Innovation in the service sector
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A presentation by Irving Wladawsky-Berger, former chief technology officer at IBM on the future of innovation in the service sector. Given at Imperial College Business School on 13 October 2009.

A presentation by Irving Wladawsky-Berger, former chief technology officer at IBM on the future of innovation in the service sector. Given at Imperial College Business School on 13 October 2009.

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  • For example … the invention of the automobile was remarkable in and of itself. It was an invention unlike anything that came before. But when you think about it … … the real measure of innovation – of real value and opportunity – was everything that spawned from it – entirely new ways of doing things, such as …
  • [Chart: Evolution of manufacturing model] This scenario of complexity, low utilization, and inefficiency has played out in many industries. Power generation, distribution, and telecommunications evolved dramatically. Manufacturing is perhaps the best and most recent example. Over a decade, we saw manufacturing around the world transform from vertically integrated, under-utilized silos to global supply chains . Today, manufacturers orchestrate suppliers and production capacity around the world to achieve not only lower costs, but much better time to market with new designs and innovations that drive growth and a more differentiated competitive position. Perhaps the best example of this evolution is Toyota . Toyota is justifiably famous for the quality of their products and the efficient production system responsible for them. Toyota Chairman Fujio Cho discussed the Toyota production system at IBM’s Business Leadership Forum in 2007 . Cho-san explained that early on, Toyota observed that automotive plants of the day had large amounts of inventory on site and the amount of work being performed in various departments within the factory was uneven. Instead, Toyota implemented a system where production is controlled by customer demand, not by production capacity. This just-in-time system allowed Toyota to significantly reduce the waste and costs associated with excess inventory . There were many factors at Toyota and across the industry that drove change, but the end result was the same – a fundamentally new model. Regardless of whether firms continued to run most of their own manufacturing or if they outsourced it completely, the new model was an efficient global supply chain.
  • My first piece of scholarly work -- Chart by Ray Kurzweil -- one of the great futurists of our time -- says that for a thousand dollars, how many calculations per second can you get? He plotted it out over 100 years. Fundamentally, it says that the price of a calculation per second went down 15 orders of magnitude over that 100 year time period. The back end of the curve says it's actually accelerating, making this a super exponential function, because six orders of magnitude improvement of that 15 occurred in the last 30-35 years. It's a pretty safe bet that the trajectory will continue. (CLICK) Nanotechnology – which you know is already happening -- will enable the design of an object on all length scales -- from the atomic to the macroscopic -- enabling more efficient and vastly less expensive manufacturing processes and providing the hardware foundation for future information technology. And what about the inverse of this chart …
  • All nations are experiencing a macro-economic shift from value in producing physical things (agriculture and goods) to value from apply capabilities for the benefit of others (services). Observation: Service sector is where the job growth is, not only in the US but around the world. Implication: Most science and engineering and management jobs will be in the service sector. For example, Kenneth Smith of H.B.Maynard (one of the oldest and most prestigious industrial engineering consulting firms) said - “Historically, most of our business at H.B. Maynard was manufacturing, today roughly 80% is in the retail sector…” So why do we still train most scientist and engineers for manufacturing age jobs? Could this be part of the reason that in most US engineering schools only 50% of entering engineering students graduate with an engineering degree? The service sector is the fastest growing segment of global economies. In the US, in 1800 90% of people were worked on farms, and today less than 3% of workers are employed in agriculture. Goods, or manufacturing of physical products, peaked in the US in the mid-1950’s and has been decreasing ever since due to automation and off shoring. However, services, especially complex information and business services, as we will see is where the growth is. But the growth in the service sector jobs is not just in the developed countries, it is also happening in the developing countries. In fact, the International Labor Organization, reports that 2006 was the first time in human history that more people worker in the service sector than in agriculture world wide. 40% in service sector, 39.7% in agriculture, and 21.3% in manufacturing, with the growth coming by moving people from agriculture to services – this represents the largest labor force migration in human history. 1970 estimates % of service in labor force (change to 2005/2009 est) China 12 +17 142% India 17 +6 35% US 62 +14 23% Indonesia 29 +10 34% Brazil 41 +25 61% Russia 42 +27 64% Japan 48 +19 45% Nigeria 16 +3 19% Bangledesh 19 +7 37% Germany 45 +19 42%
  • From an economic standpoint, we’re seeing innovation as the common thread woven into the fabric of more and more nations, as they tackle the challenges of an ever-changing world. And with good reason. Economies everywhere have concluded that Innovation is the single greatest driver of competitive advantage today. And markets being what they are, innovations that occur in the marketplace generate further innovations. In the process, they give rise to new industries, they spur productivity and economic growth, fuel wealth-creation, create higher-paying jobs, and raise the standard of living for everyone.
