinsight.com/1463-7154.htm
Bhasin, S. 2012. An appropriate change strategy for Lean success. Emerald Group publishing. Vol. 50, No. 3, pp. 439-458. [Accessed February 2014] Available: www.emeraldinsight.com/0025-1747.htm
Ford, R. & Randolph, W. 1992. Cross-functional structures: A review and intergartion of Matrix Organisation and project management, Journal of management, Vol. 18 NO.2, pp. 267 – 294.
Gunasekaran, A. & Kobu, B. 2007. Performance measures and metrics in logistics and supply chain management: a review for recent literature (1995-204) for research and applications, International journal of production research, Vol. 45, pp. 2819-2840
Gunasekaran, A., Patel, C. & McGayhey, R.E. 2004. A frame work for supply chain performance measurement, International journal of production economies, Vol 87, pp. 333 – 347
Importance of small and medium sized enterprises (SME) as a driving force of economy is widely discussed, especially when seeking remedies for the aftermath of the financial crisis of 2008. Another topic gaining plenty of media coverage is corporate social responsibility (CSR); many well-known large companies have experienced reputation crises when their or their suppliers’ non-compliant actions in developing countries have been exposed to public attention. At the same time, outsourcing and networking are ever more common in any field of business, and more and more companies – including SME – are involved in international supply chains. Consequently, managing and communicating the CSR issues within the supply chain is crucial for risk reduction. The call for effective and reliable approach to both CSR and supply chain management (SCM) is therefore an acute topic not only in large organizations, but many SME, as well. Operating a global supply chain, especially sourcing products from developing countries makes CSR a complicated issue with limited resources of an SME.
The purpose of this paper is to discuss CSR management and communication within a global supply chain with an intermediary SME approach. There is plenty of research on both CSR and SCM, but mainly from larger company perspective. Research and literature on CSR from SME point of view is also available, but they often concentrate on SMEs acting as an individual organization and in the role of a supplier. Publications on CSM from SME point of view are quite scarce, as are articles discussing SME in an intermediary role within global supply chains.
In this paper, these tree topics are interlinked and discussed as an entity, which is based on a desktop research on published articles discussing CSR and SCM themes, emphasising ones with an SME and communicative approach. The articles were selected for the review by their relevance and accessibility. Firstly, the aim of this paper is to develop an overall perception on the current situation of CSR management and communication in SME, concentrating on the supply chain related issues. Secondly, the recommendations for good CSR and SCM practices suggested in the articles used are concluded as general guidelines for developing CSR and SCM processes in intermediary SME.
The document at hand is structured as follows: In the next two chapters, the methods and materials used are described and the key concepts and theoretical framework introduced. The analysis is divided to description of the current situation and recommendations for future development. In conclusion, the main findings of this paper are presented and needs for future research discussed in brief.
2. Key concepts and theoretical framework
Corporate social responsibility (CSR)
United Nations define CSR as “a management concept whereby companies integrate social and environmental concerns in their business operations and interactions with their stakeholders.” (www.unido.org) CSR is often described as “Triple bottom line“, where company’s responsibilities include economic, environmental social imperative (Jussila 2010, 15, www.unido.org). As mentioned above, stakeholder approach is core issue in CSR, as all activitied and development should be based on the needs of the stakeholders and dialogue with different stakeholder groups – employees, customers, suppliers, shareholders, local communities etc. (Jussila 2010, 125)
CSR is a topical theme of discussion, as CSR issues are getting more media attention and the pressure from the stakeholders toward companied to be engaged in CSR is growing (Andersen & Skjoett-Larsen 2009,75. Welford & Frost 2006, 168). As consumers’ ethical needs are increasing, the importance of CSR management in retails rising which adds more pressure to the entire retail supply (Cosetta, Musso Risso 2009, 33). CSR approach is becoming more important not only for consumers but (partly due to the consumer pressure) it affects also business purchasing decisions (Hietbrink, Berens & Van Rekom 2010, 284). At the same time, relevance of CSR for company image has increased (Hietbrink et al. 2010, 284) and risk reduction is a major driver for engaging in CSR (Welford et al. 2006, 168), in particular with brand items. The clearer the company or trade mark brand is, the more vulnerable it is for damage from bad publicity due to breaches in CSR related issues (Welford et al. 2006, 168, 170). Many retail chain have introduced own house brand products, where the damage would be exceptionally severe as it reflects to the entire company image (Cosetta et al. 2009, 36). Safety recalls, quality and consumer issues are also often considered as a part of CSR (Carter & Jennings 2002, 37).
Supply chain management (SCM)
Supply chain managements means management of multiple relationships across a network of businesses called the supply chain. It gives the opportunity to gain synergy benefit from integrated processes and management within a company and between them (Lambert 65). The main components of SCM comprise the work flow/activity structure (i.e. division of work within the chain), organisational structure (i.e. integration of functional areas), structure of communication and information flow and methods for planning and control (Vaaland & Heide 2007, 21).
In the modern network economy, supply chains compete with one another as much as individual companies (Vaaland et al. 2007, 20, Lambert 65, Carte et al. 2009, 75). The importance of SCM increases along with the transitions from manufacturing business towards providing services, as well as from own manufacturing towards outsourcing and networking are (Howarth 674). Within a supply chain, companies can reduce costs and ensure profitability (Vaaland et al. 2007, 20), but at the same time, they become partly responsible of whatever happens upstream the supply chain.
Small and medium sized enterprise (SME)
European commission has a clear definition for SMEs:
“The category of micro, small and medium-sized enterprises (SMEs) is made up of enterprises which employ fewer than 250 persons and which have an annual turnover not exceeding 50 million euro, and/or an annual balance sheet total not exceeding 43 million euro.) (Article 2 of the Annex of Recommendation 2003/361/EC as sited in SM User Guide 2014, 5)
Despite their limited size, SMEs have a significant role in the economy; eg. in the European Union alone there are approximately 23 million SMEs that employ 75 million people. Moreover, 99 % of all European enterprises fall to the category of micro, small or medium-sized enterprise. (SME User Guide 2014, 5)
The reality of CSR in supply chains
CSR management within supply chain
SCM has got even more attention with the CSR scandals arising from western companies manufacturing goods in the developing countries with lacking respect to environment, human rights an social issues (Andersen et al. 2009, 76). Often, these breached do not happen with the company itself but up the supply chain. In order to have credible and effective CSR policy, a company needs to ensure the behaviour of the entire supply chain it sources from (Cosetta et al. 2009, 36, Vaaland et al. 2007, 20, Ciliberti, Pontrandolfo & Scozzi 2008, 1579). It takes already plenty of effort to have CSR issues communicated and controlled with the direct suppliers, but involving second and third tier suppliers and auditing the reliably is challenge that can hardly be met, especially with SME resources (Welford et al. 2006, 170, Ciliberti et al. 2008, 1581). On the other hand, a single company engaging in CSR affect an entire business network and supply routes and thus have much wider and deeper impact than expected (Cosetta et al. 2009, 54). Whether a company sees CSR from doing good – perspective or aims at gaining competitive advantage of it, the entire supply chain must be involved in order to have long lasting results of one’s own actions.
