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Chinese University of Hong Kong Visit 8/2/2011


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Chinese University of Hong Kong Visit 8/2/2011

  1. 1. Service Systems, Value Propositions,<br />and Service Innovation<br />Dr. Stephen K. Kwan<br />Professor, Service Science<br />Management Information Systems<br />College of Business Administration<br />San José State University, CA, USA<br /><br />Contact:<br />Prepared for Visitors from <br />Chinese University of Hong Kong<br />August 2nd, 2011<br />
  2. 2. 2<br />Kwan 2010<br />Changing nature of work - away from farms and factories…<br />World’s Large Labor Forces<br />A = Agriculture, G = Goods, S = Service<br />US shift to service jobs<br />2010<br />2010<br />(A) Agriculture:<br />Value from <br />harvesting nature<br />40yr Service<br />Growth <br />S<br />%<br />G<br />%<br />A <br />%<br />Labor<br /> %<br />Nation<br /> 142%<br />29<br />22<br />49<br />25.7<br />China<br /> 35%<br />23<br />17<br />60<br />14.4<br />India<br />(G) Goods:<br />Value from <br />making products<br /> 23%<br />76<br />23<br /> 1<br /> 5.1<br />U.S.<br /> 34%<br />39<br />16<br />45<br /> 3.5<br />Indonesia<br />(S) Service:<br />Value from enhancing the<br />capabilities of people and their ability <br /> to interconnect and co-create value<br /> 61%<br />66<br />14<br />20<br /> 3.0<br />Brazil<br /> 64%<br />69<br />21<br />10<br /> 2.4<br />Russia<br /> 45%<br />67<br />28<br /> 5<br /> 2.2<br />Japan<br /> 19%<br />20<br />10<br />70<br /> 1.6<br />Nigeria<br /> 37%<br />26<br />11<br />63<br /> 2.1<br />Bangladesh<br /> 42%<br />64<br />33<br /> 3<br /> 1.4<br />Germany<br />Employment Change<br />CIA Handbook, International Labor Organization<br />Note: Pakistan, Vietnam, and Mexico now larger LF than Germany<br />Numeric change in wage-salary employment by industry sector, projected 2004-14<br />(Thousands)<br />Professional and business service4566<br />Healthcare and social assistance4303<br />The largest labor force migration in human history is underway, driven by global communications, business and technology growth, urbanization and <br />regional variations in labor and infrastructure costs and capabilities.<br />2<br />Kwan 2010<br />
  3. 3. Innovation in Modern Services<br />现代服务的创新<br />In its 11th Five-Year Plan, China had targeted an increase of the service sector’s output to 43.3% of GDP by 2010, up from 40.3% in 2005<br />In its 12th Five-Year Plan, China had targeted an increase of the service sector’s value-added output to 47.3% of GDP by 2015, up 4%.<br />
  4. 4. 4<br />Kwan 2010<br />Skills for the 21st Century<br /><br />
  5. 5. 5<br />Kwan 2011<br />Some Definitions<br />Service Science is short for Service Science, Management, Engineering and Design (SSMED1).<br />Service Science is concerned with the study of Service Systems.<br />cf. Computer Science is concerned with the study of Computer Systems.<br />Service Systems are man-made complex systems designed to improve the quality of life by co-creating value through value propositions among the stake-holders.<br />1 Spohrer, J., Kwan, S.K. “Service Science, Management, Engineering, and Design (SSMED): An Emerging Discipline – Outline and References”, International Journal of Information Systems in the Service Sector, 1(3), 2009.<br />
  6. 6. Service Science is a Big Tent<br />(for every variety of disciplines)<br />Service<br />Operations<br />Marketing<br />Management<br />Quality<br />Supply Chain<br />Human Factors<br />Design<br />Innovation<br />Engineering<br />Systems<br />Computing<br />Economics<br />Arts<br />Science<br />“Service Science is just ___<name your discipline>____”<br />General<br />Systems<br />Theory<br />A Service<br />System is <br />Complex<br />OR/IE<br />MS<br />Information<br />Science<br />(i-schools)<br />MIS<br />Economics & Law<br />Game Theory<br />Anthropology<br />& Psychology<br />Organization<br />Theory<br />CS/AI<br />Multiagent Systems<br />6<br />
