Cisco service innovation 20110418 v2

© 2011 IBM Corporation

IBM University Programs World Wide (IBM UP)

Service Science: Progress & Directions

Dr. James (“Jim”) C. [email protected] Champion and Director, IBM University Programs WWCisco Talk Santa Clara, CA, US, April 18th, 2011

Working Together to Build a Smarter Planet

2 © 2011 IBM CorporationIBM UP (University Programs) WW

Outline Introduction: Changing Nature of Innovation

Stimulus: Service Growth & Product-Service Systems – The World & IBM

Response: Service Science & Innovation Priorities– Cambridge University Report, UK Royal Society Report, Arizona

State University Report, Handbook of Service Science, Open Service Innovation, etc.

Evolution: Regional Innovation Ecosystems– What is a “Smarter Planet”? “Quality of Life” Improvement?

• Quality of Life: Our growing dependence on networks of interconnected product-service systems

– Local optimization does not equal global optimization– Local problems can cascade into global significance– Global competition for talent (“people vote with feet”)

– How are Cities & Universities Linked? What Jobs & Skills?

• How to visualize Service Science? Systems & Knowledge?• Holistic Service System (HSS)? Value-CoCreation (VCC)?• Where is the “Real Science”?


IBM operates in 170 countries around the globe

IBM has 426,000 employees worldwide 2010 Financials

Revenue - $ 99.9B Net Income - $ 14.8B EPS - $ 11.52 Net Cash - $11.7B

21% of IBM’s revenue in growth market countries; growing at 13% in late 2010

Number 1 in patent generation for 18 consecutive years ; 5,896 US patents awarded in 2010

More than 40% of IBM’s workforce conducts business away from an office

5 Nobel Laureates

Smarter

Planet9 time winner of the President’s National Medal of Technology & Innovation - latest award for Blue Gene Supercomputer


IBM Centennial – 100 Years of Innovation!(Smarter Tools)

IBM Centennial Film: 100 People & 100 Yearshttp://www.youtube.com/watch?v=39jtNUGgmd4


Watson and Jeopardy!(Even Smarter Tools)


42%6433 3 1.4Germany

37%261163 2.1Bangladesh

19%201070 1.6Nigeria

45%6728 5 2.2Japan

64%692110 2.4Russia

61%661420 3.0Brazil

34%391645 3.5Indonesia

23%7623 1 5.1U.S.

35%23176014.4India

142%29224925.7China

40yr ServiceGrowth

S%

G%

A %

Labor% WW

Nation

World’s Large Labor ForcesA = Agriculture, G = Goods, S = Service

20102010

CIA Handbook, International Labor OrganizationNote: Pakistan, Vietnam, and Mexico now larger LF than Germany

US shift to service jobs

(A) Agriculture:Value from harvesting nature

(G) Goods:Value from making products

(S) Service:Value from

IT augmented workers in smarter systemsthat create benefits for customers

and sustainably improve quality of life.

Service Growth: The World


0

20

40

60

80

100

Year

Reven

ue (

$B

)

Services

Software

Systems

Financing

Service Growth: IBM

B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc.

What do IBM Service Professionals Do? Run things on behalf of customers,help Transform customers to adopt best practices, and Innovate with customers.

Revenue Growth by Segment

© 2011 IBM Corporation

IBM University Programs World Wide (IBM UP)

StakeholderPriorities

Education

Research

Business

Government

StakeholderPriorities

Education

Research

Business

Government

Service Systems

Customer-provider interactions that enable value cocreation

Dynamic configurations of resources: people, technologies, organisations and information

Increasing scale, complexity and connectedness of service systems

B2B, B2C, C2C, B2G, G2C, G2G service networks

Service Systems

Customer-provider interactions that enable value cocreation

Dynamic configurations of resources: people, technologies, organisations and information

Increasing scale, complexity and connectedness of service systems

B2B, B2C, C2C, B2G, G2C, G2G service networks

Service Science

To discover the underlying principles of complex service systems

Systematically create, scale and improve systems

Foundations laid by existingdisciplines

Progress in academic studies and practical tools

Gaps in knowledge and skills

Service Science

To discover the underlying principles of complex service systems

Systematically create, scale and improve systems

Foundations laid by existingdisciplines

Progress in academic studies and practical tools

Gaps in knowledge and skills

Develop programmes & qualifications

Develop programmes & qualifications

Service Innovation

Growth in service GDP and jobs

Service quality & productivity

Environmental friendly & sustainable

Urbanisation &aging population

Globalisation & technology drivers

Opportunities for businesses, governments and individuals

Service Innovation

Growth in service GDP and jobs

Service quality & productivity

Environmental friendly & sustainable

Urbanisation &aging population

Globalisation & technology drivers

Opportunities for businesses, governments and individuals

Skills& Mindset

Skills& Mindset

Knowledge& Tools

Knowledge& Tools

Employment& Collaboration

Employment& Collaboration

Policies & Investment

Policies & Investment

Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015

Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015

Encourage an interdisciplinary approach

Encourage an interdisciplinary approach

The white paper offers a starting point to -

The white paper offers a starting point to -

Priorities: Succeeding through Service Innovation - A Framework for Progress(http://www.ifm.eng.cam.ac.uk/ssme/)

Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008)

Glossary of definitions, history and outlook of service research, global trends, and ongoing debate

1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions


UK Royal Society Report (2009)http://royalsociety.org/Hidden-wealth-The-contribution-of-science-to-service-sector-innovation/


Priorities: Research Priorities: Research Framework Framework

for the Science of Service for the Science of Service (2010)(2010)Pervasive Force: Leveraging Technology to Advance Service

Strategy Priorities

Execution Priorities

Fostering ServiceInfusion and Growth

Improving Well-Being through

Transformative Service

Creating and Maintaining a Service Culture

Stimulating Service Innovation

Enhancing Service Design

Optimizing Service Networks and Value Chains

Effectively Branding and Selling Services

Enhancing the Service Experience through

Cocreation

Measuring andOptimizing the Value of

Service

Development Priorities

Source: Global Survey of Service Research Leaders (Ostrom et al 2010)


Factory as a Product-Service Systemhttp://www.youtube.com/watch?v=nd5WGLWNllA


Rethinking “Product-Service Systems”F

B

ServiceSystem Entity

Product-Service-System

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

SSE

B

F

F F

B B

ServiceBusiness

ProductBusiness

Front-Stage Marketing/Customer Focus

Back-Stage Operations/Provider Focus

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e.g., Citibank

“Eve

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Product-Service Systems as Learning Systems

Learning Systems(“Choice & Change”)

Exploitation(James March)

Exploration(James March)

Run/Practice-Reduce(IBM)

Transform/Follow(IBM)

Innovate/Lead(IBM)

Operations Costs

Maintenance Costs

Incidence Planning & Response Costs (Insure)

Incremental

Radical

Super-Radical

Internal

External

Interactions

“To bethe best,

learn fromthe rest”

“Doublemonetize,

internal winand ‘sell’ to

external”

“Try tooperateinside

thecomfortzone”

Linda Sanford, IBM “Let Go To Grow”March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.


What is Smarter Planet? Harmonized smarter product-service systems.

INSTRUMENTED

We now have the ability to measure, sense and see the exact condition of practically everything.

INTERCONNECTED

People, systems and objects can communicate

and interact with each other in entirely new

ways.

INTELLIGENT

We can respond to changes quickly and accurately, and get better results

by predicting and optimizing

for future events.

WORKFORCE

PRODUCTS

SUPPLY CHAIN

COMMUNICATIONS

TRANSPORTATION BUILDINGS

IT NETWORKS


Communication$ 3.96 Tn

Transportation$ 6.95 Tn

Leisure / Recreation / Clothing

$ 7.80 Tn

Healthcare$ 4.27 Tn

Food$ 4.89 Tn

Infrastructure$ 12.54 Tn

Govt. & Safety$ 5.21 Tn

Finance$ 4.58 Tn

Electricity$ 2.94 Tn

Education$ 1.36 Tn

Water$ 0.13 Tn

Global system-of-systems$54 Trillion

(100% of WW 2008 GDP)

Same IndustryBusiness SupportIT SystemsEnergy ResourcesMachineryMaterials Trade

Legend for system inputsNote:1. Size of bubbles represents

systems’ economic values2. Arrows represent the strength of

systems’ interaction

Source: IBV analysis based on OECD

Our planet is a complex, dynamic, highly interconnected $54 Trillion system-of-systems (OECD-based analysis)

This chart shows ‘systems‘ (not ‘industries‘)

Our planet is a complex system-of-systems

1 Tn


Economists estimate, that all systems carry inefficiencies of up to $15 Tn, of which $4 Tn could be eliminated

Global economic value of

System-of-systems

$54 Trillion100% of WW 2008 GDP

Inefficiencies$15 Trillion28% of WW 2008 GDP

Improvement potential

$4 Trillion7% of WW 2008 GDP

How to read the chart:

For example, the Healthcare system‘s value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can be eliminated (= 34% x 42%).

We now have the capabilities to manage a system-of-systems planet

Source: IBM economists survey 2009; n= 480

System inefficiency as % of total economic value

Impr

ovem

ent

pote

ntia

l as

% o

f sy

stem

inef

ficie

ncy

Education1,360

Building & Transport Infrastructure

12,540

Healthcare4,270

Government & Safety5,210

Electricity2,940

Financial4,580

Food & Water4,890

Transportation (Goods & Passenger)

6,950

Leisure / Recreation /

Clothing7,800

Communication3,960

Analysis of inefficiencies in the planet‘s system-of-systems

Note: Size of the bubble indicate absolute value of the system in USD Billions

42%

34%

This chart shows ‘systems‘ (not ‘industries‘)

