The Hunt for Leading Indicators

The Hunt for Leading Indicators Modeling the Co-creation of Value in Complex IT Service Engagements Susan U. Stucky, representing work with Melissa Cefkin, Yolanda Rankin, and Ben Shaw at IBM Research-Almaden, SMART Workshop @ ServiceWave 2010, Ghent, Belgium 13 December 2010

Agenda
The Hunt for Leading Indicators in the Value Co-creation Process
Motivation
Example
Emerging model: ontology and dynamics
Leading Indicators
Why
Where to look
What kinds of data are needed (and available)
What kinds of analytics make sense
Discussion
SMART Workshop

Motivation
Theoretical
“ The fundamental axiom of service science is that the purpose of the service system is win-win value co-creation with other service systems. Service systems are all social systems (systems made up of people interacting) interpreted through the lens of value co-creation. Value co-creation is the purpose of a service system.”*
Practical
Value co-creation in complex BtoB IT service engagements can take months or years, involve hundreds if not thousands of people, as well vast numbers of other resources. Not much is known about how value-co-creation actually happens in the course of service engagements. Both a better understanding and ways of systematically monitoring, measuring and managing value co-creation dynamically.
*Source: SSME Course at IBM-Almaden/Jim Spohrer

We relate the tale of a successful IT service engagement… Call center work is not easy
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 There is a great deal to know...
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Call center work is not easy
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..and hundreds of people to deal with each day
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 Fresh problems arise with each new introduction
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 People are not happy
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 There is much turnover
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

…the tale continues bi-weekly meetings over demonstrations and prototypes
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 We can improve the way call centers operate!
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33 additional features co-constructed, agreed and added to the formal requirements
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 68 (35+33 add’l) features implemented and delivered
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 Client Provider 35 feature requirements for a custom software application
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 Increasing collective intelligence and promoting harmonious operation
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

Let’s take a look:
We saw in this story:
The original value promised was delivered
Additional, unanticipated value was co-constructed
This co-construction contributed value to both client and provider
Things don’t always work out so well…

Just as successes unfold, so do breakdowns
Value propositions are not realized due to unanticipated interactional work.
The problem solved turns out to be the wrong one
Value co-constructed by client and provider is left lying on the table
An idea that looks great on paper founders in the execution (e.g. access rights, intellectual property rights…).
The provider actualizes the value proposition, but the situation has changed.

Ontology (from Spohrer and Maglio, 2009)
Ecology
Entities
Resources
People
Technology
Organizations
Shared Information
Interactions
Value Proposition Based Interactions
Governance Mechanism Based Interactions
Outcomes
Stakeholders
Measures
Quality
Productivity
Compliance
Sustainable innovation
Access Rights

Positing two loosely-coupled subsystems
Governing: where value is realized
Actualizing: where value is created
Entities (configurations of types of resources specified)
Value-Prop based exchanges between entities
Governance-based interactions (configurations of roles)
Access rights are specified
Measure = transaction cost
Represented as a network of entities
Interactions among instances of resources
Sets of interactions rated as positive or negative
Outputs of interactions
Measure: cost of interaction
Represented as sets of interactions with outputs

Dynamics Governance Actualization Interactions Governing Actualizing P I T O P I T O Provider Client p p t c t p p c t p t c resource (type) resource (actual instance) binding relation interaction entity

Value realization in service engagements Fulfilled instantiation acknowledgement expected state actual state Proposed (unfolding over time) Actualization Governing Actualizing unfolding as expected leads to realization of anticipated value Service Actualization Value Realization  (no problemo) case 3 case 2 case 1 or, if expectations align and value-increasing patterns prevail, realization of additional value from emergent “seeds” authorization realization commoditization straightforward emergent no yes P I T O P I T O Provider Client P I T O P I T O Provider Client

Breakdowns in service engagements unanticipated interactional work unaccounted-for coordination costs the situation changes co-constructed value is left lying on the table the wrong problem is chosen to solve obstacles over access rights, intellectual property instantiation acknowledgement Actualization (unfolding over time) X X X Fulfilled expected state actual state Proposed Governing Actualizing Service Actualization Value Realization  (no problemo) case 3 case 2 case 1 P I T O P I T O Provider Client P I T O P I T O Provider Client straightforward emergent no yes

Leading indicators of value co-creation
Need to better manage the co-creation of value process
Value co-creation in complex BtoB IT service engagements is exceedingly complex and unpredictable
Current governance mechanisms are an insufficient guarantee in the face of externalities
Many measures of service quality are lagging indicators – measures after the fact and cannot provide early warning
Leading indicators can predict short term trends that point to change before the whole system changes—in effect providing an early warning system
Identify patterns that can indicate trouble ahead or opportunities to increase value for better decision-making
Identify additional factors to improve contracts
Source: If applicable, describe source origin IBM Presentation Template Full Version

On the trail of leading indicators for value co-creation
Claim 1: Value co-creation can be usefully understood to take place in two loosely coupled systems, governing and actualizing, that can come out of alignment over time  detect misalignments
Claim 2: Value-co-creation can be understood as related but separable processes: actualization of value and realization of value.  Detect whether co-created value is actualized and acknowledged by the co-producers
Claim 3: Service actualization (aka delivery) takes place through interaction among actual, particular, resources over time  Track changes from the proposed, expected state, as service actualization unfolds
Are there more resources involved than instantiated?
Are there different resources than were instantiated?
Are there more interactions among resources than expected?
Are they taking longer than expected.
Is the quality of those interactions changing?
Claim 3: Access rights (as defined contractually) constrain configurations of resource that are instantiated
 Track changes in the proposed configurations as service actualization unfolds
Are changes made in the access rights during actualization?
Are these changes reflected back in the governing system?

Data, Analytics, and Indicators Exploratory Analytics Latent Semantic Analysis Network Discovery Login Data Social network Analysis Unstructured text mining Indicators Changes in quality of interaction among resources Changes in quantity of interactions among resources Changes in Access Rights
Data
Interactions among resources
As specified in the contractual agreement
As they occur during actualization
Login/use of IT
Roles of people
Entity Map

Thank You and Discussion

Value created (from coconut shells) in unanticipated ways

The overall process time Transactional Interactional Client Engagement p p p c p p t c p p i c Transition p p p c p p t c t p p c t p t c pr p p c Delivery p p p c t p i c Procurement (C) Opportunity Mgmt (P) p p p c i p p c

The Hunt for Leading Indicators

by ServiceWave 2010 on Dec 15, 2010

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The Hunt for Leading Indicators — Presentation Transcript