A Problem Structuring Method for Innovation Strategy: A Tentative DPSIR Approach

doi:10.4236/ib.2013.53B017

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iBusiness, 2013, 5, 80-83

http: //dx.doi.org/10.4236/ib.201 3.53B017 Published Online September 2013 (http://www.scirp.org/journal/ib)

A Problem Structuring Method for Innovation Strategy:

A Tentative DPSIR Approach

Yuting Qiu, Yiyang Fan

Business School, University of Shanghai for Science and Technology, Shanghai, China.

Email: yting.qiu @ gmail.com, [email protected]

Received June, 2013

ABSTRACT

The rise of emerging markets is restructuring the global economic and social landscape. It requires a new paradigm of

global innovation strategy to meet this challenge. After reviewing possible trends in today’s world, it is suggested that

the objective of innovation is to create an inclusive-and-sustainable future. To achieve this goal, this paper is concerned

with the use of the Prob lem Structuring Methods (PSMs) which encourage the participation of all stakeholders involved

in decision making and policy development. DPSIR (Drivers-Pressures-States-Impacts-Responses) framework, a par-

ticular PSMs, is employed to provide a systematic view in problem identification, analysis and solving in terms of mul-

tiple perspectives of stakeholders.

Keywords: PSMs; DPSIR; Innovation Strategy

1. Introduction

The rise of emerging markets is one of the most major

contexts of our times. These trends can be interpreted as

heralds of a dramatic restructuring of the global eco-

nomic and social landscape in the future. As a result,

complexities and dynamics will be perennial challenges

to global players and policy-makers. To rise to these

challenges, a future-scenario paradigm can help firms

deeply understand the potential evolution and grapple

with uncertainty and volatility.

First and foremost, it’s worth revisiting the essence of

innovation from a broader perspective. The economy is

undergoing worldwide unbalanced development. The

rich world is suffering from sluggish growth that the tra-

ditional advanced markets become over-saturated. In

contrast, the emerging world is becoming a much more

lucrative market with the rise of a prospective middle

class. But an underlying reality is that huge gaps remain

between advanced world and emerging world, for exam-

ple GNI per capita (PPP) in U.S. ($48,820) vs. China

($8,390) [1]. In emerging markets, the mega consumers

whose unmet demands are limited by purchasing power,

are accounting for more than 70% of the global popula-

tion. To tap these enormous potential groups, the role of

innovation sh ould be not only boosting economic growth

but also be solving everyday problem, eradicating pov-

erty and hunger, and helping people attain an inclu-

sive-and-sustainable future.

The inclusive-and-sustainable growth is a complex

term referring to combine economic growth with social

needs which depend upon multiple perspectives of

stakeholders in the problem context. To achieve this goal,

it requires the problem structuring methods (PSMs)

which involve the participation of all stakeholders in

working out a satisfactory solution. This paper is con-

cerned with the use of the DPSIR (Drivers-Pres-

sures-States-Impacts-Responses) framework, a particular

problem structuring approach, to broaden the perspec-

tives of participants and cast new light on the potential

innovation strategies and actions.

2. Innovation Strategy and PSMs

2.1. The Complex Dynamics of Reality

Today, corporations operate in a highly dynamic envi-

ronment. The number of players is enormous, and free-

exchanging information encourages competition. Forces

such as technological change and the global re-balancing

from developed to emerging markets have made the

problems increasingly complex, the markets more vola-

tile and the consumers more diversified. Within this par-

ticularly challenging context, the economic, social and

nature forces should be regarded as co-evolving in re-

current interactions. And there is non-linear relationship

among each part that changes in one set affect others

disproportionately.

This hyper-turbulent environment becomes a prime

candidate for dev eloping innovative and unique so lutions.

A Problem Structuring Method for Innovation Strategy: A Tentative DPSIR Approach 81

Thus the role of innovation has expanded its traditional

function as a spur to economic growth in the Age of

Schumpeter. It calls for a higher flexibility and adapta-

bility of innovation in line with different market re-

quirements, namely, more inclusive and sustainable to

deliver unique value proposition to consumers. And this

challenge places an ever-greater premium on developing

new strategy of glo bal in no vation.

2.2. Why PSMs?

A problem structuring method is recommended for com-

prehending the complex dynamics of the external reality.

The PSMs, such as DPSIR framework, h ave flexibility to

develop innovation strategy in light of complexity, man-

age changes within dynamic system, and balance the

interests of multiple players [2]. And as a subset of the

participative methods, the PSMs encourage the participa-

tion of all stakeholders involved in decision making to

address complex issues [3]. It provides a systematic view

to identify the inner strengths and weaknesses in the

process of innovation strategy development, and offer a

means of compatibility to meet various needs of stake-

holders.

