Announcing the start of the TREASURE project

New testing opportunities for new technologies to make the automotive sector more circular

 

1 June 2021 marked the start of the TREASURE project (leading the TRansion of the European Automotive SUpply chain towards a circulaR futurE), coordinated by Sergio Terzi and Paolo Rosa from the Department of Management, Economics and Industrial Engineering of the School of Management.
Co-funded by the European Commission with the H2020 programme, TREASURE is a Research and Innovation Action (RIA) that aims to offer new testing opportunities for new technologies to make the automotive sector more circular.

Its main objectives are:

  1. to guarantee sustainable use of raw materials in the automotive sector reducing the risks linked to supplies;
  2. to apply the circular economy paradigm to the automotive sector, acting as examples for the manufacturing macrosector;
  3. to deliver better economic, environmental and social performance for vehicles for all users;
  4. to create new supply chains around end-of-life vehicles (ELVs), focusing on the circular use of raw materials.

In this way, TREASURE will deliver tangible support for companies in the automotive sector, providing a practical demonstration of the benefits obtainable from the application of the circular economy paradigm, from the point of view of both business and supply chains and also of technology and sustainability, through the adoption of industry 4.0 technologies in the management processes of ELVs and their parts.

The primary results expected include:

  1. the development of an AI-based tool for analysis and comparison of possible circular supply chains in the automotive sector;
  2. the realisation of a series of successful cases for key players in the management of ELVs, such as car wreckers, scrap metal shredding plants, raw material recycling plants and vehicle manufacturers;
  3. the integration of key enabling technologies for the design, dismantling and efficient sustainable recycling of electronic auto parts.

Partners in the project, coordinated by the Politecnico di Milano, are the Dutch research centre TNO, Zaragoza University in Spain, the professional school at the Università della Svizzera Italiana, the Università degli Studi dell’Aquila, the Dutch consultancy agency Material Recycling and Sustainability B.V., the Estonian company for social studies Edgeryders OU, the Lithuanian LCD screen manufacturer EUROLCDS SIA, the Spanish auto parts manufacturer Walter Pack SL, the vehicle demolition company Pollini Lorenzo e Figli Srl, the leading Spanish car manufacturer SEAT SA, the software developers TXT E-Solutions Spa, the Spanish scrap metal recycling company Industrias Lopez Soriano SA, the Italian National Unification Body, and the French automotive cluster NEXTMOVE.

Human Centered Industry 4.0

Industry 4.0 is often referred to as a new industrial revolution and the recent COVID pandemic has further accelerated the already impressive level of investment in new technologies. However, no real transformation can happen if people are not put at the centre of the transformation. Successful implementation of the Industry 4.0 paradigm requires a joint design of technological and organizational variables, with the aim of designing technologies for humans and not instead of humans. Augmentation strategies through participatory design is the promising avenue to a more resilient and smarter manufacturing

 

Raffaella Cagliano, Professor of People Management and Organization, Co-Director Obstervatory Industry 4.0 Transition, Politecnico di Milano

Digital technologies are nowadays one of the central factors in the transformation of any organization. In the manufacturing context, digitalization is often associated to the concept of Smart Manufacturing or Industry 4.0. Someone even talks about a fourth industrial revolution, referring to the transition towards a new paradigm of interconnected, digitalized and intelligent production systems.

The recent COVID-19 pandemic has been a kind of turning point in this process. As also clearly stated in the recent sixth annual State of Manufacturing Report (Fictiv, 2021), digital transformation has become a business imperative, and no longer a “nice to have” or an optional strategic lever. In fact, those companies that have been able to thrive during the COVID-19 year and have shown higher resilience are the ones that invested more in digital technologies in the years before the pandemic. Even during the crisis, investment in digital transformation – also in manufacturing – increased hugely (see e.g. Deloitte, 2021).

Despite this, the results of the introduction of new technologies do not always fulfil promises and in many cases the investments tend to be higher than the advantages. Many change management problems are mentioned as possible cause, and many lament a lack of competencies within the organization, or a lack of right culture, mindset or other.

During our recent years of research on Smart Manufacturing at the School of Management of the Politecnico di Milano, we had the opportunity to study many successful cases of companies that were able to transform their manufacturing systems into completely new models and to improve their operations significantly; often they were even able to rethink their business model and to offer completely new lines of products or services as a consequence of the new capabilities developed and the opportunities brought by the introduction of the new technologies. At the same time, many of these companies were also able to readily react to the COVID crisis, showing a resilience that was higher than the average. They were able to move many activities to a remote or virtual space, to schedule work in a flexible way to accommodate the needs and constraints of people during the emergency, and to introduce health and safety measures more rapidly and effectively.