  • Improving U.S. health information management and technology also would serve as a catalyst for further innovation – creating opportunities for U.S. companies to export services and technologies to countries facing similar challenges in healthcare funding and quality. We should establish a pilot program to enable electronic exchanges for public health, research and health care delivery between the U.S. and at least one country on each continent.
  • The proliferation of sensors, digital communications and other forms of digital data collection, along with advances in the storage and management of such data has led to a projected tenfold growth in digital data between 2007 and 2011. All of this data has the potential to provide enterprise with valuable insights for running their businesses more effectively and efficiently. Now, businesses analysts need to adapt from an environment in which the challenge was in gaining insights from limited data to one in which the challenge is in managing and extracting useful information from massive data sets. As one can imagine, finding the relevant data, and quickly, amid the 'mountain' of available data can be like finding a needle in a haystack. Moreover, of the growth in digital data, approximately 80% of it is expected to comprise semi-structured and unstructured data (i.e., email, blogs, medical images, videos, audio files, pictures). With unstructured data, considerable effort is required to 'understand' the data, even before any further analysis can be performed to intelligently influence decision making. Semantics The number of semantically tagged documents and data sets is growing, as a result of five developments: “ Linked Data” guidelines, published in 2006, make it easier to share data on the web. The graph in the upper left represents the output of the Linking Open Data community project, which has the goal of making large numbers of open data sets more available by complying with the Linked Data guidelines. RDF (Resource Description Framework) triples are a key component of the Linked Data guidelines. Technologies to convert many legacy sources, especially of relational data, into RDF triples, became available as open source in 2006 (and IBM Research has improved versions of these) Technologies are appearing that can automatically find associations between subjects and objects from one “data graph” with subjects and objects in other “data graphs” Several important reference information suppliers, most notably Thomson Reuters, entered into this space (through their OpenCalais effort). Several efforts have developed technology to mine the essential information about people, places, materials, governments, businesses, works of literature and so on from Wikipedia, into a semantically tagged form (notably DBPedia and Freebase), so that as Wikipedia extends to cover more of the worlds knowledge, more of that becomes part of the Web of semantic data. Net: Both the number of facts, and the rich interconnecting of different classes of facts, have been growing at an accelerating rate. Example Use: In BlueJ! grand challenge, linked data (DBpedia, IMDb, Freebase etc) is used as important structured information source to improve the accuracy of question answering in additional to unstructured information. Acronyms: RDF – Resource Description Framework (W3C Standard) FOAF – Friend of a Friend – the RDF application for describing people and other people they know DBLP – Digital Bibliography and Library Project – bibliographic information on more than 1 million computer science research publications SIOC – Semantically Interlinked Online Communities DOAP – Description of a Project; DOAPSpace – a repository of open source projects RIESE - R DFizing and I nterlinking the E uro S tat Data Set E ffort OpenGuides – Information about leading cities of the world, the kind of information that would appear in a guidebook, produced by the community through a public Wiki. Jamendo – an online music community, including a large quantity of music licensed under various Creative Commons license terms. www.garlik.com – an online identity monitoring service Sindice.com – web service providing a directory/index of all Linked Open Data and Microformat data on the Web
  • What all of this means is that the digital and physical infrastructures of the world are converging. Computational power is being put into things we wouldn't recognize as computers. Indeed, almost anything—any person, any object, any process or any service, for any organization, large or small—can become digitally aware and networked. With so much technology and networking abundantly available at such low cost: What wouldn't you put smart technology into? What service wouldn't you provide a customer, citizen, student or patient? What wouldn't you connect? What information wouldn't you mine for insight? A smarter planet is possible because - Our world is becoming instrumented Our world is becoming interconnected . Virtually all things, processes, and ways of working are becoming intelligent . Let me explain each to you in a bit more detail… (NEXT SLIDE)
  • Government organizations and THEIR systems are challenged with addressing complex issues – economic slowdowns , budget shortfalls, security threats, changing demographics , and more. To survive in this ‘new world,’ governments must transform how they currently work if they are to be successful in maintaining the prosperity for societies. Communicating across silos in an ‘unconnected’ environment is no longer acceptable…
  • One thing we can do is advance an emerging discipline known as Service Science, Management and Engineering – Service Science for short. Similar to the forces that created computer science as a discipline, companies like IBM need people with a new skill set. We often refer to them as T-shaped people – professionals who have deep knowledge in one or two fields, but also have a broad knowledge across other fields critical to solving complex service sector challenges. These individuals blend technical, management and social science skills. We also need more research in how to optimally measure and construct complex service systems that govern much of our everyday lives – such as banking, healthcare, energy, retail, military, transportation and education systems. The America COMPETES Act required a study to look into how the federal government should support Service Science through education, training and research. And I strongly endorse this critical first step.
