Service Science & Policymaking Dr. James (“Jim”) C. Spohrer, [email_address] Innovation Champion and Director IBM UPward (University Programs worldwide, accelerating regional development) Otago Forum-3, Dunedin, New Zealand Tuesday December 6 th , 2011
Institutions or business and societal organizations, organizational (role configuration) dimensions of
Infrastructure /Product/Technology/Environment, physical dimensions of
Information or Knowledge, symbolic dimensions
B. Service Customer
Public or Private
Forms of Ownership Relationship (B on C) Forms of Service Relationship (A & B co-create value) Forms of Responsibility Relationship (A on C) Forms of Service Interventions (A on C, B on C) Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40 , 71-77. From… Gadrey (2002), Pine & Gilmore (1998), Hill (1977) Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68 , 1 – 17. “ Service is the application of competence for the benefit of another entity.”
Spohrer, JC (2011) On looking into Vargo and Lusch's concept of generic actors in markets, or “ It's all B2B …and beyond!” Industrial Marketing Management, 40(2), 199–201. Ecology (Populations & Diversity) Entities (Service Systems, both Individuals & Institutions) Interactions (Service Networks, link, nest, merge, divide) Outcomes (Value Changes, both beneficial and non-beneficial) Value Proposition (Offers & Reconfigurations/ Incentives, Penalties & Risks) Governance Mechanism (Rules & Constraints/ Incentives, Penalties & Risks) Access Rights (Relationships of Entities) Measures (Rankings of Entities) Resources (Competences, Roles in Processes, Specialized, Integrated/Holistic) Stakeholders (Processes of Valuing, Perspectives, Engagement) Identity (Aspirations & Lifecycle/ History) Reputation (Opportunities & Variety/ History) prefer sustainable non-zero-sum outcomes, i.e., win-win win-win lose-lose win-lose lose-win
What is service science? A service system? The ABC’s? Economics & Law Design/ Cognitive Science Systems Engineering Operations Computer Science/ Artificial Intelligence Marketing “ a service system is a human-made system to improve provider-customer interactions and value-cocreation outcomes, by dynamically configuring resource access via value propositions, most often studied by many disciplines, one piece at a time.” “ service science is the transdisciplinary study of service systems & value-cocreation” The ABC’s: The provider (A) and a customer (B) transform a target (C)
IBM Smarter Planet: The Three I’s and Smarter 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. IT NETWORKS WORKFORCE PRODUCTS SUPPLY CHAIN COMMUNICATIONS TRANSPORTATION BUILDINGS
Where are the opportunities? Every city and region! 'building smarter systems isn't simply a proposal or theory, but a practical reality, with clear steps, quantifiable benefits and best practices' - Sam Palmisano
Recent McKinsey Study and IBM Study Today, major urban areas in developed regions are, without doubt, economic giants. Half of global GDP in 2007 came from 380 cities in developed regions, with more than 20 percent of global GDP coming from 190 North American cities alone. The 220 largest cities in developing regions contributed another 10 percent. But by 2025, one-third of these developed market cities will no longer make the top 600; and one out of every 20 cities in emerging markets is likely to see their rank drop out of the top 600. By 2025, 136 new cities are expected to enter the top 600, all of them from the developing world and overwhelmingly—100 new cities—from China. The performance of core systems of today’s cities is fundamental to social and economic progress. Faced with major challenges, these systems can be improved and optimized through the application of smart solutions.