  7. 7. Service System Worldview1<br />Service<br />Provider<br />Customer<br />Service<br />Experience<br />A Service System and Its Entities<br />1Kwan, S. K. & Min, J. H. (2008) “An Evolutionary Framework of Service Systems”. <br />Presented at the International Conference on Service Science, Beijing, China, April 17-18.<br />7<br />Kwan 2011<br />
  8. 8. 8<br />A Service System Network<br />Service<br />System A<br />Service Interactions<br />Service<br />System B<br />Service<br />System E<br />Service<br />System C<br />Service<br />System D<br />Service<br />System F<br />Kwan 2011<br />8<br />
  9. 9. 9<br />A Service Supply Chain<br />Service<br />System A<br />Service Interactions<br />Service<br />System B<br />Service<br />System E<br />Service<br />System C<br />Service<br />System D<br />Service<br />System F<br />Kwan 2011<br />9<br />
  10. 10. 10<br />Example: Purchases from<br />Kwan 2011<br />
  11. 11. Example: Purchases from<br />Customer<br /><br />Bookcloseout_us<br />theBookGrinder<br />USPS<br />nengland4<br />USPS<br />USPS<br />“transparent”<br />service provider<br />Not being evaluated?<br />USPS<br />Kwan 2011<br />
  12. 12. 12<br />Kwan 2010<br />Example: Quality of Service Supply Chain<br />Example from Dan Pritchett<br />
  13. 13. Service System Worldview<br />Employees &<br />Stockholders<br />Community<br />Service<br />Provider<br />Customer<br />Service<br />Experience<br />Partners<br />Competition<br />Service System<br />Society<br />13<br />Kwan 2011<br />
  14. 14. Service System Worldview<br />Service Management<br />Fitzsimmons & Fitzsimmons<br />Employees &<br />Stockholders<br />Capacity<br />& Manpower<br />Planning,<br />Training <br />Community<br />Service<br />Provider<br />Customer<br />Facility<br />Location<br />& Design<br />Service<br />Experience<br />Partners<br />14<br />Social<br />Networking<br />Competition<br />Competitive<br />Strategy<br />Service<br />Concept<br />Realized<br />Customer<br />Flow &<br />Service<br />Delivery<br />Market<br />Segmentation<br />Operating<br />Strategy<br />Society<br />Kwan 2011<br />
  15. 15. Value Co-Creation Through Value Propositions<br /> Value<br />Employees &<br />Stockholders<br />Community<br />Service<br />Provider<br />Customer<br />Value<br />Value<br />Value<br />Service<br />Experience<br />Partners<br />Competition<br />Service System<br />Governance<br />Society<br />15<br />Kwan 2011<br />
  16. 16. 16<br />Service Systems, Computing, and IT Services1<br />Service Provider’s Back Stage Support<br />Information<br />Technology<br />Platform<br />Back<br />Stage<br />Processes<br />Front<br />Stage<br />Processes<br />Front Stage<br />ITSM – Management of the Processes<br />and Infrastructure of IT Services<br />Service Computing<br />(e.g., SOA)<br />1 Kwan, S. K. & Hefley, B., “Service Systems”, 2008.<br />Kwan 2011<br />
  17. 17. 17<br />Kwan 2011<br />Formulation of Value = Benefit / Cost<br />Better Off<br />From:<br />Customer Value = (Results + Process Quality ) / (Price + Customer Access Costs)<br />Heskett et all 1997<br />To:<br />Harvey 2005<br />To:<br />
  18. 18. 18<br />Stages in Customer Empowerment<br />in Value Co-Creation<br />Stage 1: Value Chain<br />Value Proposition<br />Customer<br />Service<br />Provider<br />Focal<br />Relationship<br />Service<br />Experience<br />5 Kwan, S. K. & Yuan, S. T. ”Customer-Driven Value Co-Creation in Service Networks”, to appear in Demirkan, H., Spohrer, J.C. and Krishna, V. ed., The Science of Service Systems, volume in Service Science: Research and Innovation (SSRI) in the Service Economy series, Springer, 2010.<br />Kwan 2011<br />