  • From an economic standpoint, we’re seeing innovation as the common thread woven into the fabric of more and more nations, as they tackle the challenges of an ever-changing world. And with good reason. Economies everywhere have concluded that Innovation is the single greatest driver of competitive advantage today. And markets being what they are, innovations that occur in the marketplace generate further innovations. In the process, they give rise to new industries, they spur productivity and economic growth, fuel wealth-creation, create higher-paying jobs, and raise the standard of living for everyone.
  • To foster and reward innovation among our employees we created a management system to encourage new ideas and give them a chance to be tested and tried out.
  • Key Speaker Messages: Explain “why” we would enter into these relationships (see “Details” for specific examples) To foster the environment for collaborative innovation To ensure advancement of social and environmental innovations To complement our capabilities in an effort to increase competitive advantage APQC Site Visit Guide Responses: 9. Refer to slide Details: Why would we enter into these relationships? Venture Capital To invest in potential leading-edge technologies that represent growth opportunities To be in a position to acquire start-ups with complementary capabilities University Relations To attract and hire the best talent from universities (undergraduate, MBA, PhD.) To increase collaborative research in areas of interest to IBM - the exchange of ideas To provide access to and use of our technologies by university faculty, students and administration as well as access to university technologies To generate increased profitable sales of products and services - addressing university I/T needs Keystone Customers To generate revenue while strengthening a client relationship To create valuable intellectual capital for IBM's portfolio To provides a steady stream of advanced prototype exhibits for the Industry Solutions Labs (ISL), which hosts major clients , key industry events and CEO conferences ISVs To influence application design and development favorable to IBM platform Corporation Community Relations To ensure advancement of social and environmental innovations that will benefit the community at large
  • Key Points: The world of IP is changing. It used to be that companies developed proprietary solutions and guarded them against everyone. Today there is a continuum of innovation – stretching from the old proprietary model to a new more open and collaborative model. Different companies and organizations within the IT industry react to this continuum differently. For example: Rambus, a high-speed chip manufacturer, seeks to guard and capitalize on their IP while Red Hat, an open source software company, depends on the sharing of ideas to advance development. NTP’s suit vs. RIM is another example -NTP is the company name (originally stood for New Technology Products) -NTP has two employees (one is a patent attorney) -NTP was founded in Virginia in 1992 -NTP holds around 20 patents – all on wireless e-mail technology. NTP’s patents all were awarded to one of its founders. OASIS (Organization for the Advancement of Structured Information Standards), is another more “open” organization. As a not-for-profit international consortium, OASIS drives the development, convergence, and adoption of “open and interoperable” web business standards. Adding to this dynamic landscape are new IP practices -- which are disrupting companies and their strategies along this continuum. - The adoption of open source software solutions, open standards and collaborative business models are giving rise to patent pledges – where the strategic sharing of IP fuels community innovation (IBM 500 software patent pledge). Patent commons are also forming. These are organizations that agree to share their patents – with other members in the commons – in order to advance development. Patent trolls are also a relatively new behavior. Companies such as Intellectual Ventures are in the business of buying and stockpiling patents for litigation. Name of general counsel at Eli Lilly is Bob Armitage.