Stakeholder Priorities 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 Science To discover the underlying principles of complex service systems Systematically create, scale and improve systems Foundations laid by existing disciplines Progress in academic studies and practical tools Gaps in knowledge and skills 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 Skills & Mindset Knowledge & Tools Employment & Collaboration Policies & Investment Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015 Encourage an interdisciplinary approach 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
Priorities: Research Framework for the Science of Service Source: Global Survey of Service Research Leaders (Ostrom et al 2010) Pervasive Force: Leveraging Technology to Advance Service Strategy Priorities Execution Priorities Fostering Service Infusion 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 and Optimizing the Value of Service Development Priorities
Service systems and knowledge access evolving Nested, networked holistic service systems that provide “Whole Service” to the people-inside http://www.service-science.info/archives/1056 U-BEEs = University-Based Entrepreneurial Ecosystems, City Within City Nation State/Province City/Region University College K-12 Cultural & Conference Hotels Hospital Medical Research Worker (professional ) Family (household ) For-profits Non-profits U-BEE Job Creators
Time ECOLOGY 14B Big Bang (Natural World) 10K Cities (Human-Made World) sun (energy) writing (symbols and scribes, stored memory and knowledge) earth (molecules & stored energy) written laws (governance and stored control) bacteria (single-cell life) sponges (multi-cell life) money (governed transportable value stored value, “ economic energy”) universities (knowledge workers) clams (neurons) trilobites (brains) printing press (books) steam engine (work) Where is the “Real Science” - mysteries to explain? In the many sciences that study the natural and human-made worlds… Unraveling the mystery of evolving hierarchical-complexity in new populations… To discover the world’s architectures and mechanisms for computing non-zero-sum Entity Architectures (Є N ) of nested, networked Holistic-Product-Service-Systems (HPSS) 200M bees (social division-of-labor) 60 transistor (routine cognitive work)
Learning to embrace societal transformations “In democratic capitalism, both the government and the economy are built upon systems of broad-based self determination. And the private foundation is a creation of the latter, the economic system. From John Rockefeller, Andrew Carnegie, Henry Ford, and Ewing Kauffman to Bill Gates and Eli Broad, virtually every foundation donor has been an entrepreneur—someone who first created wealth by starting a for-profit venture, and who then “reconstituted” part of that wealth in a potent new form by starting a foundation. …foundations need to focus on creating the future, not fixing the past.” – Carl J. Schramm, Kauffman Foundation in MANAGING FOUNDATIONS TOWARD THE GOAL OF EXPANDING HUMAN WELFARE
Since the last ice age ended, roughly 10,000 to 20,000 years ago, a number of societal transformations have occurred in regions around the world.
Societal transformations change the nature of human interactions with each other and their environment, from hunter-gatherers, to farmers, to factory-workers, to knowledge-workers.
Societal transformations impact the nature of competition, and incumbent leaders often find it costly and risky to re-tool and embrace change.
Learning to embrace societal transformations = learning to embrace new forms of competition (knowing that the duration of “the game” is shrinking)
The Gathering Storm Report: Societal Transformation “The committee concluded that the United States appears to be on a course that will lead to declining, not growing, standard of living for our children and grandchildren .” – Gathering Storm “Gentlemen, we have run out of money. It is time to start thinking.” – Rutherford
“ The Gathering Storm report is focused upon the ability of Americans to compete for employment in a job market that increasingly knows no geographic boundaries.”
“ The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and out hope that our children and grandchildren will inherit every greater opportunities.”
“ The possession of quality jobs is the foundation of a high quality life for the nations citizenry.”
“ While only four percent of the nations workforce is composed of scientists and engineers, this group disproportionately creates jobs for the other 96 percent.”
“ Further, the pace of creation of new knowledge appears by almost all measures to be accelerating.”
“ While this progress by other nations is to be both encouraged and welcomed, so too is the notion that Americans wish to continue to be among those people who do prosper.”
“ The Gathering Storm committee contends that it is strongly in America’s interest for all nations to prosper. Aside from its humanistic merit this outcome should produce a safer world for everyone…”
Recommendations: Toward Regional Upward Spirals “It would be impossible not to recognize the great difficulty of carrying out Gathering Storm recommendations, such as doubling the research budget, in today’s fiscal environment… However… One seemingly relevant analogy is that a non-solution to make an over-weight aircraft flight-worthy is to remove an engine.” – Gathering Storm Revisited “The fate of empires depends on how they educate their children.” – Aristotle “The best way to predict the future is to inspire & enable the next generation to build it better.” –IBM UPward
I. Improve inputs to universities
Fix “broken” K-12 system (invest in K-12)
III. Improve outputs from universities
Fix “broken” University system (invest in Higher Education)
II. Improve transitions from university to first job
Fix “broken” Employment system (increase R&D funding)
IV. Improve speed of regional innovation
Fix “broken” Governance system (align visa, tax, etc. regulations)
What does “societal transformation” actually change?