These companies have a common approach to digital transformation: to put people at the centre of the transformation. We can recognize this approach from two main elements. First of all, they introduced digital technologies within the context of a clear strategy for operations improvement, where technology is seen mainly as a way to facilitate or augment human physical or cognitive capabilities, rather than substitute them. Technologies, on the one hand, are used to facilitate the work of operators by providing all the relevant information, guidance and support that is needed to operate in the most effective way, and to take away those tasks that are heavy, dangerous or where humans don’t add specific value compared to machines, leaving in this way more space to people to contribute according to their most valuable characteristics. Even more, some applications of Industry 4.0 technologies are designed to augment the operators’ potential by providing them with all the data and information needed to make them able to manage complex production systems autonomously and contribute to continuously improve the processes and the systems themselves. Thus, technologies are not used instead of humans, but for humans to enhance their work and contribution.

Second, these companies adopted a systemic approach to technology design and implementation that allowed them to design a system where technology works for humans. This systemic approach requires that technological and organizational factors are designed together, according to the well-known – but not so often used – socio-technical approach. If technology has to support human work, the technical and social systems should be designed together to exploit the joint advantage of the two systems and to design work and processes where the potential of technology and humans are fully exploited. A more common approach is instead the one where technology is designed first, and the consequences of technology on people are managed afterward, trying to adapt a posteriori the knowledge, culture but even the predisposition of people to the technology, with poor results in most cases. This mistake has been perpetuated in every major technological wave or revolution.

Instead, in many successful cases we observed that the joint design of the technology and the work system is realized though participatory approaches, where people are engaged not just in the last phases of change, to inform them or to test the new systems, but instead since the early phases of the project. Operators are asked to express their needs, to provide early feedback on the new systems and sometimes even to provide ideas to further improve or innovate the production systems. When this level of involvement is achieved, the manufacturing system will benefit from the transformation even after the implementation of the technologies, since people are able to continuously improve the way they work and they use the technology, crafting their jobs according to the potentialities discovered in the technologies and in the data that have been made available. This idea of participation, involvement and diffused creativity is coherent with the principles of design thinking that we have seen used in some of the most advanced cases in our study, and that can constitute a new frontier for the application of the methodology outside the context in which it originated.

 

Big Data: new skills for new professions

Did you know that 2.5 quintillion bytes of data bytes are created every day?  But what happens to all this information? We talked about this with Carlotta Orsenigo, co-director of the International Master in Business Analytics and Big Data.

That’s a staggering number. Where does all this data come from and how is it used?

When it comes to Big Data, there are two areas we think about right away.

On the one hand, there is the Internet of People – the data that users generate as a result of the digitisation of personal relationships. I’m referring to texts, messages, comments, videos, images, and so on.
This information, left by users on blogs, social networks or e-commerce sites, can be collected and used, for example, for sentiment analysis and therefore, to deduce the emotional inclination of users towards a given topic.

On the other hand, we then think of the Internet of Things, or all the data generated by sensors, such as those relating to the location or operation of a particular device. This data is collected and used in various fields, such as that of industry. An example would be the designing of predictive maintenance systems, capable of predicting the onset of a malfunction on a machine or production line in advance, with the aim of reducing risks and costs, and guaranteeing greater safety of the production process.

There is also a third category, that of data collected by corporate transactional systems. This can be exploited for a variety of applications, such as the construction of recommendation engines, which generate suggestions for products and services which can be customised on the basis not only of past purchases, but also of users’ interests.

To extract all this information from the data collected, you need someone who is able do this. What are the professional profiles that are emerging in response to companies’ growing interest in Big Data?

Today, the most sought-after figure on the market is that of the Data Scientist.
The skills required are of different types: modelling, analytical, skills related to the field of artificial intelligence and machine learning. Alongside hard skills related to data management technologies, machine learning, artificial intelligence, and coding – algorithms must be built and implemented  – the Data Scientist should also have management and governance skills. This is essential in order to be able to relate effectively to those within the organisation who deal with the company’s activities and so that the analytical activities they carry out can be translated into actual value.

To summarise, the Data Scientist is the expert in data analysis methodologies, and is the most sought-after figure.

But there is not only the Data Scientist. The Data Science Architect, for example, is responsible for managing and developing analytical pipelines, therefore the entire analytical process, and the technologies to support analysis, management, and data collection. This is a person who takes on the technological responsibility for the analytical process.

There is also the Data Analyst, who uses their analytical skills to monitor the company’s performance. In this case, the skills sought are more those like statistics, reporting and data visualisation, so maybe the more “traditional” skills, but which are just as valued as those relating to machine learning and AI.