  19. 19. 19<br />Stage 2: Traditional Service Value Network<br />Value Proposition<br />Customer<br />Service<br />Provider<br />Focal<br />Relationship<br />Provider Partner<br />Network<br />Service<br />Experience<br />Value Proposition<br />cf. ICT-enabled service networks,<br />mobile applications, etc.<br />Kwan 2011<br />
  20. 20. 20<br />Kwan 2011<br />Example of Service Value Network<br />Service System/Network<br />1. People <br />2. Technology<br />3. Shared Information<br />4. Organizationsconnected by value propositions<br />from Jim Spohrer<br />
  21. 21. Stage 3 – Improved Value Chain<br />Value Proposition<br />Customer<br />Service<br />Provider<br />Focal<br />Relationship<br />Value Proposition<br />Customer’s<br />Social<br />Network<br />Service<br />Experience<br />Kwan 2011<br />
  22. 22. 22<br />Example of Customer Driven<br />Service Value Network<br />Their Friends<br />TV Programs<br />Ad’s and “Buy Me”<br />Target Audience<br />Illustration from: Vascellaro, J. A. “Video’s New Friends”, The Wall Street Journal, February 28, 2008.<br />Product Placements<br />Kwan 2011<br />
  23. 23. 23<br />Taking Advantage of Social Networks<br />Kwan 2011<br />
  24. 24. Stage 4: Customer Driven Service Value Network<br />Value Proposition<br />Service<br />Provider<br />Customer<br />Focal<br />Relationship<br />Value Proposition<br />Value Proposition<br />Provider Partner<br />Network<br />Customer’s<br />Social<br />Network<br />Service<br />Experience<br />cf. “Resource Integrators” in Service Dominant Logic literature<br />Kwan 2011<br />
  25. 25. 25<br />Variety of Value Propositions<br />Maslow’s<br />Hierarchy<br />Of Needs<br />Value Dimensions<br />Service Provider<br />Society<br />Community<br />Employees<br />Stockholders<br />Partners<br />Customers<br />Intrinsic<br />Hedonic<br />Social<br />Societal<br />Environmental<br />Political<br />Stakeholders<br />Economic<br />A point in this 3-D space is a Potential Value Proposition<br />1<br />2<br />4<br />3<br />Stages of Customer Empowerment<br />Kwan 2011<br />
  26. 26. 26<br />Kwan 2011<br />Maslow’s Hierarchy of Needs<br />Disposable <br />Income &<br />Desire for<br />Services<br />Needs<br />vs.<br />Wants<br />
  27. 27. 27<br />Service Provider<br />Society<br />Community<br />Employees<br />Stockholders<br />Partners<br />Customers<br />Value Propositions can also be bi-directional<br />Customers<br />Partners<br />Service Provider<br />Service Provider<br />Society<br />Community<br />Employees<br />Stockholders<br />Partners<br />Customers<br />?<br />Kwan 2011<br />
  28. 28. 28<br />Kwan 2011<br />Value Proposition Model (VPM)<br />Starting with the Service System<br />Service<br />Provider<br />Customer<br />Service<br />Experience<br />
  29. 29. 29<br />Kwan 2011<br />VPM – a common example<br />Service<br />Provider<br />Customer<br />Value Proposition<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Customer<br />Service<br />Experience<br />
  30. 30. 30<br />Kwan 2011<br />VPM – individuals and community<br />Service<br />Provider<br />Customer<br />Value Proposition<br />Community/<br />Social<br />Network<br />Customer<br />A Shared<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Customer<br />Service<br />Experience<br />
  31. 31. 31<br />Kwan 2011<br />VPM – individuals and Facebook community<br />Service<br />Provider<br />Customer<br />Value Proposition<br />Community/<br />Social<br />Network<br />Customer<br />A Shared<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Customer<br />Service<br />Experience<br />
  32. 32. 32<br />Kwan 2011<br />VPM – service provider partners<br />Service<br />Provider<br />Customer<br />Value<br />Proposition<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />Value Proposition<br />