The 4 I’s
Geographic Unit of Analysis
Region/City & Lead University
McKinsey: Urban Worlds
IBM: How Smart Is Your City?
Societal Infrastructure (Technologies & Environment) Individuals (Skills) Institutions (Jobs) Cultural Information (Quality-of-Life Measures) (challenges, language, laws, measures, models, routines)
Cultural Information & Quality-of-Life Measures: California Human Development Report 2011 http://www.measureofamerica.org/docs/APortraitOfCA.pdf
~250 years of infrastructure transformations Source: Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages ; (Edward Elar Publishers, 2003). Installation Deployment Irruption The Industrial Revolution Age of Steam and Railways Age of Steel, Electricity and Heavy Engineering Age of Oil, Automobiles and Mass Production Age of Information and Telecommunications Frenzy Synergy Maturity Panic 1797 Depression 1893 Crash 1929 Credit Crisis 2008 Coming period of Institutional Adjustment and Production Capital 1 2 3 4 5 Panic 1847 1771 1829 1875 1908 1971 1873 1920 1974 1829 Crash
Formation of Mfg. industry
Repeal of Corn Laws opening trade
Standards on gauge, time
Catalog sales companies
Economies of scale
Support for interventionism
Build-out of Interstate highways
IMF, World Bank, BIS
~100 years of US job transformations Source: US Bureau of Economic Analysis; McKinsey Global Institute Analysis
~30 years of skill transformations: depth & breadth Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How Computers Are Creating the Next Job Market. Princeton University Press. Expert Thinking Complex Communication Routine Manual Non-routine Manual Routine Cognitive
T-shaped professionals: depth & breadth Ready for Life-Long-Learning Ready for T-eamwork Ready to Help Build a Smarter Planet SSME+D = Service Science, Management, Engineering + Design Many disciplines (understanding & communications ) Many systems (understanding & communications) Deep in one discipline (analytic thinking & problem solving) Deep in one system (analytic thinking & problem solving) Many multi-cultural-team service projects completed (resume: outcomes, accomplishments & awards) BREADTH DEPTH
Systems-Disciplines Framework: Depth & Breadth disciplines systems Systems that focus on flows of things Systems that govern Systems 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 city secure state scale nation laws 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 stakeholders Customer Provider Authority Competitors resources People Technology Information Organizations change History (Data Analytics) Future (Roadmap) value Run Transform (Copy) Innovate (Invent) Starting Point 1: Observe the Stakeholders (As-Is) Starting Point 2: Observe their Resource Access (As-Is) Change Potential: Think It! (Has-Been & Might-Become & To-Be) Value Realization: Do It Together! (New As-Is)
Proposed societal transformation: Who’s first? NPR: Out of Economic Chaos, A New Order May Be Rising
HAWLEY: The grand total of U.S. automotive fatalities from 1975 to the present, about one and a half million people. Now, the grand total of U.S. fatalities from 1775 to the present in every military conflict we've had is 1.3 million. So in other words, in the last roughly 35 years we've killed more people with cars than we have in more than 300 years of warfare.
I think if you step back and look at cars from a sort of 35,000 foot level, you've got to wonder why we're doing this to ourselves. And there's a tremendous amount of industry and employment built up around it. But suppose it all changed.
One way it could change is if human weren't allowed to drive cars anymore. Or let me put it differently. If cars were much more appealing because they drove themselves and did it safely.
And this isn't just Jetson stuff. There's a brilliant computer scientist, artificial intelligence researcher at Stanford, named Sebastian Thrun. He's invented a car that drives itself. You can hop in the car and you never touch the wheel or the pedals. It navigates through all the traffic snarls. It won't run over little old ladies in Pasadena. It won't even run over a squirrel.