15%

20%

25%

30%

35%

40%

15% 20% 25% 30% 35% 40% 45%


What improves Quality-of-Life? Product-Service System Innovations

A. Systems that focus on flow of things that humans need (~15%*)1. Transportation & supply chain

2. Water & waste recycling/Climate & Environment

3. Food & products manufacturing

4. Energy & electricity grid/Clean Tech

5. Information and Communication Technologies (ICT access)B. Systems that focus on human activity and development (~70%*)

6. Buildings & construction (smart spaces) (5%*)

7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*)

8. Banking & finance/Business & consulting (wealthy) (21%*)

9. Healthcare & family life (healthy) (10%*)

10. Education & work life/Professions & entrepreneurship (wise) (9%*)C. Systems that focus on human governance - security and opportunity (~15%*)

11. Cities & security for families and professionals (property tax)

12. States/regions & commercial development opportunities/investments (sales tax)

13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax)

20/10/10

0/19/0

2/7/42/1/1

7/6/11/1/0

5/17/27

1/0/2

24/24/1

2/20/247/10/3

5/2/2

3/3/10/0/0

1/2/2

Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities

* = US Labor % in 2009.

“61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)”


Regional Innovation Ecosystems& Holistic Service Systems http://www.service-science.info/archives/1056

Examples: Nations, States, Cities, Universities, Luxury Hotels, Cruise Ships, Households

Subsystems: Transportation, Water, Food, Energy, Communications, Buildings, Retail, Finance, Health, Education, Governance, etc.

Definition: A service system that can support its primary populations, independent of all external service systems, for some period of time, longer than a month if necessary, and in some cases, indefinitely

Balance independence with interdependence, without becoming overly dependent

Nation

State/Province

City/Region

HospitalMedicalResearch

UniversityCollegesK-12

LuxuryResortHotels

Family(household)

Person(professional)

For-profits

Non-profits

Start-Ups

~25-50% of start-ups are newIT-enabled service offerings

SaaSPaaSIaaS

A Day Made of Glass: Corninghttp://www.youtube.com/watch?v=w12B02eJpaM&feature=fvst


People

“All the information workers observed experienced a high level of fragmentation in the execution of their activities. People averaged about three minutes on a task and about two minutes on any electronic device or paper document before switching tasks.”

– Gloria Mark and Victor M. Gonzalez, authors of “Research on Multi-tasking in the Workplace”


Families

"The family is the natural and fundamental group unit of society and is entitled to protection by society and the State".

– Article 16(3) of the Universal Declaration of Human Rights

“Developing a Family Mission Statement”

– Stephen R. Covey, author of The 7 Habits of Highly Effective Families

“In the agricultural age, work-life-and-family blended seamlessly.”

– IBM GIO 1.0


Hospitals

“Modern medicine is one of those incredible works of reason: an elaborate system of specialized knowledge, technical procedures, and rules of behavior.”

– Paul Starr, author of The Social Transformation of American Medicine


Universities

“The contemporary American university is in fact a knowledge conglomerate in its extensive activities, and this role is costly to sustain.”

– Roger L. Geiger, author of Knowledge and Money: Research Universities and the Paradox of the Marketplace


Cities

“Cities are the defining artifacts of civilisation. All the achievements and failings of humanity are here… We shape the city, and then it shapes us. Today, almost half the global population lives in cities.”

– John Reader, author of Cities

IBM Releases ``IBM and the Future of our Cities'' Podcast

– IBM Press Release 2005


Businesses

“…of the 100 entities with the largest Gross National Product (GNP), about half were multi-national corporations (MNCs)… The MNCs do not exist on traditional maps.”

– Alfred Chandler and Bruce Mazlish, authors of Leviathans

“The corporation has evolved constantly during its long history. The MNC of the late twentieth century … were very different from the great trading enterprises of the 1700s. The type of business organization that is now emerging -- the globally integrated enterprise -- marks just as big a leap. “

– Sam Palmisano, CEO IBM in Foreign Affairs


Call Centers

“Call Centers For Dummies helps put a value on customer relations efforts undertaken in call centers and helps managers implement new strategies for continual improvement of customer service.”

– Réal Bergevin, author of Call Centers For Dummies


Data Centers

“All data centers are unique, but they all share the same mission: to protect your company’s valuable information.”

– Douglas Alger, author of Build the Best Data Center Facility for Your Business


Nations

“Understanding economic change including everything from the rise of the Western world to the demise of the Soviet Union requires that we cast a net much broader than purely economic change because it is a result of changes in (1) the quantity and quality of human beings; (2) in the stock of human knowledge particularly as applied to human command over nature; and (3) the institutional framework that defines the deliberate incentive structure of a society.”