Pressure up the retail supply chain
As the consumer pressure increases in retail and the brands need to be protected from damaging publicity, the pressure to engage in CSR does not stop the retailers but affects the entire supply chain. (Welford et al. 2006, 168, 170, Hietbrink et al. 2010, 284). According to most research, CSR may and should add willingness to buy from the company (e.g. Hietbrink et al. 2010, 284). Especially when CSR is particularly important for the company’s image, company buyers consider the consumer pressure on CSR when choosing the suppliers Hietbrink et al. 2010, 296). In case if quality and price are equal, well-managed CSR may be the deciding factor in benefit for a certain supplier. The importance of CSR in procurement process increases, if the purchased product plays a major physical part in customer’s own end product (Hietbrink et al. 2010, 295). For a company in intermediary supply chain position that provides services by supplying products from other manufacturers this is crucial, as the physical product delivered is eventually sold to consumer as such.
Though most customer companies in supply chains do appreciate CSR effort, they are seldom willing to reward the practitioners of CSR enough to cover the costs induced (Hietbrink et al. 2010, 296). Tight price competition makes CSR development in supply chain harder, as customers are not willing to pay for the CSR engagement that they nevertheless require to be implemented up the supply chain (Welford et al. 2006, 171). In addition to lower price, retailer customers require shorter lead times, constant update of the products to meet the latest requirements or trends and seasonal products to be delivered within a tight time frame, which is in contradiction with the CSR aim to comply with legal working time limits in manufacturing (Welford et al. 2006, 171).
Challenges in implementation and communication
In practice, even the big players in retail are struggling to communicate and implement their CSR principles and use codes of conduct to instruct and control their supplier in the global supply chain. There seems to be a contradiction in the companies’ policies and how well they manage to root the principals to their suppliers (Andersen et al. 2009, 75-78). At the same time, the ones producing CSR communication seem to find it more successful than the targeted audience (Dawkins 2004, 113). Also for the CSR implementation in the supply chain, the most common approach is quite straightforward: companies have a code of conduct for suppliers and regular monitoring for compliance. In case of non-compliance, the measures vary from warning to immediate cutting of the contract. Many CSR managers would prefer mutual engagement to CSR from earlier stage and developing the operations in cooperation with the suppliers, but with limited resources this seldom is possible. (Welford et al. 2006, 169)
Power distribution in the supply chain
Key actors of the supply chain are usually the large retailers from the developed countries. They can affect consumer choices, experience the pressure from the consumer and take most responsibility towards them. At the same time they define the target level of CSR, stipulate it up the supply chain and, due to their size, also have the most power to influence with their bargaining power. (Andersen et al. 2009, 77, Cosetta et al. 2009, 35) The larger the firm is and more resources it has, the easier it is to attract suppliers and get them committed to the customer’s CSR policies (Andersen et al. 2009, 82, Ciliberti et al. 2008, 1580). The possibility to affect a supplier is highly dependent on the relevant power structure: the bigger share of the business of the supplier comes from a customer, the more its needs and concerns are listened and met (Vaaland et al. 2007, 201). Correspondingly, intermediary SME’s are in a weaker position within their supply chains, often to both directions. Large retailers have specific demands on CSR that SME’s must follow (Cosetta et al. 2009, 38), but at the same time, SME may have difficulties in implementing CSR with their own suppliers. SME’s can introduce codes of conduct, but it is questionable whether they are regarded as important as the ones of larger customer. Even the sanctions used for CSR breaches are less effective, when coming from a minor customer. (Ciliberti et al. 2008, 1581)
CSR in SME’s
For SME’s, the motives for CSR activity differ from the ones of larger corporations; potential business benefits and personal values of the owners / managers play a larger role, whereas pressure from NGO’s etc. is lesser. In SME’s, CSR can be more easily than in large organizations embedded to company culture an identity, as owners’/managers’ values in general are more visible in the company. (Nielsen & Thomsen. 2009, 185) Engagement in CSR and customer requirements can be seen either as a threat, a necessary evil or a business opportunity; the approach is much dependent on the owners/managers views. (Howarth 679) At the same time, external factors, especially customer demands are a priority for SME’s in CSR decision making (Howarth 675). Partly outside the triple-bottom-line approach, the quality of the products and services is also often considered as major a part of social responsibility in SME’s (Suprawan, de Bussy & Dickinson 2009, 3-5.).
Scarcity of resources allocated for CSR is a constraining factor in most organisations (Welford et al. 2006, 168), but especially in SMEs where having competence and know-how on CSR is also not as widespread as in large corporations. Other SME specific CSR challenges are also recognized: Large customer tend to be very demanding in their codes of conduct, without understanding the limitations of SME’s and external support for SME’s in developing their CSR policy and operations is inadequately, while they at the same time gain less direct advantage from implementing CSR than the large companies. (Cosetta et al. 2009, 38) For SMES’s, having a sufficient, credible CSR system and communication with suppliers is crucial for being competitive towards large customers, but making it profitable is a major challenge, as putting a price tag on good CSR and SC management is often not possible. Many CSR efforts in SME’s are tackled by the high cost, both internally and in the form of higher purchase prices (Ciliberti et al. 2008, 1580).
SCM in SME’s
When it comes to supply chain management, SME’s seldom have effective systems, techniques and tools at use. Also, they are less satisfied with the current supply chain situation than larger organizations. Implementing SCM in full extent is challenging for SMES’, as their own operations are often practically stipulated by large customers’ requirements. (Vaaland et al. 2007, 21) However, if SME’s are not strengthening their SCM, there is a risk that they’ll lose even more bargaining power with the larger links of the chain: not only the customers, but also suppliers which eventually will result in lesser competitive power. (Vaaland et al. 2007, 28.) Auditing is another crucial phase in credible CSR process within a global supply chain, but it is especially challenging for SME’s with supplier around the globe: having internal auditors is not possible, but finding a reliable, cost effective third-party inspector to do it is not easy, either (Welford et al. 2006, 169,171. Ciliberti et al. 2008, 1580.)
SMEs recognize the importance of clear and truthful communication, as well as the necessity to differ the approach to different stakeholder groups (Suprawan et al. 2009, 5). However, SMEs’ approach to CSR communication is unsystematic and they try adapt some of the communication practices of the bigger companies) but are unable to execute them as such (Nielsen et al. 2009, 177). CSR communication is often focused on internal communication instead of external (Ciliberti et al. 2008, 1580). Many SME’s concentrate on building informative one-way communication to their customers, but tend to forget other external stakeholders, such as suppliers (Nielsen et al. 2009, 185). SME’s often lack a written code of contact, but relay on interpersonal communications (Suprawan et al. 2009, 6-7). Even though SME’s are able to build dialogue and long term relationships with key suppliers often more effectively than larger organisations (Nielsen et al. 2009, 185), this ad-hoc approach instead of written policies and codes of conduct is eating too may resources when there many customers and suppliers to communicate with.