If you could eliminate the seven million accidents per year, the 2.9 million injuries, the 40,000 fatalities, that would be enormous boon. But if you think about what would happen in the short term. Let's suppose in the next five or ten years this idea comes to fruition.
Think about all the disruption that could cause. You might not have to own a car. Well, that might be good. You'd have a garage that you could use to start up a company instead of storing a couple of rusting hulks of metal in it. You'd never have to call Tom and Ray Magliozzi again, because you wouldn't have to fix your car.
There wouldn't be a parking problem, because you'd push a little button on your iPhone, a smart car would zip up, pick you up, drop you off where you need to go. That means no more valets, no more taxi drivers, no more meter maids, no more traffic cops. You'd never hear a car horn, because why would a robot car honk at another robot car. Makes no sense.
But that's an example of the sort of change that in the short term can cause immense of amounts of anxiety and upheaval.
A Framework for Global Civil Society Perhaps universities should be first to try societal transformations?
Daniel Patrick Moynihan said nearly 50 years ago: "If you want to build a world class city, build a great university and wait 200 years." His insight is true today – except yesterday's 200 years has become twenty. More than ever, universities will generate and sustain the world’s idea capitals and, as vital creators, incubators, connectors, and channels of thought and understanding, they will provide a framework for global civil society.
John Sexton, President NYU
What are the benefits of top-ranked universities? % WW GDP and % WW Top-500-Universities Strong Correlation (2009 Data): National GDP and University Rankings http://www.upload-it.fr/files/1513639149/graph.html
What are the benefits of more education? Of higher skills? … But it can be costly, American student loan debt is over $900M
Universities Worldwide Accelerating Regional Development “ 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.”
Our 21 st Century World: System of Systems Regional Nested, Networked Holistic Product-Service Systems http://www.service-science.info/archives/1056
Holistic Product-Service Systems provide access to “Whole Service” to people inside, including Transportation, Water, Food, Energy, Communications, Buildings, Retail, Finance, Health, Education, Governance, etc.
Examples: Nations, States, Cities, Universities, Hotels, Hospitals, Homes
Definition: An holistic product-service system is a type of complex value-cocreation system that can provide “whole service” to its primary population of people, independent of all external systems, for an extended period of time, balancing independence with interdependence (outsourcing limits, re-cycle to sustain, etc.)
University-Based Entrepreneurial Ecosystems (U-BEE’s): Universities are usually in the “top five” job creators of regions, when they have associated incubators & science-technology parks, super-computing data centers, hospitals, cultural & conference hotels, K-12 schools, etc.
For-profits Non-profits U-BEE Job Creators ~25-50% of start-ups are new IT-enabled service offerings SaaS PaaS IaaS http://www.thesrii.org Nation State/Province City/Region University College K-12 Cultural & Conference Hotels Hospital Medical Research Worker (professional ) Family (household )
Pegasus Global Holdings $200M Smart City Living Lab
7 September 2011
The Center for Innovation, Testing and Evaluation will cover 20 square miles in New Mexico, and will resemble a mid-sized American city, including urban canyons, suburban neighborhoods, rural communities and distant localities.