– Douglass C. North, author of Understanding the Process of Economic Change


Regional Innovation Ecosystems& Holistic Service Systems (Universities)http://www.service-science.info/archives/1056 Examples: Nations, States, Cities,

Universities, Luxury Hotels, Cruise Ships, Households




Nation

State/Province

City/Region



LuxuryResortHotels

Family(household)


For-profits

Non-profits

Start-Ups


SaaSPaaSIaaS



Universities & Regional Innovation Ecosystems (Data)% GDP and % Top-500-Universities

Japan

ChinaGermany

France

United KingdomItaly

Russia SpainBrazilCanada

IndiaMexico AustraliaSouth Korea

NetherlandsTurkey

Sweden

y = 0,7489x + 0,3534R² = 0,719

0

1

2

3

4

5

6

7

8

9

0 1 2 3 4 5 6 7 8 9

% g

loba

l G

DP

% top 500 universities

Strong Correlation (2009 Data): National GDP and University Rankingshttp://www.upload-it.fr/files/1513639149/graph.html


Growing Importance of HPC to Universities

HPC = High Performance Computing (2006 NSF Data)

$0

$20

$40

$60

$80

$100

$120

Fund

ing

in M

illio

ns o

f Dol

lars

$0

$20

$40

$60

$80

$100

$120

Fund

ing

in M

illio

ns o

f Dol

lars

Average NSF funding: $30,354,000

Average NSF funding: $7,781,000

95 of Top NSF-funded Universities with HPC 98 of Top NSF-funded Universities w/out HPC

With HPC Without HPC

Journal of Information Technology, Volume 10, Issue 2 (accepted) www.jiti.net

31 © 2010 IBM CorporationIBM University Programs (IBM UP) WW

Example: San Jose, California (USA)


Regional Innovation Ecosystems: NY StateTop Employers (Healthy, Frugal, Wealthy, Innovative, Wealthy, Wise…)


Edu-Impact.Com: Growing Importance of Universities with Large, Growing Endowments

“When we combined the impact of Harvard’s direct spending on payroll, purchasing and construction – the indirect impact of University spending – and the direct and indirect impact of off-campus spending by Harvard students – we can estimate that Harvard directly and indirectly accounted for nearly $4.8 billion in economic activity in the Boston area in fiscal year 2008, and more than 44,000 jobs.”


Regional Innovation Ecosystems& Holistic Service Systems (Cities)http://www.service-science.info/archives/1056 Examples: Nations, States, Cities,

Universities, Luxury Hotels, Cruise Ships, Households




Nation

State/Province

City/Region



LuxuryResortHotels

Family(household)


For-profits

Non-profits

Start-Ups


SaaSPaaSIaaS



Urban-Age.Net

Currently, the world’s top 30 cities generate 80% of the world’s wealth.The Urban Age

For the first time in history more than 50% the earth’s population live in cities - by 2050 it will be 75%The Endless City


Population growth per hour in major cities

37 © 2010 IBM CorporationIBM University Programs (IBM UP) WW

A. Flow of things1. Transportation: Traffic congestion; accidents and injury

2. Water: Access to clean water; waste disposal costs

3. Food: Safety of food supply; toxins in toys, products, etc.

4. Energy: Energy shortage, pollution

5. Information: Equitable access to info and comm resourcesB. Human activity & development

6. Buildings: Inefficient buildings, environmental stress (noise, etc.)

7. Retail: Access to recreational resources

8. Banking: Boom and bust business cycles, investment bubbles

9. Healthcare: Pandemic threats; cost of healthcare

10. Education: High school drop out rate; cost of educationC. Governing

11. Cities: Security and tax burden

12. States: Infrastructure maintenance and tax burden

13. Nations: Justice system overburdened and tax burden

Cities as Holistic Service Systems: All the systems

Example: Singapore

Example: Songdo

(~$35B/~8yrs)


Universities as Holistic Service Systems: All the systems

A. Flow of things1. Transportation: Traffic congestion; parking shortages.

2. Water: Access costs; reduce waste

3. Food: Safety; reduce waste.

4. Energy: Access costs; reduce waste

5. Information: Cost of keeping up best practices.B. Human activity & development

6. Buildings: Housing shortages; Inefficient buildings

7. Retail: Access and boundaries. Marketing.

8. Banking: Endowment growth; Cost controls

9. Healthcare: Pandemic threat. Operations.

10. Education: Cost of keeping up best practices..C. Governing

11. Cities: Town & gown relationship.

12. States: Development partnerships..

13. Nations: Compliance and alignment.


Luxury Hotels as Holistic Service Systems: All the systemshttp://www.youtube.com/watch?v=Hm7MeZlS5fo


University & Regional Innovation Ecosystems (Why?)

$

Cities & Public Safety

Government Service to Individuals & Institutions

Education

Transportation

Energy

ICT (Computing & Communications)

Retail & Hospitality

Food & Products

Health

Building

Finance

University:

The Heart of

Regional Innovation

Ecosystems

School ofPublic Policy

School ofEngineering

School ofBusinessMngmnt

School ofMedicine

School ofEducation

School ofArchitecture

School ofUrban

Planning

School ofHospitality

School ofInformation

School ofScience &

Arts

University:The Heart of

Regional InnovationEcosystems

Incubator& Start-Ups


UNIVERSITIES:Research Centers & Real-World Systems

CITIES/METRO REGIONS:Universities Key to Long-Term Economic Development

Accelerating Regional Innovation: Universities as “Living Labs” for Host Cities

42

University Trend: “Sister Campuses” (People Flows)

