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@example.com
Received June, 2013
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
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) . 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-
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
This hyper-turbulent environment becomes a prime
candidate for dev eloping innovative and unique so lutions.
Copyright © 2013 SciRes. IB
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 . 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 . 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-
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
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-
4) There are both trends from bottom-up and top-down
that require facilitate two-way communication and plan-
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
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
What issues and stakeholders are important or
peripheral? Whose values could actually be respected
and whose interests will be served by particular decision
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?
Copyright © 2013 SciRes. IB
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 .
C. The resilience
Resilience is measured by the magnitu de of turbulen ce
that can be absorbed before the system changes its
structure. 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 . 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 . Constructing a preliminary conceptual
model, DPSIR can be used as a means for structuring and
analyzing, even a model for decision support .
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-
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
Smeets and Weterings(1999) 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
Use feasible technology and
control at a reasonable cost to
fulfill unmet demands
Sustainabilityenvironment-friendly Maintain a balanced and
long-lasting development 
Copyright © 2013 SciRes. IB
A Problem Structuring Method for Innovation Strategy: A Tentative DPSIR Approach
Copyright © 2013 SciRes. IB
Mi g r at io n an d
Liberalizati on of
Gr owing an d
Th e rise of em er g ing
advanc ed and
developing co unt r i e s
rema in but narrow
acro ss reg ion s
and countr ies
Se t u p cl ea r
Develop affordable and sustainable products
Create disrupt i ve business models
A more flexible and adaptable strategy
Driving forcesPressuresState changesImpacts
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-
Financial support from NSSFC (NSSFC/13BJY021) and
Academic Talent Development Program for Liberal Arts
and Social Sciences, Shanghai Academic Degrees Com-
mittee (2012) 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
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