Combined a challenge
Therefore, developing CSR implementation in the entire supply chain is a particular challenge for many SME’s but also necessity for future success of the business. Combination of developed CSR and SCM is especially important, as both these issues gain public interest and media coverage so far the big retail companies are the most affected, bot for SME, a similar reputation scandal could be even more lethal. (Nielsen et al. 2009, 185). This, however, is a true challenge; If even the big players in retail are struggling to implement their CSR principles in their supply chain (Andersen et al. 2009, 75), what are the realistic possibilities for SME’s to do the same?
Guidelines for future development
Profitable CSR with customer in mind
SME’s should develop their CSR process with the customer oriented perspective at the forefront. CSR activities should meet the customers’ preferences and requirements in order to attract business (Hietbrink et al. 2010, 296). This would also increase the possibilities to gain competitive advantage and to make CSR profitable, as CSR actions and communication can more effectively be presented to a customer as added value to the service or product if they match the customers’ needs and concerns (Dawkins 2004, 109). Listening to the customers, market and public discussion constantly is crucial, as situation changes all the time and a company must react and update its CSR policy and communication likewise (Morsing & Schultz. 2006, 323).
In order to enhance CSR in its supply chain, SME’s need to have CSR integrated in their entire organisation (Andersen et al. 2009, 81). CSR and communicating the responsibility issues should be embedded in all key processes and personnel from all functions as specialists in their own field made involved in developing the company practices further (Dawkins 2004, 118). Internal communication on CSR should be open, as the dialogue between leaders and employees increases not only understanding of CSR within the organization but also enhances the external communication (Suprawan et al. 2009, 5). Internal sense-making, trainging and personnel involvement in CSR is crucial for effective supplier communication on a day-today basis (Howarth 681. Suprawan et al. 2009, 4). Purchasing and logistics functions are a key player in CSR development in the supply chain, as it has the closest interactions with the suppliers (Carter et al. 2002, 38)
Tools and systematic approach
Introducing tools and systematic approach to both CSR and SCM would make the internal processes more effective and reliable, but also get the suppliers better involved in CSR (Ciliberti et al. 2008, 1587). The most important management tools for CSR in SCM are written policies and requirements to suppliers (eg. code of conduct), performance monitoring (internal and supplier auditing system) and awareness building (educating suppliers systematically). (Ciliberti et al. 2008, 1580) SME’s should also get acquainted with the most common practices and guidelines in CSR and SCM, and follow them whenever possible in order to avoid conflicts with requirements from larger companies that suppliers meet.
Knowledge enhancing is important both internally and externally: training own personnel and engaging them to CSR is a prerequisite for dispensing the ideas to partners and suppliers, as well. Constant dialogue on CSR issue with the supplier eventually creates a shared frame of reference and creates true commitment to CSR practices (Andersen et al. 2009, 81-82). Building a network, investing in trusting long term supplier relations and developing CSR issues in cooperation makes CSR implementation the supply chain more effective (Andersen et al. 2009, 82. Welford et al. 2006, 170. ). From a supplier point of view, this learning approach eventually improves the position in competition, which is an effective motivation for cooperation and CSR implementation (Carter et al. 2002, 48). Better cooperation and introducing CSR thinking within the supply chain also improves suppliers performance in quality, lead time and efficiency (Carter et al. 2002, 46).
CSR communication strategy
When choosing the strategy for CSR communication with their supplier, SME’s can choose from various approaches. The traditional, mostly informative and one-way, CSR communication strategy is based on risks, standards and compliance (Howarth 676. Ciliberti et al. 2008, 1580.). Internally, the control-power approach means that managers communicate CSR and delegate responsibility downwards, and similar thinking is applied towards suppliers: in order to avoid risks, an individual or a supplier has to fulfil the defined standard is or a punishment will follow (Howarth 680).
Another strategy, believed to be more beneficial but perhaps more arduous to implanted, emphasizes capacity building, creation and empowerment: CSR policies are developed in internal dialogue as well as in dialogue with suppliers, which creates true commitment and concentrates more on new possibilities and shared responsibility (Howarth 680. Ciliberti et al. 2008, 1580). Common involvement in social responsibility seems to enhance trust, commitment and cooperation within the supply chain and prevents opportunism (Carter et al. 2002, 46. Morsing et al. 2006, 324), which is important for an intermediatory SME whose success relies on trustworthy long term relationships both up and down the supply chain. This mentoring approach also means transition from reactive to proactive thinking (Howarth 676, 681.), which enhances seeing CSR as an opportunity instead of a burden at all levels of the supply chain.
Especially for suppliers in developing countries, external pressure, i.e. customer demands, is at currently the most significant motive of engaging in CSR activities and communication (Welford et al. 2006, 168). However, suppliers are also waking up, as the consequences of exploiting employees and environment are becoming visible (e.g. shortage on work force, water, waste and pollution issues) (Welford et al. 2006, 173.) Also, learning more about CSR and embedding it to the processes is becoming a competitive factor for the suppliers, as well (Welford et al. 2006, 171): with developed CSR, they can maintain a higher sales price, save costs, attract more customers, but also be more attractive as an employer. Therefore it seems, that now is a good time to kick-start CSR discussion with the supplier, as they have an internal driver for it, too.
The concepts of corporate social responsibility and supply chain management are tightly interlinked in the modern business model based on networks and subcontracting. Implementing and communicating their CSR policies successfully in a supply chain is challenging, and at the same the pressure and contradictory demands are increasing. Bargaining power within the supply chain defines the possibilities of a company to introduce CSR requirement, and SME’s are in weaker position doe to their limited size and influence.
SME’s engage in CSR for somewhat different motives than larger companies but are well aware of the importance of the issues. However, SME’s struggle more with the scarce resources for CSR implementation, as well as find it difficult to make their CSR efforts pay off. Non-systematic approach to supply chain management and communication make the combined challenge even more arduous to overcome.
When developing their CSR communication within the supply chain, the SME’s should concentrate on issues most relevant for their own customers. Integrating and involving approaches to CSR are the most effective both internally and externally, and introducing management tools and systematic approach builds up the process. Capacity-building oriented communications strategy enhances constant development and knowledge sharing, but also increases supplier commitment.
In conclusion, this paper shed some light on the reality of SME’s operating in a global supply chain with tightening CSR requirement, but combining the aspects of CSR, SCM and SME would be topic worth further research. Surveying the perceptions of SME’s dealing with these issues would also assist in creating better tools for supporting SME’s in various supply chains and networks and enhance best practices of implementing CSR in SME’s.
Milka Pääkkönen, MBA student of Business Management and Entrepreneurship, HAMK University of Applied Sciences, firstname.lastname@example.org
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Jussila, M. 2010. Yhteiskuntavastuu.nyt. Vantaa: Infor.
Morsing M., Schultz, M. 2006. Corporate social responsibility communication: stakeholder information, response and involvement strategies. Business Ethics: A European Review. Vol.15 4/2006, 323-338.