The traditional problem-solving frameworks frequently

address particular problems under particular conditions,

thus they have limited applicab ility. The PSM is also not

a silver bullet for solving any problem. Instead, it is a

flexible mechanism for shaping co mplex problems into a

structured way to develop innovation solutions which can

be useful in a wide range of situations, from individual to

organizations to industries to nations. And there are five

key reasons to employ PSMs to develop innovation

strategy:

1) There is non-optimizing way to devise specific in-

novation solutions for the complex and hyper-competi-

tive marketplace. It requires us to seek alternative solu-

tions which are acceptable and measurable effective.

2) Concerning the non-linear relationship, there are

conflicts and interconnections among each parts of sys-

tem which are needed to clarify.

3) Multiple players should be treated as active subjects

instead of passive objects. Also, there are multiple deci-

sion takers.

4) There are both trends from bottom-up and top-down

that require facilitate two-way communication and plan-

ning.

5) The models should accept uncertainty. The decision

and policy are not immutable. Everything in the future

will be catalyst for their dynamic changes.

2.3. The Process to Develop Innovation Strategy

A. Identify specific issues

The success of innova tion is judged by its con tribution

to the reality of external environment. Before seeking a

solution, it’s needed to identify the issues firstly.

 What aspects of the issue should be concerned in

analysis and decision making? Which is the principal

matter to tackle?

 How interactions happen within and across eco-

nomic, social and organizational systems? Do they gen-

erate desirable or undesirable outcomes?

 What are the systematic enablers or constraints?

How to facilitate the advantage factors and eliminate the

disadvantages?

B. Define the system boundaries

Drawing the system’s boundaries is to examine care-

fully what or who should be involv ed in and who will be

affected by this system (referred to the process of bound -

ary critique). The identity of issues makes a significant

difference to the system boundary. The objectives and

players concerned with the issues decide the breadth of

participation. They also decide that the issues should be

discuss in what level, such as the global or local scope,

the industrial or organizational sphere.

C. Measure and balance the value

The focus of all the solutions will be solving conflicts

of interests at last. Thus while establishing system

boundary, it involves identifying conflicts and making a

value judgment. It’s a question of the depth of partici-

pation which associates with value claims.

 What are people’s different perspectives on the

issue, and which values and assumptions underpin these

perspectives ?

 What issues and stakeholders are important or

peripheral? Whose values could actually be respected

and whose interests will be served by particular decision

making?

D. Choose DPSIR as PSMs

DPSIR framework enables us to better understand the

complex and dynamic interactions of each parts in

system. To solve the issues, it requires us to identify

causality (in particular the State changes resulting from

specific Drivers and Pressures), and capture the uncertain

Impacts and Responses to change in a systemic way.

E. Call for participation

No one with the system can have complete knowledge.

PSMs emphasize participation in the knowledge in-

spiration and structuring process with a focus on model

building. And model built by a small group will be

present to a wider group as stimulus for discussion.

Guidance on how this might best be brought about is

somewhat limited and a broad range of interpretations

will manifest in practice. That’s the principle of PSMs

embrace diversity in a diversity of forms.

2.4. The Benefits and Risks

A. Over simplification?

A Problem Structuring Method for Innovation Strategy: A Tentative DPSIR Approach

Communication which is a main function which

demands simplicity. Indicators within system always

tend to simplify the complex reality for measurement and

facilitating information exchange. But is it over

simplification that some important factors or participants

will be ignore or omit? Thus researches should pay great

attention to the extent of simplification. Serve particular

interests to make an acceptable decision or involve wider

group in policy development? The major objective

decides the level of simplicity .

B. Deal with uncertainty

PSMs can be viewed as heuristic devices to facilitate

engagement, communication and knowledge inspiration.

DPSIR in particular, aims to develop a framework to

represent a shared understanding of reality. The contr-

oversial or even competing perspectives of stakeholders

will be accommodated in the process of model building.

The uncertainty and complexity will be downplayed by

DPSIR framework [4].

C. The resilience

Resilience is measured by the magnitu de of turbulen ce

that can be absorbed before the system changes its

structure[5]. PSMs are unformulated frameworks with

dynamic changes under different context. Their great

resilience to changes comes from the general inclusion of

multiple attitudes, and value delivery across various

groups of stakeholders.

D. The ability of re-balancing

PSMs pay a higher degree of focus on the ability of

re-balancing. Ackermann (2012) highlights that PSMs

should respect not only who to involve but also who to

manage when considering outcomes [6]. The framework

offers a systematic communication that multiple value

claims would be considered by the participants in

balance. But this is not imposed on the participants but

comes from their own understanding and discourse.

3. DPSIR as a PSMs for Innovation Strategy

3.1. DPSIR Background

The DPSIR framework was developed by the European

Environmental Agency and acts as a form of typology to

help policy-makers grab the relevance and meaning of

the indicators [7]. Constructing a preliminary conceptual

model, DPSIR can be used as a means for structuring and

analyzing, even a model for decision support [8].