In conclusion, data analysis experts can take on positions with many facets and play a role of primary importance in the business world, which is increasingly realising the hidden value of the data it collects. However, this value only emerges if the methods of analysis are used appropriately. This is why experts are needed who are able to process data and carry out analyses using appropriate techniques in a considered way.

According to research by NewVantage Partners, over 91% of executives surveyed report increased investment in Big Data. Which sectors are most affected by this growth?

There are certainly some sectors which are more inclined in this direction, although in reality demand is developing  ̶  albeit with different intensities  ̶  across all sectors.

According to the latest data from the Big Data & Business Analytics Observatory of the Politecnico di Milano, the sector that records the most substantial growth is banking, followed by retail and telecommunications.
However, other sectors are also experiencing significant growth  ̶  not least, public administration, health and manufacturing.
Recent months have led to a slight decline in investment due to the pandemic, but forecasts for the next few years are for a recovery, even a substantial one.

The data collected by a bank is presumably very different from that generated by a hospital. How does this affect the training of the people who will work in these areas and how has MIP responded to such diverse market needs?

As I said before, demand for data analysis experts is growing, and their role is increasingly multifaceted. It is precisely in order to meet this constant and growing demand that our Business School has decided to expand its range of specialised courses.
In addition to the Master in Business Analytics and Big Data (BABD), which will reach its sixth edition next year, two new programmes have been introduced – one in the field of Supply Chain and another in Healthcare – two verticalisations in two areas that we envisage will increasingly be needing these skills in the near future.

The three masters are structured in such a way as to share the core part of the training path, which is dedicated to technologies for the management of big data and, above all, methodologies for data analysis, with particular reference to machine learning, artificial intelligence and data science.

The three programmes then diversify: the BABD master remains transversal to the themes of data science and artificial intelligence, supported by case studies and applications in different fields.
The other two masters, on the other hand, offer specific verticalisations.
So, for example, the Master in Big Data for Healthcare & Biotech aims to train data scientists who understand and know how to govern the complexities of this sector, who can interact with various parties: doctors, healthcare workers and decision makers. They also know how to put forward innovative solutions through data analysis. This always in compliance with the rules and ethical principles governing the collection and analysis of data in this particular context.

By contrast, the Master in Big Data for Supply Chain Analytics aims to provide expertise specifically directed at supply chain management and the use of IoT technologies for the collection and real-time monitoring of supply chain activities, with the ultimate goal of optimising decision-making processes in this area.

Reducing the environmental impact of logistics: the GILA Project

The international project GILA, sponsored by the German Federal Ministry of Education and Research, is designed to contribute to global efforts in reducing absolute GHG emissions from logistics and enhancing resource efficiency to thus meet the Paris Agreement’s objectives

 

Like all other business sectors, logistics can adopt more sustainable practices to reduce emissions and enhance resource efficiency.

The GILA project – run by a German, Italian & Latin American Consortium joined by the School of Management  – is designed to reduce the environmental impact (especially carbon impact) of logistics, focusing on sites that play a connecting role within transport chains, such as warehouses, consolidation/fulfilment centres, distribution centres, cross-docking sites or micro depots/city hubs, as well terminals at maritime or inland ports, freight and intermodal terminals or cargo terminals at airports.

In order to achieve the overall objective, two main research areas will be addressed:

  • best practices and future requirements, services and concepts for sustainable logistics sites within an energy and resource efficient transport chain
  • establishment of a methodological framework for assessing the environmental performance of logistics sites

The targeted methodological framework for assessing the environmental performance of logistics sites helps gain enhanced transparency and a robust basis for decision management and for the targeted identification and definition of measures to reduce CO2 emissions.

The Fraunhofer Institute for Material Flow and Logistics is responsible for leading the project and its scientific implementation.

The industry partners are: Arcadis Germany GmbH, developer of logistics sites, P3 Logistic Parks, skilled in sustainable industrial properties and market development. GreenRouter is mainly responsible for the calculation of GHG emissions of logistics sites, while Fercam, Flexilog, Conad and Prysmian group contribute through their expertise and experience of their own logistics sites.

The School of Management of Politecnico di Milano, as academic partner, contributes with its know-how on green logistics concepts, while the Universidad de los Andes brings a Latin American perspective and experience on the environmental performance of terminals.

Sharing best practices will help participating companies to be prepared for future trends and demands within logistics networks and to pave effective pathways towards zero emissions logistics by 2050 and the sustainable transformation of the sector.

The project will enable industry to use the outcomes in future planning and the implementation projects of new investments in logistics sites infrastructure, e.g. city hub distribution, new greyfield warehouse projects or sustainable transformation of existing warehouses, transhipment sites and terminals.