Nielsen, A., Thomsen, C. 2009. CSR communication in small and medium-sized enterprises. A study of the attitudes and beliefs of middle managers. Corporate Communications: An International Journal Vol. 14 2/2009, 176-189.
Much has been written about the economic impact of hosting the Summer Olympic Games and the FIFA World Cup. Without doubt, these are the biggest two sporting events in the world. Only once before have these two events been conducted in the same country within a two year period, the minimum time which can separate these two events. Mexico hosted the Summer Olympics in 1968 and the World Cup in 1970. Each event is conducted every four years.
This paper will provide a brief history of each event, leading up to the upcoming 2014 World Cup and the 2016 Summer Olympics, both to be held in Brazil. Following, will be an analysis of the recent economic impact of each of these events on the host nation. Finally, the comparative expected impact of each event on Brazil, and in particular the impact on small business formation in Brazil, will be discussed.
History of the Summer Olympics
A little history of the modern Summer Olympic Games will help the reader understand the 100 plus year growth in the economic importance of the Summer Olympic Games. The Games have been conducted every four years since 1896, The first modern summer Olympics was held in 1896 in Athens. In 1900, Paris hosted the 2nd Olympiad, followed by St Louis (1904), London (1908) and Stockholm in 1912. After a hiatus due to World War I, the quadrennial event continued until 1936, then suspended for 1940 and 1944, then continuing, uninterrupted from 1948 until the last Olympics in 2012, held in London.
With few exceptions, such as the period of the Great Depression and political boycott, each modern Olympics has generally seen increases in participation, audience and economic impact. The 1896 Olympics was conducted over a 10 day period and was a then largest sporting event ever held. The 1900 Olympics in Paris attracted more than four times the number of athletes and, integrated with the World’s Fair, was conducted over e period of five months, and included participation by 20 women.
The 1904 Games were held in St Louis, the first time outside Europe, and again in conjunction with the World’s Fair and was also spread over five months. As it seems with most Olympics, a pivotal event or person is especially memorable. In this case, the “star’ of this Olympics was George Eyser, who won 6 medals, despite having only one leg.
1908 saw the Olympics awarded to London, where the first standard length marathon was run. 1912’s games were awarded to Stockholm where Jim Thorpe won two gold medals, only to have them stripped from him for violation of the amateur code of the Olympic Games. (The medals were later reinstated in 1983, 30 years after his death)
Recommencing after WWI, the 1920 games in Antwerp drew another record number of competitors, only to be surpassed in 1924 by the Paris Olympic with 3000 competitors. The 1928 Games in Amsterdam saw two innovations – female athletes in track and field events and the first commercial sponsorship – by Coca Cola.
The 1932 Games in Los Angeles saw a reduction in competitors, due to the onset of the Great Depression. The 1936 games in Berlin, a showcase for Hitler’s Aryan superiority, are remembered for the multiple gold medal performances by Jesse Owens, an African-American.
The Games were cancelled in 1940 and 1944, with them returning to London in 1948, then Helsinki in 1952. The Melbourne Games of 1956 were the first to see the introduction of televised coverage. The 1960 Games are remembered for the performance of boxer Cassius Clay – Mohammad Ali.
In Tokyo in 1964, the modern age of satellite communications began the era of a global television audience and began the true commercialization of the event. In 1968 the Games moved to Mexico City, where the high jump was forever changed with the introduction of the “Fosbury Flop” and the Games were further politicized by the Black Power salute by American athletes on the medal podium. Politics grabbed the world’s attention with the 1972 Munich Games, when “Black September” terrorists invaded the Olympic Village and captured the Israeli team. The Munich games attracted over 7000 competitors and a record 112 countries.
1976 saw another turning point in the evolution of the Olympics. In this case it was the adverse financial consequences of the Games, held in Montreal, which incurred a debt of over $5 billion – more than $25 Billion in 2014 dollars. Political protest again occurred as African nations boycotted the Games to protest the New Zealand rugby team’s tour of Apartheid South Africa.
1980 saw the Games held in Moscow where 66 nations, including the U.S., Canada, West Germany and Japan all boycotted the Games to protest the Soviet invasion of Afghanistan. For the following Games, in 1984 in Los Angeles, the Soviet Union and 13 allies boycotted the games in retaliation of the 1980 boycott.
The followed the 1988 Games (Seoul), the 1992 Games (Barcelona) and the 1996 Games in Atlanta. The Atlanta Games are remembered for the “Atlanta bomber” but financially it marked the first time the Games attracted more than 10,000 competitors. Subsequent Games in Sydney (2000), Athens (2004) and Beijing (2008) saw successive increases in participants (to almost 11,000) and participating countries to over 200.
The 2012 Games in London resulted in an estimated 20 million visitors to the city and $14 billion in revenues generated. Over four billion viewers watched the opening ceremony – making it the most watched TV event in history.
Thus we have a condensed history of the Summer Olympic Games, leading to the 2016 games to be held in Rio de Janeiro, which beat out Madrid, Tokyo and Chicago for the hosting honor.
Benefits and costs of the Olympics
But what of the benefits and costs to the host city? Given that around two-thirds of the world’s population watches some part of the Olympics, there are both obvious public relations and financial implications of hosting the Games.
As previously mentioned, Montreal was left billions in debt, while Barcelona’s public debt rose to $6.1 billion as a consequence of the Games. Atlanta claims to have broken even, as did Sydney, but there is little evidence of an economic boom as a result of hosting. In fact, an Arthur Anderson survey on hotel occupancy indicated that while Sydney saw near 100% occupancy during the Games (a 49% increase over the period immediately preceding the Olympics), occupancy rates in Melbourne and Brisbane saw 19% and 17% drops in occupancy rate during the Olympics as compared to the early September figures. Overall, with the exception of Sydney (and for some reason, Adelaide), there was an overall nationwide decline in hotel occupancy in September 2000, compared to September 1999. (Anderson, 2000)
This substitution effect may apply to specific corporations as well as to alternate cities. For example, might the increase in occupancy at a Hilton hotel in Rio de Janeiro result from a decrease in occupancy in, say, Buenos Aries?
One should also consider the possibility of a smaller event generating the same incremental benefits. There is a capacity limit beyond which facilities cannot accommodate additional economic activity. Perhaps a smaller event – like the Commonwealth Games, for example – might fill the host city to capacity but cost considerably less to host.
When Athens won the right to host the 2004 Olympics, the budget was estimated to be $1.6 billion. The final public cost was around $16 billion. In addition, annual maintenance costs on the now under-utilized facilities is costing well in excess of $100 million a year. Some of the Olympic venues sit unused. (In fact, it was the probability of such happening that caused Chicago, in its bid for 2016, to propose it would dismantle and recycle the materials used in erecting Olympic venues.)
Other cities have been more successful in utilizing Olympic facilities. Atlanta’s two main Olympic stadia are now Turner Field (Braves Baseball) and Georgia Dome (Falcons football). The Olympic Village is used as dormitories for Georgia Tech. Urban redevelopment certainly helped Atlanta’s revitalization efforts.