University sub-systemsDisciplines in Schools (circles)Innovation Centers (squares)

E.g., CMU Website (2009)“Research Centers:where it all happens – to solve real-world problems”

Disciplines in SchoolsAward degreesSingle-discipline focusResearch discipline problems

Innovation Centers (ICs)Industry/government sponsorsMulti-disciplinary teamsResearch real-world systems

D

D

D

D

D

D

Engine

ering

Schoo

l

Social

Scie

nces

,

Human

ities

Professional

Studies

Business School

water & waste transportation

health energy/grid

e-government

Science &

Mathem

atics

I-School

Design

food & supply chain

43

City Trend: “Sister Cities” (People Flows)World as System of SystemsWorld (light blue - largest)Nations (green - large)Regions (dark blue - medium)Cities (yellow - small)Universities (red - smallest)

Cities as System of Systems-Transportation & Supply Chain-Water & Waste Recycling-Food & Products ((Nano)-Energy & Electricity-Information/ICT & Cloud (Info)-Buildings & Construction-Retail & Hospitality/Media & Entertainment-Banking & Finance-Healthcare & Family (Bio)-Education & Professions (Cogno)-Government (City, State, Nation)

Nations: Innovation Opportunities- GDP/Capita (level and growth rate)- Energy/Capita (fossil and renewable)

Developed MarketNations

(> $20K GDP/Capita)

Emerging MarketNations

(< $20K GDP/Capita)

IBM UP WW: Tandem Awards: Increasing university linkages (knowledge exchange interactions)


World Population & Product-Service System Scaling


Teaching SSME+D

Fitzsimmons & Fitzsimmons– Graduate Students– Schools of Engineering & Businesses

Teboul– Undergraduates– Schools of Business & Social Sciences– Busy execs (4 hour read)

Ricketts– Practitioners– Manufacturers In Transition

And 200 other books…– Zeithaml, Bitner, Gremler; Gronross, Chase, Jacobs,

Aquilano; Davis, Heineke; Heskett, Sasser, Schlesingher; Sampson; Lovelock, Wirtz, Chew; Alter; Baldwin, Clark; Beinhocker; Berry; Bryson, Daniels, Warf; Checkland, Holwell; Cooper,Edgett; Hopp, Spearman; Womack, Jones; Johnston; Heizer, Render; Milgrom, Roberts; Norman; Pine, Gilmore; Sterman; Weinberg; Woods, Degramo; Wooldridge; Wright; etc.

URL: http://www.cob.sjsu.edu/ssme/refmenu.asp

Reaching the Goal: How Managers Improve

a Services Business Using Goldratt’s

Theory of ConstraintsBy John Ricketts, IBM

Service Management:Operations, Strategy,

and Information Technology

By Fitzsimmons and Fitzsimmons, UTexas

Service Is Front Stage:Positioning services for

value advantageBy James Teboul, INSEAD


What is a Service System? What is Service Science? …customers just name <your favorite provider> …researchers just name <your favorite discipline>

Economics & Law

Design/ Cognitive Science Systems

Engineering

OperationsComputer Science/

Artificial Intelligence

Marketing

“a service system is a human-made systemto improve customer-provider interactions,

or value-cocreation”

“service science isthe interdisciplinary study of

service systems &value-cocreation”


How to visualize service science? The Systems-Disciplines MatrixSystems that focus on flows of things Systems that governSystems that support people’s activities

transportation & supply chain water &

waste

food &products

energy & electricity

building & construction

healthcare& family

retail &hospitality banking

& finance

ICT &cloud

education &work

citysecure

statescale

nationlaws

social sciences

behavioral sciences

management sciences

political sciences

learning sciences

cognitive sciences

system sciences

information sciences

organization sciences

decision sciences

run professions

transform professions

innovate professions

e.g., econ & law

e.g., marketing

e.g., operations

e.g., public policy

e.g., game theory and strategy

e.g., psychology

e.g., industrial eng.

e.g., computer sci

e.g., knowledge mgmt

e.g., stats & design

e.g., knowledge worker

e.g., consultant

e.g., entrepreneur

stake

holders Customer

Provider

Authority

Competitors

resources

People

Technology

Information

Organizations

change History

(Data Analytics)

Future(Roadmap)

value

Run

Transform(Copy)

Innovate(Invent)

Starting Point 1: The Stakeholders (As-Is)

Starting Point 2: Their Resources (As-Is)

Change Potential: Thinking (Has-Been & Might-Become)

Value Realization: Doing (To-Be)

disciplines

systems


What is the skills goal? T-Shaped professionals, ready for T-eamwork!

Many disciplines(understanding & communications)

Many systems(understanding & communications)

Deep in one discipline

(an

alytic th

inkin

g &

pro

ble

m so

lving

)

Deep in one system

(an

alytic th

inkin

g &

pro

ble

m so

lving

)

Many team-oriented service projects completed(resume: outcomes, accomplishments & awards)

SSME+D = Service Science, Management, Engineering + Design


Jobs: Expert Thinking & Complex Communications

-10

-5

0

5

10

15

1969 1974 1979 1984 1989 1994 1999

Levy, F, & Murnane, R. J. (2004). The New Division of Labor:How Computers Are Creating the Next Job Market. Princeton University Press.