3.2. Indicators Definition

DPSIR consists of five pre-determined indicators –

Driving forces, Pressures, State changes, Impacts and

Responses. Each indicator is used to measure some fea-

ture of the context which is important to the participants.

 Driving forces – The driver s come f rom ch anges in

economic and social development. The essential to find

out the driving forces is to encourage participants to ex-

press how changes happened in their context.

 Pressures – Each of Drivers exert potential Pres-

sure on the system. Pressures on the system can be lo-

cally/regionally/internationally endogenic pressures or

exogenic pressures. In terms of innovation strategy de-

velopment, the pressure is mostly exogenic because the

complex dynamics of reality.

 State changes – State of the external reality

changes in the background status.

 Impacts – State changes lead to actual or potential

Impacts on society, namely welfare changes. The under-

standing of socio-economic drivers or pressures should

be broadened and pay adequate attention not only to the

state of background, but also to the state of social mat-

ters.

 Responses – Societal Responses feed back on the

Driving forces and Pressures through adaptation or dis-

ruptive action. They come from the requirement to miti-

gate or overcome the problems created by State changes

or Impacts.

Smeets and Weterings(1999) [7]point out three major

purpose of indicators in terms of problem structuring:

1) To supply information on problems, in order to en-

able players to weigh pros and cons;

2) To support strategy development by identifying key

factors that cause pressure on the external environment;

3) To monitor the effects of responses.

3.3. Objectives of Innovation Strategy

As the global economy’s center of gravity shifts, the

emerging countries have been the world’s fastest-grow-

ing economies while the advanced countries slow their

tempo of growth with the risk of sinking into a prolonged

slump. Responsible for this trend are socio-demographic

changes, the search for differentiation in saturated mar-

kets, shifts in purchasing power, the internationalization

of markets and product development, and the trend to-

wards diversification. Accordingly, the objectives of

global innovation strategy should be accessibility, ac-

ceptability, affordab ility and sustainability (Table 1).

Table 1. Objectives of innovation strategy.

ObjectivesKey point Issues to tackle

Accessibility Redefine how products

distribute and sell

Tackle the issues of market

fragmentation to reach a wide

range of consumers

AcceptabilitySocially desirable Create and deliver value to

tackle the issue of demand

heterogeneity

Affordability High

price-performance ratio

Use feasible technology and

control at a reasonable cost to

fulfill unmet demands

Sustainabilityenvironment-friendly Maintain a balanced and

long-lasting development [9]

A Problem Structuring Method for Innovation Strategy: A Tentative DPSIR Approach

 Mi g r at io n an d

civilizations

 Technological

innovation

 Globalizat ion

 Liberalizati on of

trade and

investment

 Gr owing an d

ageing population

 Shortage of

resources

 Inadequate

infrastructure

 Th e rise of em er g ing

markets

 Gaps between

advanc ed and

developing co unt r i e s

rema in but narrow

 Environmental

degradation

 Unbalanced

development

acro ss reg ion s

and countr ies

 Demands

diversification

 Ecological

threats

Se t u p cl ea r

targets and

beyond

constraints

Incl usive

and

sustainable

growth

 Develop affordable and sustainable products

or services

 Create disrupt i ve business models

 A more flexible and adaptable strategy

Driving forcesPressuresState changesImpacts

Re s

onses

Figure 1. DPSIR model for innovation strategy.

3.4. DPSIR Model for Innovation Strategy

After reviewing the complex dynamics of reality, this

paper develops a tentative DPSIR model (Figure 1) to

assess the interactions of indicators to achieve today’s

objective of innova tion.

4. Discussion and Conclusions

The PSMs can be used not only in general but also spe-

cific context. DPSIR framework, a particular PSMs, is a

cyclical model which can be employed for recurrent re-

view to meet the complex and dynamic nature of innova-

tion. Involving multiple perspectives of stakeholders,

DPSIR provides a systematic view in problem identiﬁ-

cation, analysis and solving. But DPSIR framework is

fundamentally an expert device to be interpreted by spe-

cialists for the application of policy makers. Could

DPSIR be ‘handed over’ to players in system as a means

to self – assess model? It requires more discussion and

practical cases to extend the application of DPSIR as a

PSM – offering technical methods and stakeholder en-

gagement.

5. Acknowledgements

Financial support from NSSFC (NSSFC/13BJY021) and

Academic Talent Development Program for Liberal Arts

and Social Sciences, Shanghai Academic Degrees Com-

mittee (2012[13]) is gratefully acknowledged. The re-

search has also benefited from the support of China

Shanghai Municipal Research Project of Education and

Science 2011(B11041) and is also part of the Soft Sci-

ence Research Program of the Shanghai Foundation for

Development of Science and Technology, China

(096921048).

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