History of the FIFA World Cup
The FIFA World Cup has been conducted every four years since 1930, with the exception of 1942 and 1946, due to WWII. It is held two years after (or before) the Summer Olympics. The quadrennial event resulted from the amateur code of the Olympics, which conflicted with the growing professionalism of football (soccer).
The World Cup final is the world’s most widely viewed single sporting event, with a global audience of over one billion people and a cumulative audience that exceeds that of the Olympic Games. The cumulative audience of the 2006 World Cup was estimated to be 26.29 billion.
The first host country was Uruguay, followed by Italy (1934), France (1938), Brazil (1950), Switzerland (1954), Sweden (1958), Chile (1962), England (1966), Mexico (1970), West Germany (1974), Argentina (1978), Spain (1982), Mexico (1986), Italy (1990), USA (1994), France (1998), South Korea/Japan (2002), Germany (2008) and South Africa (2010).
The first World Cup was televised in 1954 and commercialization and popularity of the event has grown annually ever since. Attendance at all venue games now exceeds three million.
Benefits and costs of the FIFA World Cup
Much like the available data for the Olympics, the economic benefits of hosting the World Cup do not paint a picture of huge financial benefits. However, as Matheson (2009) points out, although “studies of the 2006 World Cup in Germany showed that the country experienced little in the way of improvements in income or employment figures… surveys noted a noticeable improvement in residents’ self-reported levels of happiness following the event” (imagine if Germany had won!). The World Cup didn’t make Germans rich, but it appeared to make them happy.
Especially in the case of developing countries, one may raise the question of the opportunity cost and value of expending scarce public capital on venues which may have only marginal utility following the event. This is true of both the World Cup and the Olympics. A developing country needs far more capital expended to provide the nationwide infrastructure required for a mega-event like the World Cup. It is these very countries to which the cost of capital is higher than for richer countries. In addition, developing countries may better spend the infrastructure “dollars” on projects other than stadia and the roads to simply get to them.
Further, tourists tend to be attracted by more developed countries as venues. In the 2002 World Cup, hosted jointly by Japan and Korea, occupancy rates for the Japanese stadia were 88.7% while Korean stadia filled only 73.9% of seats, excluding games involving the “home” team and the finals. Remember, in the late 1990s, Japan’s GDP per capita was almost 80% higher than Korea’s.
Comparison of the two events
From the preceding, it would appear that neither event represents a potential windfall for the hosts. However, the basic differences in the two events need to be recognized.
The Olympics is awarded to a city. Although various events may be spread around outside the host city, these tend to be the more minor events. The real audience draw is for events occurring in the host city. While some country teams might set up training camps in various cities in advance of the actual Games, the vast majority of the infrastructure of the Games is focused on the host city. Tourists flock to the host city, global TV coverage focuses on the host city and to a great extent, most of the structural improvements and construction finances are spent in the host city.
In addition, the Olympics are focused over a condensed time period. The Rio de Janeiro Games are scheduled for 16 days – 5-21 of August. In addition, the host city hosts the Paralympic Games for 12 days (7-18 September) with almost 5000 handicapped athletes expected to compete, and over one million ticket sales. Further, television coverage continues to expand, resulting in added Olympic-based benefits.
By comparison, the FIFA World Cup is awarded to a country. In the case of the 2014 World Cup, obviously the major focus city is Rio de Janeiro, where the final will be played. The World Cup will take place over a period of a month – 12 June to 13 July, approximately double the time of the Olympics. Further, the games of the 2014 World Cup will be spread over 12 cities – each the capital of its state. Each of the 32 participating nations has a “base camp”, spread out over the entire country.
In addition, in the year preceding the World Cup, the Confederations Cup is awarded to the World Cup hosts. It uses half the stadia which will be used the following year in the World Cup. Held from 15-30 June, 2013, it included 8 qualifying nations. According to a study released by the Economic Research Institute Foundation and published by the Brazilian Ministry of Tourism, the Confederations Cup created 300,000 jobs, $9.3bn in financial transactions and added $4.7bn to Brazilian GDP. However, these data are likely to be quite optimistic.
According to estimates by Ernst and Young, the amount invested in infrastructure around the country, primarily due to the World Cup, will exceed $10bn, while Valente and Tur cite a November 2012 estimate of $14.7bn. However, if one adds private investment, the Brazilian Association of Infrastructure and Basic Industries concluded that the investments in urban mobility, Information Technology, public security, sanitation, electricity, hotels and hospitals is roughly $62.4bn.
As one can see, comparing the benefits of the two events is quite complex. Overall, one can conclude the Olympics may generate a more culturally broad-based tourism boast, as competing athletes (and their fans) come from around 200 countries. The bulk of the economic benefits accrue to the host city, although some benefits may accrue to the various training camp cities.
The World Cup has a longer “life”, extending from the beginning of the Confederations Cup to the end of the World Cup – approximately 13 months (compared to the Olympics/Paralympics approximate 6 weeks of competition). The economic benefits are more systematically spread across the country, with multiple games played in 12 cities. The economic benefits can currently be easily seen across Brazil, with public works projects underway in each of the host cities. Public investment in new roads, public transport systems, enhanced airports, power grid and information handling plus private investment in hotels, restaurants and other tourist support activities are geographically spread across the main population centers of the country.
Comparing results from the past
There is much post-facto evidence to suggest that the net financial gain from hosting either the Olympics or the World Cup has not been very significant for past host cities and countries. However, each host represents a different set of circumstances and outcomes may need to be measured differently. In the case of Brazil, the long-term benefits of enhanced public transportation alone should be significant. Favelas (very poor, generally crime-ridden neighbourhoods) have been cleared and many people relocated to improved and safer housing. Compare Rio to Berlin or London, where improvements needed in public transportation for the latter were relatively minimal but the cost of acquiring land to develop sports sites were much greater.
One must also consider that there is an efficiency in hosting both events in such a short period of time. In some cases, the cost of stadium construction can be spread over two events, while public spending may be better justified because the combined “tourism boost” period of both events extends from mid-June 2013 to mid-September 2016 – more than 3 years.
Finally, as pointed out with increased “happiness” in Germany following the 2006 World Cup, certain intangible benefits may result. France was culturally changed by the 1998 World Cup. All of a sudden signs and announcements were being made dually in French and English. The Queen song, “We are the Champions” echoed around Stade de France after France won the final. France became more “international” as a result of hosting the event. Likewise in Germany, aside from the aforementioned “happiness”, for the first time German flags were flying everywhere. The newly re-united Germany came of age with the World Cup. Brazil is likely to enjoy similar benefits. In the past, there was a concept of “Island Brazil”, an idea that Brazil’s economy could operate without internationalization. There was little drive to teach English. Now there are English (and other language) classes being taught to all sorts of members of the service industry – taxi drivers, hotel workers, retail store employees – even prostitutes. The country is already exhibiting a sense of confidence in its place in the global economy.