 

Innovation with a human touch

Conversation with Giovanni Valente, Professor of Logic and Philosophy of Science in the Mathematics Department at Politecnico di Milano and Member of the inter-departmental Unit of Study META

 

The Politecnico di Milano, a technical University, has promoted the creation of an interdisciplinary network of scholars from its various departments of engineering, architecture and design with skills in human and social sciences to provide expertise in philosophical, epistemological, ethical and social issues related to processes of science, technology and innovation. Why was this decision made?

At international level, there is a relatively widespread tradition of promoting the presence of scholars working in the social sciences and humanities within the major polytechnical universities. In fact, some of the world’s leading academic institutions, such as the MIT in Boston, even feature entire departments dedicated to specific fields of humanities. The reason for this choice is that the humanities, if they are scientifically-informed, can complement technical knowledge by adding a critical and reflective perspective.

Research and teaching in the areas of philosophy and sociology of science and technology have been present at the Politecnico di Milano for quite some time. However, they began to acquire a systematic form of coordination only recently with the development of the Unit of Study META, which was officially created in the academic year 2017-2018 in the form of a collaboration between various departments. Throughout the years that followed, the group progressively expanded with the addition of more tenure-track faculty, post-doctoral researchers and PhD students, who have been recruited thanks to external funding as well as the direct endowment of the Rector. The current administration of the Politecnico di Milano has indeed realised the importance of developing the humanities in order to enhance interdisciplinary research and enrich the educational offer for engineers, architects and designers along the tradition of the most prestigious polytechnical universities around the world.

Specifically, META aims to produce and disseminate knowledge and offer expertise in the philosophical, ethical and social dimensions of science and technology by organising research and teaching activities as well as academic and public events, which have received a great deal of attention even outside the university itself. A distinctive feature of this network is that its members are based in different departments, so that, besides collaborating with each other, they can also interact directly with colleagues working in relevant fields of science and technology. Such an interaction thus fosters an interdisciplinary approach whereby expertise in the humanities and social sciences is well integrated in the research processes.

So, especially for an engineer, why is it important to have humanities skills and how do they fit into the training path?

As the British novelist and physical chemist Charles Percy Snow famously explained in his influential 1959 book on “The Two Cultures and the Scientific Revolution”, the alleged contrast between scientific and humanistic knowledge (namely, the two “cultures” into which the Western world seems to be split) can have dramatic consequences for society, especially in as much as the educational system tends to favour one at the expense of the other. The call for a properly balanced and multi-disciplinary preparation for our students is even more earnest now that we live in an era of high fragmentation of knowledge and hyper-specialisation, in that there often lacks a dialogue between different scientific fields, let alone between science and humanities.  Disciplines such as philosophy and sociology of science and technology are interdisciplinary by their own nature, and therefore they are suitably apt to bridge the gap across “the two cultures”, even more so when they are taught at a polytechnical university.

Indeed, philosophy and sociology prompt students to reflect upon the foundations of their own scientific and technological disciplines, thereby refining their critical thinking. To give an example, scientific models often resort to assumptions that are, strictly speaking, false, and yet they can be applied to concrete systems: that gives rise to outstanding conceptual questions about the justification of such unrealistic idealisations. Furthermore, philosophical and sociological studies put polytechnical students in a position to develop awareness of the ethical and social consequences of the use of the technologies they will employ in their future jobs. For instance, an extremely popular course META has introduced for engineering degrees at the Politecnico di Milano is called “Ethics for Technology”, which is the first course of its kind established in the Italian educational system.  Last but not least, since the courses designed by META typically require the enrolled students to submit written essays, they offer them the opportunity to practise and improve their own writing and communication skills, an opportunity they would otherwise seldom encounter in other more technical courses. This actually contributes to filling an important gap in the engineering curricula.

With reference to innovation processes that are increasingly data-dependent or data driven, what is the role of social sciences and humanities, in particular with respect to the implications of the use of artificial intelligence in the context of social phenomena?

In the current digital era, the massive and growing use of technological innovations that can process huge amounts of data with unprecedented power poses ever more pressing epistemological and ethical issues. In this respect, the long-standing discussion in philosophy and sociology about the nature of scientific data can be highly beneficial to the research on artificial intelligence, especially when it is applied to the analysis and prediction of social phenomena. Indeed, from an epistemological point of view, it is a recognized fact that there does not exist such a thing as “brute data”. For the process of collecting and elaborating data is not at all neutral but rather it is theory-laden, in the sense that the selection of the dataset relevant for the study of a certain phenomenon as well as the subsequent interpretation of computational outcomes are always driven by contextual background knowledge.