Based on U.S. Department of Labor’ Dictionary of Occupational Titles (DOT)

Expert Thinking(deep)

Complex Communication(broad)

Routine Manual

Non-routine Manual

Routine Cognitive

Increasing usage of job descriptive terms


Job Roles: IBM Building Smarter Enterprises & A Smarter Planethttps://jobs3.netmedia1.com/cp/find.ibm.jobs/location/

1. Consultant(trusted advisor to customer)

- a value proposition to addressproblems or opportunities and

enhance value co-creationrelationships

2. Sales- a signed contract that

defines work, outcomes, solution,rewards and risks

for all parties

4. Project Manager(often with co-PM from customer side)

a detailed project plan thatbalances time, costs, skills availability,

and other resources, as well asadaptive realization of plan

3. Architect(systems engineer, IT & enterprise architect)

-An elegant solution design that satisfiesfunctional and non-functional

constraints across thesystem life-cycle

5. Specialists(systems engineer, Research, engineer,

Industry specialist, application, technician, data, analyst, professional, agent)

-a compelling working system(leading-edge prototype systems

from Research)

~10%

~10% ~5%

~5%

~45%

6. Enterprise OperationsAdministrative Services, Other, Marketing & Communications

Finance, Supply Chain, Manufacturing, Human Resources, Legal,

General Executive Management

~25%

IBM Employees1. ~10% Consultant2. ~10% Sales3. ~5% Architect4. ~5% Project Manager5. ~45% Specialists6. ~25% Enterprise Operations

Project Mix From 90-10 to 80-20:B2B – Business to BusinessB2G – Business to Government


L

Product-Service-Solution Systems as Learning Systems

Learning Systems(“Viability = Choices”)

Exploitation(James March)

Exploration(James March)

Run/Practice-Reduce(IBM)

Transform/Follow(IBM)

Innovate/Lead(IBM)

Operations Costs

Maintenance Costs

Incidence Planning & Response Costs (Insure)

Incremental

Radical

Super-Radical

Internal

External

Interactions

“To bethe best,

learn fromthe rest”

“Doublemonetize,

internal winand ‘sell’ to

external”

“Try tooperateinside

thecomfortzone”

Linda Sanford, IBM “Let Go To Grow”March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.

52

How entities (service systems) learn and change over timeHistory and future of Run-Transform-Innovate investment choices

• Diverse Types– Persons (Individuals)

• Families– Regional Entities

• Universities• Hospitals• Cities• States/Provinces• Nations

– Other Enterprises• Businesses• Non-profits

• Learning & Change– Run = use existing

knowledge or standard practices (use)

– Transform = adopt a new best practice (copy)

– Innovate = create a new best practice (invent)

Transform

Innovate

Invest in each Invest in each type of changetype of change

Run

March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.

exploitexplore


Smarter = Sustainable Innovation (reduce waste, expand capabilities)

Computational System

Building Smarter TechnologiesRequires investment roadmap

Service Systems: Stakeholders & Resources

1. People 2. Technology3. Shared Information4. Organizations

connected by win-win value propositions

Building Smarter Universities & CitiesRequires investment roadmap

54

What happens when you take some of the nicotine out of cigarettes?

55

How do you create more lasting solutions?


Corning: A Day Made of Glasshttp://www.youtube.com/watch?v=6Cf7IL_eZ38


Well Being Index January 10, 2011

By Mark Whitehouse at [email protected]

One approach is to enhance GDP with other objective factors such as inequality, leisure and life expectancy. In a paper presented Saturday at the American Economic Association meeting, Stanford economists Peter Klenow and Charles Jones found that doing so can make a big difference.

Making everybody work 120 hours a week could radically boost a country's GDP per capita, but it wouldn't make people happier. Removing pollution limits could boost GDP per hour worked, but wouldn't necessarily lead to a world we'd want to live in.

58

Time

ECOLOGY

14BBig Bang

(NaturalWorld)

10KCities

(Human-MadeWorld)

Sun

writing(symbols and scribes)

Earth

written laws

bacteria(uni-cell life)

sponges(multi-cell life)

money(coins)

universities

clams (neurons)trilobites (brains)

printing press (books)steam engine200M

bees (socialdivision-of-labor)

60

transistor

Where is the “Real Science”?In the interdisciplinary sciences that study the natural and human-made worlds… Unraveling the mystery of evolving hierarchical-complexity in new populations…To discover the world’s structures and mechanisms for computing non-zero-sum

Value-CoCreation (VCC) Architectures & Holistic Service Systems (HSS)


Thank-You! Questions?