Impact on micro and small businesses
According to the Institute of Applied Economic Research, small businesses were responsible for 40 percent of the 15 million new jobs created in Brazil. Brazil now has about 6 million micro and small enterprises. The government defines micro enterprises in manufacturing as those employing up to 19 people, while small enterprises are those employing between 20 and 99 workers. In the retail sector, micro enterprises employ up to 9 workers and small enterprises between 10 and 49 workers.
Marcelo Neri, a Brazilian economist (Economist newspaper) states that the middle class in Brazil now makes up more than half of the nations’ population, growing from 35% in 1990 to 50% in 2012. Some commentators, according the Economist article, suggest the new middle class is entrepreneurial. These trends would suggest that much of the benefits from hosting the World Cup and secondarily, the Olympics, would to a great extent accrue to the entrepreneurial middle class, rather than solely to large domestic corporations and multinationals.
A research organization in Brazil, SABRAE, has performed a study to identify opportunities for Micro and Small Businesses in each of the World Cup host cities. Nine sectors were identified:
Wood and Furniture
Further, three distinct stages can be identified – pre-event, event and post-event. One could identify differing time periods in different parts of the country.
For the six cities areas impacted by the Confederations cup, the pre-event period would be up to mid-June, 2013. For other World Cup venues, the pre-event period extends to mid-June 2014. The event period likewise will be different for the Confederations Cup venues and the World Cup only venues.
The post-event period will be either from the end of the World Cup matches in the regional centers, or the end of the Paralympics in the case of Rio de Janeiro.
The study completed by SABRAE details opportunities in each of these business sectors, in each regional center in each of the three periods of time. This presents a matrix of opportunities. Given the emerging, entrepreneurial middle class in Brazil, it is likely that micro and small businesses may be in a position to take advantage of the business opportunities that will arise from hosting the World Cup. Further, those in Rio de Janeiro can additionally benefit from the business opportunities generated by the Summer Olympic Games.
The estimated direct costs of hosting the World Cup are roughly $18bn, while the Olympics will cost an additional $15bn, for an estimated total cost of $33bn (Sverrisson). Of course, accurate allocation of costs to one event over the other is somewhat arbitrary. For example, renovation of the main soccer stadium in Rio de Janeiro will also benefit the Olympics.
Overall, combining the Ernst and Young estimate of an economic impact of $70bn generated by the World Cup and the estimate of the University of Sao Paulo the Olympics would generate $51.1bn, yields a total impact of over $120bn in gross economic impact.
It is estimated in the case of Rio de Janeiro, for every dollar invested, $3.26 will be generated until 2027, with an impact on GDP of $13bn. Additionally, 120,000 new jobs will be generated per year until 2016.
Based on these, albeit rosy, estimates, the return on investment looks pretty good. However, few independent observers are “sold” on the accuracy of these estimates, and point to the previous rosy estimated that went unfulfilled at each of the recent previous venues for both the Olympics and the World Cup. However, although the short term benefits may not live up to the hype of the supporters, some of the infrastructure investments may be a driving force for economic growth in the long run. Improved roads and railways, telecommunications, electricity distribution and IT, and enhanced tourism facilities could all be a catalyst for image building, long term investment and growth.
This paper has presented an overview of the comparative impact of the FIFA World Cup and the Summer Olympic Games, and the secondary events related to each of these major events. In terms of event duration and geographic spread, the World Cup presents the greatest economic growth opportunities.
On the other hand, the Olympic Games provides a culturally broader yet geographically concentrated window of opportunity for business activities. The Olympic Games also provides greater variety in the types of venues which are developed, the cultural diversity of those tourists visiting the country and unique opportunities catering to the specific needs of the handicapped in connection with the Paralympic Games. This will obviously provide long term benefits to the handicapped in Brazil.
Especially for those in Rio de Janeiro, the combined opportunities related to both events are enormous. But even in the least impacted areas – those cities which host only World Cup games – the pre-event, event and post-event business opportunities are significant.
The end result should be a Brazil which will benefit from a large short term boost in economic activity but also a significant long term boost due to improved infrastructure and an enhanced global view. The physical (like public transportation and technology) and personal infrastructure (self-confidence and language skills) will be in place for long term economic benefit.
Dr Peter J. Gordon, Professor, Southeast Missouri State University, USA, email@example.com
Dr Francisco Vidal Barbosa, Professor, Universidade Federal de Minas Gerais, Brazil, firstname.lastname@example.org
In spring 2009 Finpro launched a project aiming at building the national cluster for education export named later on “Future Learning Finland”. In July 2009 Minister Henna Virkkunen appointed a working group to prepare an export strategy for Finnish education by the end of 2009. Work of the group was supposed to contribute towards creating a Finnish educational export cluster with Finpro’s Future Learning Finland project. Here politic social context there was the need for defining “education export” or find another term for export of services related to the Finnish know-how in education.
To find a term for phenomenon entitled “education export” in New Zealand, Australia, Great Britain and US was one goal of “Report on the export of Finnish education expertise – Thoughts for export promotion based on experiences of Future Learning Finland network (Juntunen 2010).” Besides, defining the chosen term in the Finnish context was part of the report’s goals.
It was suggested on report that “export of education expertise” (in Finnish: koulutusosaamisen vienti) is more accurate term than “education export” to describe nature of the Finnish education export business. The first argument of a short concept analysis was that the latter term refers to only educational services, but the Finnish offering includes also e.g. consulting services and technological solutions for facilitating learning processes. In fact, the Finnish offering differs radically from the offerings of countries where English are spoken as a native language. In those countries the import of foreign students constituted the most significant revenue source of education export business. For instance in New Zealand volume of foreign students’ import was 95% of the total revenues (the Economic Impact of export education 2009, 1).
Secondly, it was stated on report that the previous term refers to the fact that in case of Finland existence of business in sector called “education export” in many English-speaking countries must be based on internationally recognized expertise in education related issues. Expertise in education means that the Finnish system of education is high quality and self-renewing, the Finnish education providers have modern and future oriented concepts of learning and learning environments, and the Finnish education professionals are equipped with modern views of pedagogy. Without continuous invest on development of education and creation of learning-related innovate environments as well as branding the Finnish expertise in education and developing the Finnish offering to global education markets, the Finnish exporters face difficulties in convincing potential clients of the value of Finnish offering. Their main clients are not foreign students and degree programs in Finland cannot be the main products. (Juntunen 2010, 3)
On the report export of the Finnish education expertise was defined as export of the expertise in education based products, services and solutions for foreign clients (with two exceptions) and beneficiaries by tapping all potential modes of mobility of services across the borders. Private persons (like students and education staff), national, regional or local authorities, national or international third sector organizations (such as such as EuropeAid), and private companies and their customers were considered to constitute potential clients and consumers segment the Finnish education expertise export (Juntunen 2010, 3).
According to the General Agreement on Trade in Services (GATS 1994, 285-286) there are four modes for mobility of education services:
Cross-border supply: Service delivered within the territory of the Member, from the territory of another Member Service supplier not present within the territory of the member.
Consumption abroad: Service delivered outside the territory of the Member, in the territory of another Member, to a service consumer of the Member.