  • At every level, the opportunities to marry invention and insight are absolutely profuse, and so are the challenges. Let’s look at the issue of Intellectual Property. Proprietary Innovation : For years now, IBM has been the leader in proprietary, technology innovation. We have more than 40,000 US patents; the largest US patent portfolio compared to any other company. In 2004, that patent portfolio generated $1.2 Billion in licensing income. Clearly, the development of proprietary technology is something IBM will continue to pursue. Open Innovation: Given the rise of open source software and open standards, many of our clients are looking for non-proprietary solutions. Clients today want the flexibility, efficiencies and scalability that open source and open-standards based technology provides. IBM must participate in, if not lead, this emerging “open innovation” model where the standardization of technology can provide solutions that interoperate more effectively, and are less costly to evolve. By leading the pursuit of open, standards-based technologies, we derive significant business value by helping our clients transform their businesses. Helping them to leverage the evolving “on demand” nature of business…in an increasingly open world Today, innovation is a dual value proposition…a shared foundation of open and proprietary.
  • From an economic standpoint, we’re seeing innovation as the common thread woven into the fabric of more and more nations, as they tackle the challenges of an ever-changing world. And with good reason. Economies everywhere have concluded that Innovation is the single greatest driver of competitive advantage today. And markets being what they are, innovations that occur in the marketplace generate further innovations. In the process, they give rise to new industries, they spur productivity and economic growth, fuel wealth-creation, create higher-paying jobs, and raise the standard of living for everyone.

Innovation in the service sector Presentation Transcript

  • 1. Technology, Leadership and Innovation in the Services Economy
    • Irving Wladawsky-Berger
  • 2. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age
  • 3. The Industrial Revolution A technology and science based revolution
  • 4. Design and manufacturing of physical objects
  • 5. Innovations in the Industrial Economy Major improvements in productivity and quality in physically engineered systems
  • 6. Innovations in logistics and manufacturing Toyota Production System
    • Supply chain
    • Just-in-time production
    • Continuous improvement
    • . . .
  • 7. Accelerating Advances in Digital Technologies IT is to the 21st century as steam power was to the Industrial Revolution Source: Kurzweil 1999 – Moravec 1998 Text
  • 8. The Internet: Industrial Knowledge Age
  • 9. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems
  • 10. Growth of Services Economy in US Agriculture: Value from harvesting nature Goods: Value from making products Services: Value from enhancing the capabilities of tasks that one organization beneficially performs for others
  • 11. US Economy – The CIA World Factbook 13
    • GDP composition by sector
    • 1.2% Agriculture
    • 19.2% Industry
    • 79.6% Services
    • Labor force – by occupation
    • 0.6% Agriculture: Farming, forestry, fishing
    • 22.6% Industry: Manufacturing, extraction, transp, crafts
    • 76.8%: Services
    • 35.5% Managerial, professional and technical
    • 24.8% Sales and office
    • 16.5% Other services
  • 12. UK Economy – The CIA World Factbook 13
    • GDP composition by sector
    • 1.3% Agriculture
    • 24.2% Industry
    • 74.5% Services
    • Labor force – by occupation
    • 1.4% Agriculture
    • 18.2% Insutry
    • 74.5% Services
  • 13. World Economy – The CIA World Factbook 13
    • GDP composition by sector
    • 4% Agriculture
    • 32% Industry
    • 64% Services
    • Labor force – by occupation
    • 40% Agriculture
    • 20% Industry
    • 40% Services
  • 14. Changing nature of work in the world - away from farms and factories… 42% 64 33 3 1.4 Germany 37% 26 11 63 2.1 Bangladesh 19% 20 10 70 1.6 Nigeria 45% 67 28 5 2.2 Japan 64% 69 21 10 2.4 Russia 61% 66 14 20 3.0 Brazil 34% 39 16 45 3.5 Indonesia 23% 76 23 1 5.1 U.S. 35% 23 17 60 14.4 India 142% 29 22 49 25.7 China 40yr Service Growth S % G % A % Labor % Nation World’s Large Labor Forces A = Agriculture, G = Goods, S = Service 2009 2009 The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and regional variations in labor and infrastructure costs and capabilities. CIA Handbook, International Labor Organization Note: 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 enhancing the capabilities of people and their ability to interconnect and co-create value