Accordingly, if we wish to draw meaningful and reliable conclusions from the available data, we ought to understand the extent to which they depend on the theoretical assumptions underlying the construction and implementation of the algorithms we employ. Moreover, from an ethical point of view, when we deal with sensitive data that reveal personal information, as often happens in the context of social phenomena, there arise delicate and controversial ethical issues, for instance, concerning the protection of individual privacy. Data security is actually one of the major problems stemming from the use of powerful computational algorithms, together with bias problem  namely the fact that AI systems are trained on data that are only representative of a limited sample of the population, and the trust deficit problem, namely the fact that the procedures by which deep learning models predict the outcomes remain largely unknown.

In order to face these outstanding challenges of artificial intelligence, the vast philosophical and sociological literature on epistemological and ethical issues concerning scientific data can thus be fruitfully combined with scientific and technological practice so as to develop an effective integrated approach.

Who doesn’t like to play?

Our alumni, Ben Thompson, Virginia Soana and Sandro Duarte, talk about their entrepreneurial journey which started in MIP’s classrooms and led to a partnership with Zero Latency VR, the world leader in Virtual Reality entertainment.

Tell us more about your startup: how it was born, the needs it meets, and the challenges faced during the pandemic.

  • Ben: I am a great fan of paintball and airsoft. I have always been interested in the relationship between video games and the real world and how technology can make possible the convergence between these two worlds. Zero Latency VR fits right into this market space, embracing the physical experience ̶ physical movement is required during the game  ̶  and the digital experience  ̶  the world, zombies, and spaceships are all digital and classic video game characteristics.
  • Sandro: Who doesn’t like to play? We had been following the Zero Latency boom for some time, but the idea of ​​bringing this franchise to Italy was born when Ben and I were carrying out a project ̶ again, linked to innovative gaming  ̶̶  that failed for various reasons. Obviously, we did not give up and we started our journey with Zero Latency during the final months of 2019. The initial idea was to open in June 2020, but we had to postpone due to the uncertainty of the moment, linked to Covid-19.
  • Virginia: I am a daughter of the Nintendo NES and Super Mario Bros. Initially, I was involved in the project as a legal consultant but, thanks to the know-how of my colleagues and their direct experience, I understood well what I was dealing with and I immediately decided to join the project, fascinated by a world so evolved and interested in VR. The biggest challenge? The launch and preparation, currently being finalized, of our project during the Covid-19 pandemic, an obstacle that is not exactly easy to overcome.

After the partnership with Zero Latency VR, what could be the future for Live Action Gaming in the gaming/entertainment sector?

  • Ben: The first point on our agenda is to expand ZL in Italy and take it to more cities. On my side, I worked with a Swedish friend on a scoring system and interface capable of inserting digital elements into physical experiences. This project is close to being completed and I see Live Action Gaming as an important vehicle and promoter of this technology in Italy.
  • Sandro: Virtual reality has come to stay! By joining forces with the ZL community, we not only gain a world-class partner in terms of VR entertainment but also access to high-level know-how, without the need to develop a VR platform from scratch. The short-term goal is to open more offices throughout the peninsula and offer Italians a unique and revolutionary VR experience.
  • Virginia: As Ben said, the idea is to expand as much as possible in Italy in the next 3-5 years, following a strategy already largely planned: we know that the country is ready and eager to try virtual reality and we are sure that LAG, thanks to its vision and to the company structure, can be the right way to reach this goal.

Could you also tell us something about your other post-MBA professional experiences and how much they have influenced this new project?

  • Ben: The final project work to complete the Part-Time MBA, presented by Sandro and me together with other colleagues, was focused on the topic of virtual reality played in a physical space. After my MBA, I left my old role and moved on to the E-sports sector. Immediately after the positive feedback we received on the thesis, we decided to try to transform it from a theoretical exercise into a real project. There have been several iterations, failures and difficulties, but in the end we made a good deal with ZL and we are happy to launch it soon.
  • Sandro: I will be forever grateful to MIP. Those were two intense years, full of great emotions. On a professional level, the Part-Time MBA had an almost immediate effect, since in the last 3 years I have coordinated various engineering activities which, together with a multidisciplinary team, identify innovative solutions to minimize the cost of ownership of helicopters at Leonardo Helicopter Division. My entrepreneurial streak emerged during the MBA as, from day one, the Faculty encouraged students to pursue and develop their business ideas. If, 3 years ago, someone had told me that I would pursue my entrepreneurial side, I would have laughed!
  • Virginia: The Part-Time MBA has completely changed my career perspective, making me fall in love with entrepreneurship. At the end of the course, I abandoned any activities as an employee and founded 3 start-ups, the last of which is Live Action Gaming. In addition, as a shareholder, I entered a further company founded by another alumnus from the Part-Time MBA, also collaborating in his community of professionals, and I am collaborating as a mentor for a fourth project in progress. Not only the satisfactions, but also the falls and failures have taught me not to give up and have led me to be more and more aware of my possibilities and skills.