Dr. James (“Jim”) C. SpohrerDirector, IBM University Programs (IBM UP) [email protected]

“Instrumented, Interconnected, Intelligent – Let’s build a Smarter Planet.” – IBM“If we are going to build a smarter planet, let’s start by building smarter cities” – CityForward.org“Universities are major employers in cities and key to urban sustainability.” – Coalition of USU

“Cities learning from cities learning from cities.” – Fundacion Metropoli“The future is already here… It is just not evenly distributed.” – Gibson

“The best way to predict the future is to create it/invent it.” – Moliere/Kay“Real-world problems may not/refuse to respect discipline boundaries.” – Popper/Spohrer

“Today’s problems may come from yesterday’s solutions.” – Senge“History is a race between education and catastrophe.” – H.G. Wells

“The future is born in universities.” – Kurilov“Think global, act local.” – Geddes


Service System Ecology: Conceptual Framework

Resources: People, Technology, Information, Organizations Stakeholders: Customers, Providers, Authorities, Competitors Measures: Quality, Productivity, Compliance, Sustainable Innovation Access Rights: Own, Lease, Shared, Privileged

Ecology(Populations & Diversity)

Entities(Service Systems)

Interactions(Service Networks)

Outcomes(Value Changes)

Value Proposition (Offers/Reconfig/Risks/Incentives)

Governance Mechanism (Rules/Constraints/Penalties)

Access Rights(Relationships)

Measures(Rankings of Entities)

Resources(Roles in Processes, Specialization)

Stakeholders(Valuation Perspectives)

win-win

lose-lose win-lose

lose-win

Identity(Aspirations/Lifecycle)

Reputation(Opportunities/Variety)

prefer sustainable non-zero-sum

outcomes

© 2005 IBM Corporation61 © 2010 IBM Corporation

Service-dominant logic

Service is the application of competences for the benefit of another entity

Service is exchanged for service

Value is always co-created

Goods are appliances for delivery

All economies are service economies

All businesses are service businesses

Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17.

Resource Integrator/Beneficiary

(“Firm”)

Resource Integrator/Beneficiary

(“Customer”)

Value

Co-

crea

tion

Value Configuration

Den

sity


What is value?

Value depends on the capabilities a system has to survive and create beneficial change in its environment.

Taking advantage of the service another system offers means incorporating improved capabilities.

Value can be defined as system improvement in an environment.

All ways that systems work together to improve or enhance one another’s capabilities can be seen as being value creating.

Vargo, S. L., Maglio, P. P., and Akaka, M. A. (2008). On value and value co-creation: A service systems and service logic perspective. European Management Journal, 26(3), 145-152.


What is a service system?

Service involves at least two entities applying competences and making use of individual and shared resources for mutual benefit.

We call such interacting entities service systems.

A. Service Provider

• Individual• Organization• Public or Private

C. Service Target: The reality to be transformed or operated on by A, for the sake of B

• People, dimensions of• Business, dimensions of• Products, goods and material systems• Information, codified knowledge

B. Service Client

• Individual• Organization• Public or Private

Forms ofOwnership Relationship

(B on C)

Forms ofService Relationship(A & B co-create value)

Forms ofResponsibility Relationship

(A on C)

Forms ofService Interventions

(A on C, B on C)

Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.

Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.


Resources are the building blocks of service systems

Formal service systems can contractInformal service systems can promise/commit

Trends & Countertrends (Evolve and Balance):Informal <> FormalSocial <> Economic

Political <> LegalRoutine Cognitive Labor <> ComputationRoutine Physical Labor <> Technology

Transportation (Atoms) <> Communication (Bits)Qualitative (Tacit) <> Quantitative (Explicit)

First foundational premise of service science

Service system entitiesdynamically configure

four types of resources

The named resource isPhysical

orNot-Physical

(physicists resolve disputes)

The named resource hasRights

orNo-Rights

(judges resolve disputeswithin their jurisdictions)

Physical

Not-Physical

Rights No-Rights

2. Technology

4.. SharedInformation

1. People

3. Organizations

Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..


Value propositions are the building blocks of service system networks

Second foundational premise of service science

Service system entitiescalculate value from multiple

stakeholder perspectives

A value propositions canbe viewed as a request from

one service system to anotherto run an algorithm

(the value proposition)from the perspectives of

multiple stakeholders accordingto culturally determined

value principles.The four primary stakeholderperspectives are: customer,

provider, authority, and competitor

StakeholderPerspective(the players)

MeasureImpacted

PricingDecision

BasicQuestions

ValuePropositionReasoning

1.Customer Quality(Revenue)

ValueBased

Should we?(offer it)

Model of customer: Do customers want it? Is there a market? How large? Growth rate?

2.Provider Productivity(Profit)

CostPlus

Can we?(deliver it)

Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?

3.Authority Compliance(Taxes andFines)

Regulated May we?(offer anddeliver it)

Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?

4.Competitor(Substitute)

Sustainable Innovation(Marketshare)

Strategic Will we?(invest tomake it so)

Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?