  • 15. 12 Services is Front Stage: We are all in services . . . More or less! James Teboul - INSEAD Every organization consists of front stage and back stage activities Services deal with the front stage interactions People are prominent in front stage activities, providing solutions to problems and focusing on achieving a positive customer experience in a collaboration between the providers and consumers of services Manufacturing and production deal with back stage operations Product excellence and competitive costs are key to back stage activities which tend to focus on specialization, standardization and automation
  • 16. Pure product Transformation Labor & Capital Pure service Customer Customer In case of a pure product, . . . we have raw materials in and a finished product out. we have ore in and gold out. we have steel in, cars out. In case of a ‘pure’ service, we have a customer in and, in the best case, the same customer out, but transformed by the experience. Labor & Capital Experience Raw Materials Finished Products
  • 17. Prof. James Teboul THE AGE OF SERVICES INDUSTRY SERVICES Front Stage (People, Tools) Back Stage (Design, Manufacturing) Back stage Front stage In industry, we focus on the back stage operations, but we still need a front stage to sell, distribute, repair, develop solutions, help and train customers In services, we focus on the front stage experience, but we still need back stage operations to prepare products and components or process information Any business is made up of two parts
  • 18. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems Location Lab-based Market-facing
  • 19. Complex Organizational Systems Physically Engineered Systems
  • 20. Innovations in the Industrial Economy Major improvements in productivity and quality in physically engineered systems
  • 21. The Internet: Industrial Knowledge Age
  • 22. Market Environment in the 21st Century Global, integrated, “system of systems” Fast changing, complex, unpredictable Focused on people, services, organizations
  • 23. Key Challenge for the Knowledge Age Leverage technology, science and innovation to make major improvements in the productivity and quality of services, organizations and the very way the world works
  • 24. Technology, components and products Automation of standardized back-office operations Productivity tools for front-office applications Huge variety of market facing e-services
  • 25. Market Facing, People, Services Lab-based, Technology, Products
  • 26. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems Location Lab-based Market-facing Scope Specialized, narrow Global, holistic, system of systems
  • 27. Evolution of the Internet Networking TCP-IP Information World Wide Web Communications e-mail . . . Commerce e-business Consumer, business, government, healthcare and other Services Cloud Computing Internet Distributed resources Grid Computing
  • 28. What new capabilities are enabling us to re-think how to apply technology, science and innovation to services, complex organizational systems and the very way the world works? Huge amounts of information Billions of mobile devices; trillions of sensors Massive computational power and storage capacity High bandwidth, wireless networks . . .
  • 29. By 2011, the world will be 10 times more instrumented than it was in 2006. Internet connected devices will leap from 500M to 1 Trillion 14 2005 2006 2007 2008 2009 2010 2011 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 Exabytes RFID, Digital TV, MP3 players, Digital cameras, Camera phones, VoIP, Medical imaging, Laptops, smart meters, multi-player games, Satellite images, GPS, ATMs, Scanners, Sensors, Digital radio, DLP theaters, Telematics , Peer - to - peer, Email, Instant messaging, Videoconferencing, CAD/CAM, Toys, Industrial machines, Security systems, Appliances 10x growth in five years Approximately 70% of the digital universe is created by individuals, but enterprises are responsible for 85% of the security, privacy, reliability, and compliance.