Potentially be able to house up to 35,000 people and will operate as if people are actually living there
The facility will allow technology companies, university and urban planners to test the "positive and negative impacts emerging technologies - Smart Grid, intelligent traffic systems, cyber security and more
estimated cost $200 million
Smart City Living Lab ~$6K per potential-citizen to build/launch
Economy Hotel Projects ~$30K per guest-room to build/launch
Highest Priced Luxury Resort Hotels ~$600K per guest-room to build/launch
The Gathering Storm , Revisited for All Regions “There is nothing as practical as a good theory.” – Kurt Lewin “History is a race between education and catastrophe.” – H.G. Wells
Regions are entities that must learn to learn better
Regions = Nations, States, Cities, etc…
Learning = Improving the global competitiveness performance of a region
that provision access to high-quality “whole service” to the people in them
that also provision access to high quality products & services globally
to contribute to a higher quality-of-life, both inside and outside their region
service science studies product-service systems & customer-provider interactions (value-cocreation mechanisms, including the servitization of products and productization of service by the algorithmic revolution and other means)
Regional innovation = “Entities learning”
“ Run-Transform-Innovate Learning Framework”
“ T-Shaped Professionals & the Systems-Disciplines Framework”
A major societal transformation is underway… “If we’re number one in technology, why do I have to call India for tech support?” – Jay Leno “Ideas are the new currency in a global knowledge economy.” – Ben Wildavsky, Senior Fellow, Kauffman Foundation “No country can lead in today’s world unless it leads in science.” – Speaker Nancy Pelosi “A history of modernization is in essence a history of scientific and technological progress… I firmly believe science is the ultimate revolution.” – Wen Jiabao, Premier, People’s Republic of China
Driven by “The Death of Distance” & “Algorithmic Revolution”
Cairncross, Economist (1997)
Zysman, CACM (2006)
Manifesting in new forms of “Global Competition”
Friedman, The World is Flat (2005)
Characterized as a “Gathering Storm” by Americans
US National Academies (2005, 2007, 2011)
Societal Transformations Change The Rules of Competition “The purpose of business is to create and keep a customer.” – Peter Drucker
From Value-Creation Worldview: Compete Against Others - Zero-Sum Mindset
During different time intervals some regions begin to pull ahead, and some fall behind… eventually the people in lagging regions immigrate to leading regions, some lagging regions “collapse” and are absorbed into other regions or remain dysfunctional… not only is human capital squandered in lagging and collapsed regions, but human suffering grows over time in these regions…. disenfranchised populations create a security threat for all….
To Value-CoCreation Worldview: Compete With/For Others - Non-Zero-Sum Mindset
The gains of innovators are “taxed” based on geography of their customers as well as home location of provider (providers cannot succeed without customers)… as innovators seek to expand their markets into other regions successfully the “governments” of both provider and customer regions see tax revenues increase… accelerating both “transform” and “innovate” capabilities… accelerating entities learning and regional innovation.
Innovator regions benefit the most, but the incentive is not to pull so far ahead that other regions lag too far behind or collapse; the incentive is to also create wealthier more capable customers over time, and regions compete in cycles of progress that move everyone forward…
Simple Examples of Value-CoCreation Model:
Toyota locating manufacturing plants in the US
“ The Huppenthal Method” Style of Learning Competition
Students compete, but “winning” is defined as everyone completing the work as fast as possible, to beat their individual and collective previous best time
Leaders help those lagging behind catch-up, peer-mentoring and win-win NZS mindset
Demonstrated accelerated learning times and elevated student engagement levels
In Sum… “College is more valuable to the future economy than petroleum.” – Greg Easterbrook, Author “You can always count on Americans to do the right thing - after they’ve tried everything else.” – Churchill
Gathering Storm reflects a major societal transformation underway
Driven by “The Death of Distance” and “Algorithmic Revolution”
Manifesting in new, challenging forms of “Global Competition”
The nature of regional competition is being transformed (accelerating)…
From Value-Creation Worldview: “Compete Against” - Zero-Sum Mindset
To Value-CoCreation Worldview: “Compete With/For” - Non-Zero-Sum Mindset
The transformation depends on increasing “trust” … a hard thing to do
However, increasing interconnectedness suggests there is no other viable alternative
Cascade failures in globally interconnected economies are a real threat to stability
Increased trust can only be earned by performance against a shared innovation roadmap, or a shared vision for a better future for all…
For example, climate change and sustainable environment
For example, increased global security and financial stability
It is time to get our priorities straight and focus on what matters most…
IBM operates in 170 countries around the globe IBM has 426,000 employees worldwide
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 9 time winner of the President’s National Medal of Technology & Innovation - latest award for Blue Gene Supercomputer The Smartest Machine On Earth 100 Years of Business & Innovation “ Let’s Build a Smarter Planet"
IBM University Programs: What We Do: The “6 R’s” (not to be confused with 3 R’s)
Research awards focus on grand challenge problems and big bets