Value propositions coordinate & motivate resource access



Access rights are the building blocks of service system ecology(culture and shared information)

service = value-cocreationB2BB2CB2GG2CG2BG2GC2CC2BC2G***

provider resourcesOwned OutrightLeased/ContractShared Access

Privileged Access

customer resourcesOwned OutrightLeased/ContractShared Access

Privileged Access

OO

SA

PA

LC

OO

LC

SA

PA

S AP C

Competitor Provider Customer Authority

value-proposition change-experience dynamic-configurations

(substitute)

time

Third foundational premise of service science

Service system entitiesreconfigure access rights to

resources by mutually agreed tovalue propositions

Access rights Access to resources that are owned

outright (i.e., property)

Access to resource that are leased/contracted for (i.e., rental car, home ownership via mortgage, insurance policies, etc.)

Shared access (i.e., roads, web information, air, etc.)

Privileged access (i.e., personal thoughts, inalienable kinship relationships, etc.)



Premises of service science: What service systems do

Service system entitiesdynamically configure (transform)

four types of resources

Service system entitiescalculate value from multiple

stakeholder perspectives

Service system entitiesreconfigure access rights

to resources by mutually agreed to value propositions

S AP C

Physical

Not-Physical

Rights No-Rights

2. Technology

4.. SharedInformation

1. People

3. Organizations

StakeholderPerspective

MeasureImpacted

Pricing Questions Reasoning

1.Customer Quality Value Based

Should we? Model of customer: Do customers want it?

2.Provider Productivity CostPlus

Can we? Model of self: Does it play to our strengths?

3.Authority Compliance Regulated May we? Model of authority: Is it legal?

4.Competitor Sustainable Innovation

Strategic Will we? Model of competitor: Does it put us ahead?



Understanding the Human-Made World

See Paul Romer’s Charter Cities Video: http://www.ted.com/talks/paul_romer.html

Also see: Symbolic Species, DeaconCompany of Strangers, SeabrightSciences of the Artificial, Simon


Why 13 types of service systems? K-12 STEM and the human-made world

“Imagine a better service system, and use STEM language to explain why it is better”STEM = Science, Technology, Engineering, and MathematicsSee NAE K-12 engineering report: http://www.nap.edu/catalog.php?record_id=12635

See Challenge-Based Learning: http://www.nmc.org/news/nmc/nmc-study-confirms-effectiveness-challenge-based-learning

Challenge-based Project to Design Improved Service Systems

– K - Transportation & Supply Chain

– 1 - Water & Waste Recycling

– 2 - Food & Products (Nano)

– 3 - Energy & Electric Grid

– 4 – Information/ICT & Cloud (Info)

– 5 - Buildings & Construction

– 6 – Retail & Hospitality/Media & Entertainment (tourism)

– 7 – Banking & Finance/Business & Consulting

– 8 – Healthcare & Family Life (Bio)

– 9 - Education & Work Life/Jobs & Entrepreneurship (Cogno)

– 10 – City (Government)

– 11 – State/Region (Government)

– 12 – Nation (Government)

– Higher Ed – T-shaped teamwork, deep & broad education

– Professional Life – T-shaped teamwork, series of projects

Systemsthat focus onGoverning

Systemsthat focus on

Human Activities andDevelopment

Systemsthat focus onFlow of things


Where are the opportunities? Everywhere!

71 © 2011 IBM CorporationIBM UP (University Programs) WW71

Vision for the Educational Continuum: Individuals & Institutions Learning

Any Device Learning

TECHNOLOGY IMMERSION

PERSONAL LEARNING PATHS

Student-Centered Processes

KNOWLEDGE SKILLS

Learning Communities

GLOBAL INTEGRATION

Services Specialization

ECONOMIC ALIGNMENT

Systemic View of Education

Intelligent• Aligned Data• Outcomes Insight

Instrumented• Student-centric• Integrated Assessment

Interconnected• Shared Services• Interoperable Processes

ContinuingEducation

HigherEducation

SecondarySchool

PrimarySchool

WorkforceSkills

Individuals Learning Continuum TheEducationalContinuum

Institutio

ns Learn

ing Contin

uum

EconomicSustainability

http://www-935.ibm.com/services/us/gbs/bus/html/education-for-a-smarter-planet.html


Fun: CityOne Game to Learn “CityInvesting”Serious Game to teach problem solving for real issues in key industries, helping companies to learn how to work smarter. Energy, Water, Banking, Retail

http://www.ibm.com/cityone


Priority 1: Urban Sustainability & Service Innovation Centers

A. Research: Holistic Modeling & Analytics of Service SystemsModeling and simulating cities will push state-of-the-art capabilities for planning interventions in

complex system of service systems

Includes maturity models of cities, their analytics capabilities, and city-university interactions

Provides an interdisciplinary integration point for many other university research centers that study one specialized type of system

Real-world data and advanced analytic tools are increasingly available

B. Education: STEM (Science Tech Engineering Math) Pipeline & LLLCity simulation and intervention planning tools can engage high school students and build STEM

skills of the human-made world (service systems)

Role-playing games can prepare students for real-world projects

LLL = Life Long Learning

C. Entrepreneurship: Job CreationCity modeling and intervention planning tools can engage university

students and build entrepreneurial skills

Grand challenge competitions can lead to new enterprises