  • 30. Real-time information analysis The world's physical and digital infrastructure are converging
  • 31. Our world is becoming INSTRUMENTED But the sensors don’t yet communicate with each other very well Our world is becoming INTERCONNECTED But we don’t yet speak the same “language” across these connections Virtually all things, processes and ways of working are becoming INTELLIGENT We are at the infantile stage of intelligence where some signals are easily understood - others are just a fog 16 Making the world smarter
  • 32. Some emerging “smart” applications 16 Smart traffic systems Smart water management Smart energy grids Smart healthcare Smart food systems Intelligent oil field technologies Smart regions Smart weather Smart countries Smart supply chains Smart cities Smart retail
  • 33. Smart Cities 30 EDUCATION • TRANSPORTATION • SOCIAL SERVICES • UTILITIES • ENERGY • HEALTHCARE • COMMUNICATIONS RETAIL • AUTOMOTIVE • FINANCE • MANUFACTURING • FOOD • POSTAL SERVICE • MEDIA • DEFENSE • CUSTOMS
  • 34. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems Location Lab-based Market-facing Scope Specialized, narrow Global, holistic, system of systems Approach Siloed within disciplines Multi-disciplinary
  • 35. T-Shaped Professionals Deep Expert Thinking and Broad Skills in Business, Communications, Organization Broad Deep in one… Broad across many… Science and Engineering Math and Operations Research IT and Information Systems Complex Engineering Systems Business and Management Economics and Social Sciences Business Anthropology and Design Organizational Change & Learning Deep
  • 36. Overriding Educational Objective Develop or Enhance the Leadership Skills for Dealing With: Technical Skills Business Skills People Skills Complex Systems Complex Markets Complex Organizations
  • 37. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems Location Lab-based Market-facing Scope Specialized, narrow Global, holistic, system of systems Approach Siloed within disciplines Multi-disciplinary Culture Proprietary Open, distributed, collaborative
  • 38. Collaborative Innovation Social Networks: Bringing People and Communities into Our Systems 19
  • 39. Collaborative Innovation
      • Creating a culture in which collaboration and interaction across silos is an essential element of innovation
      • Surfacing innovative solutions to specific business challenges
      • Rewarding innovators and innovative ideas in tangible, visible ways
    20 ThinkPlace: Consistent global management system for employee-based innovation
  • 40. Collaborative Innovation Innovation Ecosystems: External Relationships and Partnerships 21 Sustaining Enablers: Innovation Ecosystem Engaging in strategic relationships enables an extension of our business model into the value net Venture Capitalists ISVs Business Partners University Relations
    • Technical
    • Thought Leaders
    Corp. Community Relations CGMs & SLEs Investor Relations (IR)
    • Financial Analysts
    • Annual Report
    • Direct IR
    Legal Media Relations IT Analysts Alumni Programs Standards Bodies Gov’t Programs Keystone Customers IBM Channels to Constituencies
  • 41. Open Standards 22 OGSA Web Services XML Linux Globus WSDL SOAP SMTP SQL NNTP HTTP/HTML IRC POP/iMAP TCP/IP WAP
  • 42. Collaborative Innovation
    • Open Source communities
      • 10s of thousands of programmers worldwide collaborating on
        • Linux, Apache Web server, Eclipse, Open Grid Services Architecture . . .
    • Untold numbers worldwide contributing to/collaborating on
      • Blogs, Wikis . . .
    23
  • 43. The Changing IP Landscape For a Knowledge-Based Economy 24
    • Proprietary Innovation
    • Income and Royalties
    • Collaborative Innovation
    • Interoperability
    Patent Pledges and Commons Patent Assignments Open Source Software Patent Licensing A Spectrum of Collaboration and Competition Proprietary Open
  • 44. 21 st- Century Innovation Model 25 Proprietary Innovation Closed programs, intended to produce revenue and profit for the owner Open, Collaborative Innovation Creating, maintaining, enhancing capabilities that are shared, free of charge Differentiation Standardization Leadership
  • 45. The Changing Nature of Research and Innovation 19 Industrial Age Knowledge Age Focus Natural and engineered physical objects Information, people, service systems Location Lab-based Market-facing Approach Siloed within disciplines Multi-disciplinary Scope Specialized, narrow Global, holistic, system of systems Culture Proprietary Open, distributed, collaborative
  • 46. 18 Knowledge, Information & Services Economy Industrial Economy
  • 47. Technology, Leadership and Innovation in the Services Economy
    • Irving Wladawsky-Berger
  • 48. 11 Services is Front Stage: We are all in services . . . More or less! James Teboul - INSEAD The distinction between industry and services sectors is, in fact, largely irrelevant. Clearly, these two sectors are evolving in symbiosis: services cannot prosper without a powerful industrial sector and industry is dependent on services Every business and institution is involved in services to a greater or lesser extent, because its activities will involve front stage interactions as well as back stage operations We will be even more in services in the future, as the back end shrinks with economies of scale and outsourcing and the front end develops further with more sophisticated demands from customers