Commercial presence: Service delivered within the territory of the Member, through the commercial presence of the supplier Service supplier present within the territory of the Member.
Presence of a natural person: Service delivered within the territory of the Member, with supplier present as a natural person.
Reason of identifying client segments and modes of service mobility across the borders as a part of concept analysis was to provide framework for analytical discussion on the Finnish export of education expertise. The main argument regarding clients was that instead of individuals the main client segment are authorities. As to GATS modes of mobility the main message was that without commercial presence in the main markets and without virtual services education sector cannot constitute a significant new export sector by 2015, because Finland cannot be the destination of consuming training services abroad due to legislation denying tuition fees.
In 2009 the working group, which prepared the education export strategy for approval of the Council of State noted that the “export of education expertise” can be considered more accurate term than “education export” to describe phenomenon the group was trying to grasp. However, the group decided to use the term “education export”, because it has been used in English-speaking countries. The group, however, pointed out that the education export must be understood in the broad sense meaning all education related exports. (Education export strategy 2009, 7)
Since 2010 “education export” is used as an official term in administrative language (see e.g. International education markets and Finland 2013). However, there is still lack of precise definition of “education export” and systematic use of that definition among education exporters and the Future Learning Finland. In one hand matters not fitting into definition called “education export” are counted among education export. In other hand it is not explicated sufficiently enough what “education export” could mean as products, services and solution.
“Education export” implicates to commercial activities meaning that nature of “export of education expertise” is profit-oriented. Currently projects not being commercial ones are reported under “education export”. So, statistics on volume and structure of education export are not reliable. Secondly, imprecise term e.g. allows higher education institutions to report international academic activities under “education export” discouraging to commercialize education expertise, and to create business models for education export, which are preconditions of expanding and professionalization of the business (Juntunen 2010, 3)
Business areas and business models
Listings of business areas of the Finnish education export provide responses to question: What does “education export” means as products, services and solutions. “Thoughts on Education export” blog on 3rd of November 2013 provides a list of the most important business areas to Finland in terms of business potential. The top 10 areas on the list were following:
Operating schools, colleges and universities abroad
Strategic partnerships with foreign operators so that role of Finnish party consist of expert services, products and solutions improving quality, effectiveness or any added value valuable to operator or authorities
Localization of relevant parts of Finnish system and practices to solutions for local needs so that Finnish education exports get a significant pilot
Degree business by utilizing all possible modes of service mobility, and using earning logics which are not only based on the commissioned education model (in Finnish: tilauskoulutusmallille)
Scalable further education for public sector by using multi-mode learning methods including virtual learning
Learning games (e.g. Rovio’s products)
Virtual learning environments, such us products of Tribelearning
Products for learning (such as Sanako’s products for language learning and Teklab’s labs for engineering education)
Education system reforms funded by donors of international development or authorities of developed countries
Content for education and training including new types of learning materials
Classification of business areas would improve quality of the debate on education export. It is useful for all members of the national education export cluster Future Learning Finland from policy makers to business actors in process of finding focus for actions. In other words, classification supports all levels of Future Learning Finland cluster to find focus for the education export business, and to identify actions needed to be carried out for improving likeliness that by 2015 education export constitutes a significant new export sector in Finland.
How to increase volume of education export significantly in short term? This question is linked with the business area listing above and assessment of potential business volume of each area. Easing terms of conditions to charge tuition fees is one action needed to be done e.g. along with suggestions of Dr. Päivi Lipponen’s group. Without easing money making with degrees achieving goals of the Education Export Strategy is unrealistic. Besides, increasing number of contracts on operating schools or being strategic partner for schools operators abroad are needed. To avoid limitations of low number high-caliber specialist with sufficient language and communication skills, the Finnish education export also have to increase sale of technology product and solutions for learning as well as sale of educational content. Being competitive in consultancy service provision based education system development business is challenging. However, contracts on large-scale system development projects are still definitely needed in order to achieving the national goals. (see above mentioned blog)
Classification of business areas, what does “education export” means in our case, also constitutes a starting point for designing new business models for education export. Significance of business models as competition factors has been increased as result of development of information technologies, internationalization and changes in business network. “Companies operate more and more in partnership networks, offering joint value propositions, build multi-channel and jointly owned channel networks, and apply different earning logics. Competitions between companies take place with increasing significance between business models instead of single products and services”. (Pulkkinen et al., 2010, 8 – 9).
Business Model Canvas, originally presented by Osterwalder and Pigneur (2010) is these days a widely used tool for designing, developing and presenting a potential business concept. The Canvas model is applicable in the context of education export and it consists of the following nine blocks supporting business designing:
Being competitive in global education market presupposes competitive business model, and members of FLF, for sure, must pay more attention to business model development. Canvas provides one tested framework for doing it, and business areas classification support process of finding content for business model.
The business model Canvas also provides a framework for analyzing weaknesses of current situation. A list of some top weaknesses of the Finnish education export, state of affairs hindering the Finnish education exporters to be more competitive in global markets, is the following:
Value proposition: Finns are not good at selling value and telling-stories
Customer: authorities are the main customer segment of the most of education exporters, but understanding of value of services for a chosen customer segment is weak
Customer relationships: customer management is relying too much on home-office-based efforts instead of managing relationships through locally employed agent, local partner or direct investment
Channels: virtual mobility of services and provision of services via units abroad should be considerably enforced as modes of service delivery
Revenues: earning logic is too much based on invoicing expert’s input
Activities and resources: due to a short history of the Finnish education export professionalism level of education exporters is not high enough
Costs: total expert costs are high, and means of reducing costs are not in use
Partners: education exporter’s capacity to orchestrate their business network in the global market in customer cases so that they are reliable service provider with competitive price is weak.
It really matters, what does “education export” means in the public debate, in discussions between education exporters and in talks within exporters. The lack of definite and generally agreed concepts limits the opportunities to design and expand education export business and hinders the allocation of the public resources on the most promising business areas.
Timo Juntunen, Director of Global Education Services, JAMK University of Applied Sciences, email@example.com
Long-term North-South partnership between Lahti and Rustenburg has expanded over the years
City of Lahti has been part of the North South Local Government Co-operation program since 2002. The program is coordinated by the Association of Finnish Local and Regional Authorities and funded by the Ministry for Foreign Affairs. Through the program, Lahti and its African partner municipalities have received funding for development activities in the field of environmental administration. The co-operation is based on colleague-to-colleague interaction and mutual learning. Best practices are shared through peer reviews, trainings, exchange visits and benchmarking while research pilots and studies are conducted to find new solutions for identified challenges. From September 2014 onwards, the co-operation is being coordinated from Lahti University of Applied Sciences.
Lahti has currently local government partners in South Africa and Ghana. In South Africa, Lahti is co-operating with Rustenburg and Madibeng Local Municipalities that are situated approximately 100 kilometers from Johannesburg in North West Province. The area known as a hub of tourism and mining industry, especially platinum mining. In Ghana, Lahti has partnered with the capital of Volta Region, Ho Municipality. The economy of Ho is highly dependent on small-scale agriculture.