Our alumni community shares the passion for innovation and the purpose to build a better future for all. What impact did your MIPexperience have on your personal and professional growth, and on this new entrepreneurial experience?

  • Ben: There are a couple of aspects necessary for increasing your success, both as an employee and as an entrepreneur. One is the network, which can provide you with advice, resources and, most importantly, team members. The team is everything. The MBA has given me a broader capacity and understanding of how businesses work, allowing me to better understand how an employer acts and making me acquire the right approach to start my company, manage both the people and all the flows of work. The part-time format made this experience even more impactful because it allowed me to learn fundamental skills, such as time management, the ability to delegate and how to meet deadlines, which are essential in an entrepreneurial environment but also necessary to survive and successfully pursue an MBA while working full time.
  • Sandro: LAG is having positive feedback and a good part of this is largely due to the fact that we are a team with a multidisciplinary background and an immense desire to accomplish our goals. As Ben says, the team is everything! If you have a team that believes in the project, most of the work is done. On a personal and professional level, when I think about my path at MIP, the phrase “I was blind, but now I see” comes to my mind. As I said before, I lived the MBA intensely and extracted as many lessons as possible. So I cannot praise one feature over another because this would not do justice to the Master. I see my experience as a whole and not in part.
  • Virginia: Attending this path provided me with that set of “business” skills I was lacking because of my legal background, and allowed me to refine several soft skills that I am now applying daily in the world of entrepreneurship. I am thinking about time management, the execution of activities according to a concept of priorities based on business needs, the ability to work and lead a team of people, just to name a few. On the other hand, we met during the Master and we shared assignments, deliveries, and deadlines, and we worked as a group: this allowed us to get to know each other as individuals, even before becoming the full-fledged team which we are now. We share a common path that is helping us to face daily challenges and a mindset that allows us to achieve high-level goals with awareness and serenity.

 

Designing for the digital society: unveiling the opportunities embedded in digital technologies through Design Thinking

Nowadays, digital technologies are providing incredible options; we live in a world where technological opportunities are cascading over society at an unprecedented speed. Humans are central to understanding how the technology can be better aligned with end-user needs and their willingness to adopt it. Design Thinking is an approach that looks at value and change from the perspective of people

 

Claudio Dell’Era, Associate Professor of Design Strategy at School of Management, Politecnico di Milano
Stefano Magistretti, Assistant Professor of Innovation and Design Management at School of Management, Politecnico di Milano

We live in a digital society where digital technologies are all being used for work, monitoring health and habits, staying connected, seeking information and getting the news, shopping for groceries, travelling, managing finances and more. Digital technologies are widespread throughout the world, and their presence in our daily life is booming. In the last few decades, several different digital technologies have reshaped the way people live and the way companies develop new products and services. Nowadays, digital technologies are providing incredible options; we live in a world where technological opportunities are cascading over society at an unprecedented speed.

A world awash with technologies and information. But humans do not use digital technologies or data; they need products and services. Artificial Intelligence (AI), in particular, has the potential to transform our world for the better: it can improve healthcare, reduce energy consumption, make cars safer and enable farmers to use water and natural resources more efficiently. AI can be used to predict environmental and climate change, improve financial risk management and provides the tools to manufacture  products tailored to our needs with less waste. AI can also help to detect fraud and cybersecurity threats, and enables law enforcement agencies to fight crime more efficiently. AI can benefit the whole of society and the economy. It is a strategic technology that is now being developed and used at a rapid pace across the world.

Nevertheless, AI also brings new challenges for the future of work, and raises legal and ethical questions. To address these challenges and make the most of the opportunities which AI offers, the Commission published a European strategy in April 2018. The strategy places people at the centre of the development of AI — human-centric AI. According to the report “Tech for Good – Smoothing disruption, improving well-being” developed by McKinsey, the development and adoption of AI-driven solutions has the potential not only to raise productivity and GDP growth, but also to improve wellbeing more broadly, including through healthier living and longevity and more leisure.

Technology has for centuries both excited the human imagination and prompted fears about its effects. In this changing context, the challenge is to build AI solutions to improve and not damage wellbeing. Researchers and practitioners are acknowledging that this is a problem of design, which acts as a driver of innovation and change and which is able to keep humans at the centre when building solutions. Humans are central to understanding how the technology can be better aligned with end-user needs and their willingness to adopt it.

Design Thinking is an approach that looks at value and change from the perspective of people. Or, even better, from the perspective of what is meaningful to people. Similar to many other approaches, Design Thinking also combines three factors: (i) technologies, how things are made and their improved performance; (ii) people, how these things are valuable for customers; (iii) business, how organisations can profit from offering them.
The perspective embedded in Design Thinking makes it unique: Design Thinking starts with people. This approach allows leaders to look at value created for individuals and assume their perspective, conceiving innovation not primarily as a source of competitive advantage and profit, but as a means to generate value for end-users.