  33. 33. 33<br />Kwan 2011<br />VPM – partner’s acquistion of customer<br />Service<br />Provider<br />Customer<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />Service<br />Experience<br />
  34. 34. 34<br />Kwan 2011<br />Example 1 of 4<br />Service<br />Provider<br />Customer<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />
  35. 35. 35<br />Kwan 2011<br />Example 2 of 4<br />Service<br />Provider<br />Customer<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />Vendor<br />Service<br />Experience<br />
  36. 36. 36<br />Kwan 2011<br />Example 3 of 4<br />Service<br />Provider<br />Customer<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />Vendor<br />Service<br />Experience<br />
  37. 37. 37<br />Kwan 2011<br />Example 4 of 4<br />Service<br />Provider<br />Customer<br />Customer<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Service<br />Experience<br />Vendor<br />Service<br />Experience<br />
  38. 38. 38<br />Innovation<br />혁신<br />創新<br />创新<br />革新<br />Innovation resides at the intersection of invention and insight, leading to the creation of social and economic value.National Innovation Initiative<br />Innovation can happen anywhere on the Value Chain!<br />(business model, organization, environment, process, technology, etc.)<br />CREATING<br />SOMETHING<br />NEW<br />Kwan 2011<br />
  39. 39. 39<br />Kwan 2011<br />Some Thoughts on Innovation<br />“Creativity can be taught.<br /> Innovation can be learned.”<br /> David Blakeley, Director<br />“Incremental Innovation vs.<br /> Radical Innovation”<br /> Judy Estrin<br /> “Closing the Innovation Gap”<br />Innovation in Modern Services<br />现代服务的创新<br />
  40. 40. 40<br />Kwan 2011<br />Levels of Service Innovation<br />Radical Innovations<br /><ul><li>Major Innovation: new service that customers did not know they needed.
  41. 41. Start-up Business: new service for underserved market.
  42. 42. New Services for the Market Presently Served: new services to customers of an organization.</li></ul>Incremental Innovations<br /><ul><li>Service Line Extensions: augmentation of existing service line.
  43. 43. Service Improvements: changes in service delivery process.
  44. 44. Style Changes: modest visible changes in appearances.</li></li></ul><li>For example, “The Ten Types of Innovation”<br />by Larry Keeley, Doblin Inc.<br />Kwan 2011<br />41<br />
  45. 45. 42<br />How the Service System Framework and VPM could complement the Foresight Method applied to Services<br />© Cockayne and Carleton<br />Kwan 2011<br />
  46. 46. 43<br />How the Service System Framework could complement <br />the Foresight Method applied to Services<br />Business Models &<br />Value Propositions<br />Service System<br />Thinking<br />© Cockayne and Carleton<br />Kwan 2011<br />
  47. 47. 44<br />Example of how the Service System Framework could complement an Innovation Method applied to Services<br />BPMN<br />UML – Use Cases<br />Service Blueprint<br />Story Boards<br />UI Prototyping<br />MANGA textbooks<br />etc.<br />Kwan 2011<br />
  48. 48. 45<br />Using the Foresight Method<br />Kwan 2011<br />
  49. 49. 46<br />Sample Project from SJSU MBA Students<br />46<br />Kwan 2011<br />
  50. 50. 47<br />Kwan 2011<br />Teaching the method for <br />“Service Made in ?country?”<br />
  51. 51. 48<br />Kwan 2011<br />Service Summer 2010<br />Karlsruhe, Germany<br />
  52. 52. Service Systems, Value Propositions,<br />and Service Innovation<br />Dr. Stephen K. Kwan<br />Professor, Service Science<br />Management Information Systems<br />College of Business Administration<br />San José State University, CA, USA<br /><br />Contact:<br />End<br />Prepared for Visitors from <br />Chinese University of Hong Kong<br />August 2nd, 2011<br />