Finding the niches for Finnish environmental technology solutions in the African markets
In 2013–2014, the co-operation between Lahti, Rustenburg, Madibeng and Ho has focused on the development of municipal solid waste management and sanitation coverage. Through the support of the co-operation, South African partners have piloted source separation operations and capacitated community-based groups to start recycling and material recovery ventures. In Ghana, feasibility of dry toilet technology and composting have been studied in course of school and community pilots.
For Lahti University of Applied Sciences (LUAS), the project provides valuable insight and contacts to the progressing African environmental technology markets. Understanding the stakeholders, challenges, needs and priorities of the South African and Ghanaian waste and water sectors makes it possible to evaluate the potential of Finnish environmental technology solutions for these markets. The environmental engineering degree program of LUAS has been involved in the planning and implementation of research pilots of the co-operation, e.g. through course works, final theses and student work placement. This R&D approach will be strengthened from 2015 when LUAS is coordinating the co-operation in Lahti.
International experience for students through work and studies in Africa
Annually 2–6 environmental engineering students have been given the opportunity to work in the environmental administration of the African partner municipalities for 3 months. The work placements have supported the implementation and documentation of the research pilots. In Ghana, students have taken part in the activities of the dry toilet pilot, such as organizing the training events for users and builders of dry toilets as well as monitoring the field trials of end products. In South Africa, for example the design of a public waste education center and waste sorting center have been supported with student work placement.
Work placement in Africa is a valuable opportunity to improve language, networking and project management skills. Students get exposed to the whole cycle of project management while taking part in the planning, budgeting, implementation, monitoring, reporting and evaluation of the activities. Successful implementation of activities requires collaboration with multiple stakeholders. For example, when organizing field trials with urine fertilizer, it is necessary to coordinate the activities between the environmental health officials, agricultural extension officials, local researchers, farmers and dry toilet owners. A part from technical know-how, the work placement offers a good opportunity to develop presentation, negotiation and management skills.
Through the local government co-operation, Lahti University of Applied Sciences has also created network in the field of higher education to South Africa. This interaction has been extended to other countries in Southern Africa. In 2013-2015, LAMK is coordinating a North-South-South Higher Education project, Fanhees 3, with partners from North-West University (South Africa), University of Botswana (Botswana), Helsinki Metropolia University of Applied Sciences, Polytechnic of Namibia (Namibia), HAMK University of Applied Sciences. This project supports teacher and student mobility and enables few environmental engineering students from Lahti to take part in student exchange annually.
Anna Aalto, Project Manager, Lahti University of Applied Sciences, firstname.lastname@example.org
Close relations of Finland and Namibia over a hundred years
Finland has a great reputation in Namibia, as missionary workers worked with the local people on technological and education issues as early as in beginning of 1900’s. Nobel Prize winner, our former president Martti Ahtisaari was the key negotiator during the Namibia’s independence process. With the mutual understanding and thrust between the countries, it’s easy to build up new projects and co-operation on educational and research.
The co-operation between Rauma, Finland and Namibia started with the building of a new multidisciplinary highly technical research vessel, with modern research capabilities for marine and fisheries research of Namibia by STX Finland Ltd (STX-Fi) from August 2011 to June 2012. This modern and innovative vessel is specially designed for the purposes of Namibian fisheries research.
Improving the maritime education on Namibia (Maribia)
The main aim of “Improving the maritime education on Namibia (Maribia)”-project is to improve the maritime education of Namibia on the higher educational level of Namibia and on the level that can be approved by the International Maritime Organization (IMO). The project is in line with the objectives of Finland’s Development Policy Programme. It supports the maritime cluster of Namibia by promoting the rise and preservation of sustainable jobs in the maritime field. This MARIBIA-project will last to the end of year 2015.
Water project for Horizon2020
Namibia is a large country at over 800 000 km2, with low population number (2.3 million inhabitants) being the driest country south of Sahara desert (Figure 2). Actually, there is more seals 2.7 million than human being in Namibia. The key economic sectors are mining, fishing, tourism and agriculture (most important fish and marine products). All of these sectors depend on a sustainable water supply and sanitation in varying degrees. However, as an example Windhoek, the capital of Namibia, has an average annual rainfall of around 370 mm, while the average evaporation rate is over 3000 mm per annum. The nearest perennial river, the Okavango, is 700 km from the city on the north-eastern border of the country (border with Angola). Windhoek is therefore continuously facing serious water challenges.
In order to address the challenges of sustainable water systems in Namibia, we have put together a consortium of experts to work on these issues. Our proposed project, for Horizon2020, is focused on research, technological innovation, business opportunities, education, tools and methodologies for clean and hygiene water supply and sanitation (including raw water, drinking water, waste water, sea water) in Namibia. An important aspect is the energy, as all parts of operation of water systems need energy for successful operation. Our approach combines innovative technical solutions to local knowledge, operational and effective application of integrated water management in connection to local operators, including policy institutions and implementation bodies. As a practical tool, we have to urban areas as pilot sites: Windhoek, the capital and Walvis Bay municipality (Figure 3). RV Mirabilis is considered as a research vessel for sea water sampling (Figure 1).
Presence is needed on site
However, it should be kept in mind that the way of doing business varies from country to country. For example, in Namibia, the presence on site is very important. Maritime project personnel, as project manager Marva and captain, maritime expert Koivisto with the co-workers have visited Namibia several times since 2012. Project manager Keinänen-Toivola is able to prepare the water project for Horizon2020 on site in Namibia with Kolmiloikalla vaihtovirtaa-project (Figure 4).
Kolmiloikalla vaihtovirtaa- project, a key for successful co-operation
Kolmiloikalla vaihtovirtaa is a mutual project of Satakunta University of Applied Sciences and Turku University of Applied Sciences, funded by the Ministry of Education and Culture. The project is a part of the CoastAL cooperation between Satakunta University of Applied Sciences and Turku University of Applied Sciences (www.coastal.fi). It offers the staff of universities of applied sciences the chance to cooperate with their working life partners in an intensive and long-term manner. The Kolmiloikalla vaihtovirtaa project offers two working life exchange options of about three months for the years 2014–2015: Domestic working life exchange and International exchange. The destinations of domestic exchange can be research and development units of companies or sector research facilities. When it comes to international exchange, the RDI units of our strategic international partners or their regional cooperation organizations are recommended as destinations.
Minna Keinänen-Toivola, Project Manager, Satakunta University of Applied Sciences/ Faculty of Energy and Construction/ WANDER Nordic Water and Materials Institute, email@example.com
Heikki Koivisto, Project Manager, Satakunta University of Applied Sciences/ Faculty of Logistics and Maritime Technology, firstname.lastname@example.org
Meri-Maija Marva, Training Manager, Satakunta University of Applied Sciences/ Faculty of Logistics and Maritime Technology, email@example.com
Martti Latva, Chief Project Manager, Satakunta University of Applied Sciences/ Faculty of Energy and Construction/ WANDER Nordic Water and Materials Institute, firstname.lastname@example.org