Design Thinking is usually characterised by three traits: a human-centred perspective, where innovators build empathy with users; the leverage of creativity as a driver of innovation (sometimes even in contrast to assets as knowledge, technology and competitive positioning); and an intense use of prototyping as a rapid and effective source of communication and learning among stakeholders.

Human centeredness in Design Thinking means that what drives the entire innovation process is the identification and satisfaction of user needs. The success of any innovation depends on simultaneously achieving user desirability, technology feasibility and financial viability, yet Design Thinking almost prescriptively instructs innovators to address desirability first.
By continuously involving end users in the iterative co-creation and testing of ideas and prototypes, design thinkers ensure that the outcomes of their innovation effort add value to the human experience and are meaningful and affordable. In so doing, Design Thinking overturns the traditional business perspective that is technology driven: companies first determine what is feasible for them to develop and then push their new products and services through marketing campaigns hoping that they address people’s search for value and meaning.

The need for a human-centred approach also stems from the wicked nature of the problems addressed in Design Thinking projects. Wicked problems are defined as a class of social system problems that are ill-formulated, where the information is confusing, and where many customers and decision-makers have conflicting values. These types of problems should be addressed with a human perspective to grasp their complexity, make sense of them and make them tractable.

Human centredness in Design Thinking is achieved through the innovator’s empathy with users. Empathy consists of perspective taking, namely the ability to adopt the perspective of another person or recognise their perspective as their truth, be open to various inputs, suspend judgement, recognise other people’s emotions and communicate by mirroring back.

 

How to improve the effectiveness of social information programmes

A research published in JEEM (Journal of Environmental Economics and Management) investigates the impact of stimulating environmental self-identity on energy behaviour

 

How to improve the effectiveness of social information programs? Such a challenge has been tackled in the paper published on Journal of Environmental Economics and Management, to which contributed Prof. Massimo Tavoni and researcher Jacopo Bonan of the Department of Management, Economics and Industrial Engineering.

Social information programmes are widely used by policymakers to nudge behavioural change. These are based on the comparison of individual behaviour with that of a reference group. Their effectiveness strongly depends on household and individual traits. The existing evidence in economics and psychology points to the role of environmental values and identity in determining pro-environmental behaviour and the impact of social information.

Researchers from the School of Management of Politecnico di Milano conducted a large field experiment on household energy conservation, to test whether the impact of a social information programme can be strengthened by leveraging environmental values and identity.

A communication that stimulates environmental self-identity, as well as comparing their energy behaviour with those of other users and with their own in the past, was attached to a certain number of customers’ bills of an electricity supplier. The results in terms of changing energy consumption habits of this group were then compared with those of the group for which neutral communication was maintained.

The results seem to show that stimulating environmental identity does not, on average, strengthen the effectiveness of a social information programme, in terms of reducing energy consumption. However, there is evidence that stimulating environmental identity can lead to reductions in consumption for individuals who have in the past assumed virtuous behaviour from the point of view of energy saving.

 

 

For detailed information:
Can social information programs be more effective? The role of environmental identity for energy conservation
Jacopo Bonan, Cristina Cattaneo, Giovanna d’Adda, Massimo Tavoni
Journal of Environmental Economics and Management, 2021, 102467, ISSN 0095-0696

Climate change: one degree of additional warming costs Italian companies loss of revenue

Over one million companies analysed for ten years (2009-2018): Centre and North-East are the most affected areas. The largest losses are in the construction, finance, mining and ICT sectors, with little damage to tourism, agriculture and transport.

 

Climate change is costing the economic system a lot of money: looking at ten years (2009-2018), one degree of additional warming has led to an average reduction in turnover and profitability of -5.8% and -3.4%, respectively, for Italian companies. If we then consider the actual changes in temperature in the various geographical areas, in 2018 alone – a particularly hot year – our business network recorded a loss of revenue of Euro 133 billion, with the greatest percentage losses in the North East and the Centre.

This is what emerges from the first year of activity of the Climate Finance Observatory of the School of Management of the Politecnico di Milano, which on 27 April 2021 presented its main results at an online conference attended by institutions, businesses, investors and trade associations. Global warming is now fully an economic issue.  “We have developed a database that crosses economic/financial information on 1,154,000 companies in Italy between 2009 and 2018 (22 million in Europe) with meteorological data on temperature, rainfall and solar radiation since 1950 – explains Vincenzo Butticè, vice director of the Observatory – to find solid empirical evidence on the relationship between climate and the economic system“. This has resulted in reliable metrics to support regulators, financial institutions and manufacturers in their economic/financial analysis of climate change.

The Observatory has in fact calculated the real, not hypothetical, damage caused by an increase in temperature of 1 degree Celsius in Italy: small enterprises have lost the most in profitability, while large companies, being able to act better on costs and processes, despite a decrease in revenues and demand, were better able to contain their losses in margins.

Among the sectors most affected by the temperature increase are construction, finance and mining. Information technology, real estate and research and innovation suffered the same drop in turnover (-6.4%), but with a smaller decrease in margins. Manufacturing and retail were the best performing sectors, preceded only by agriculture, tourism and transport.

On the other hand, in geographic terms, the impact was worse in Central Italy and the North East, where companies managed to maintain higher margins. The North West suffered a sharp loss in profitability but not as much in turnover, while the South and Islands were little affected by climate change.

If we look at the drop in turnover in absolute figures, the biggest losses were recorded in Lazio, Lombardy, Emilia Romagna and Tuscany.

Managing the consequences of climate change and mitigation strategies represent the greatest challenge that world economies will have to face in the coming years – comments Roberto Bianchini, director of the Climate Finance Observatory -. For example, the analysis shows how a flood could cost companies in the affected area up to 4% of turnover and a loss of value of balance sheet assets of around 0.9%, which rises to 1.9% in case of a large fire. The global emergency related to the pandemic has also contributed to increasing the perception of risk, because it has shown how economic actors are affected not only directly, but also indirectly, through the channels of demand, supply or their own supply chain”.

On the regulatory side, both the European Commission and the regulatory agencies produced a large number of documents in recent months to improve understanding of the interrelationships between climate risks and economic activities. One example is the “Green Taxonomy”, a document that identifies actions within different sectors that can promote climate change adaptation and mitigation while avoiding negative impacts on the environment.

It is extremely important to identify risks and to find tools and metrics to quantify the climate exposure of portfolio assets. The action of the ECB is relevant in this direction: it carried out an analysis of about 4 million companies and 2,000 banks to identify the exposure of the financial system over the next 30 years. The study shows that the costs for implementing adaptation and mitigation strategies now are far lower than they are likely to be in the future: according to the ECB, the probability of default of banks will be higher the less action is taken by the economic system to change the trajectory of temperature increase.

 

For more information: https://www.osservatoriefi.it/efi/2021/04/28/climate-change-finance-rischi-e-opportunita-per-le-imprese/ (in Italian)

The School of Management of Politecnico di Milano obtains international AACSB certification and the “Triple crown” – the three top business school accreditations

The Association to Advance Collegiate Schools of Business has been the world’s longest-running business school accreditation body since 1916. The certification covers the entire organisation, including administration and accounting, and ensures international accreditation.

This achievement, which follows EQUIS and AMBA certifications, means the School of Management of Politecnico di Milano officially has the “Triple crown” and holds the three top prestigious awards for Business Schools.

The School of Management of Politecnico di Milano has achieved international AACSB (Association to Advance Collegiate Schools of Business) certification. This is issued by the world’s longest-running accreditation body for business schools, with the most significant business education network – uniting students, academics, teachers and companies worldwide.

Globally, less than six per cent of schools with undergraduate and postgraduate business administration courses hold this certification. AACSB-accredited schools undergo a rigorous review process to verify their resources, credentials, and commitment to students and achievements in providing a world-class future-oriented and innovative education. Recognition by AACSB accredits the entire organisation, including administration and accounting, providing internationally recognised certification. On average, the entire accreditation process takes four years.

AACSB’s recognition is in addition to two other prestigious certifications: EQUIS-EFMD Quality Improvement System was obtained in 2007 and AMBA-The Association of MBAs in 2012. The School of Management of Politecnico di Milano holds the “Triple crown”, i.e. the three most authoritative accreditations for Business Schools.

Politecnico di Milano Rector Ferruccio Resta said: “The AACSB certification is a great accomplishment for our university. It acknowledges the quality of our teaching, the preparation of our faculty and the international dimension achieved by the School of Management and has been widely confirmed today. It is a starting point to leap forward, to place higher education at the centre of economic and social recovery. This accreditation reaffirms the value of the Politecnico’s expertise and knowledge as essential resources for the growth of our cities, businesses and regions.”

Politecnico di Milano School of Management Dean Alessandro Perego said: ” international accreditations represent a fundamental tool for our school which is helpful to strengthen the quality of teaching, research and social commitment, in a continuous comparison with the most innovative international framework. We are proud to receive the AACSB certification, a goal that rewards our efforts and allows us to complete the three most prestigious international accreditations. I am sure this achievement will encourage members of the School of Management of Politecnico di Milano to persevere in their pursuit of excellence.”