The document discusses universities as complex service systems from both external and internal perspectives. It examines the role of universities in driving national, regional, and city competitiveness through metrics like GDP correlations. Universities are described as economic engines that impact employment, expenditures, knowledge, and human capital formation. Their presence is shown to benefit both cities through growth and cities are important for universities to thrive. A framework is proposed to view universities as service systems with multiple stakeholders like students, faculty, administration, and businesses.

1. Universities as Complex Service Systems: External and Internal Perspectives Giovanna Lella, Antonio Fischetto, Vittorio Cesarotti University of Rome Jim Spohrer, GuangJie Ren, YingTat Leung, Jorge Sanz IBM Almaden Research Center Frontiers in Service July 1, 2011, Columbus, OH

2. 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, 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)

3. Universities : Critical role in National, Regional, and City competitiveness University of Rome Tor Vergata Antonio Luigi Fischetto Master student in Management Engineering Tor Vergata University Rome- Italy

4. Correlation analyses to show the current importance of the universities in the different countries

5. US is literally “off the chart” – but including US make correlation even higher: % of Top 500: 30,3 % % global GDP: 23,3 % Source: http://www.arwu.org/ARWUAnalysis2009.jsp The big relation between the Percentage Distribution of Top 500 Universities and the Country GDP (2009)

6. US is still “off the chart” – China projected to be “off the chart” in less than 10 years: % of Top 500: 33,865 % % global GDP: 28,365 % Source: http://www.arwu.org/ARWUAnalysis2009.jsp The big relation between the Percentage Distribution of Top 500 Universities and the Country GDP (2004) China in 2009 2004-2009: Relative Change China (+3,+1.7), US (-3.5,-5)

7. Key characteristics of the new economy To be globally competitive countries need to invest in their Innovation Systems and human capital development not only at the national, but also regional level … Universities and other higher education institutions can play a key role in Regional Innovation Systems and Human Capital Formation….. “ Every great city has at least one university – it is almost a diagnostic sign of being a major city. A university acts like a talisman.” Professor Eric Thomas Bristol University Source: Power Point Presentation, “ Universities as engines for the development of their regions”, OECD, 2008

8. The role of the university Employment impact Impact of expenditures Impact on knowledge

9. Describing and understanding the importance and the effects deriving from the presence of the university. Quantitative data to reinforce the main proposition: “ Is the university an economic engine for the city?”

10. Impact of expenditures: how to measure it Source: The Difference a University Makes: An Impact Analysis of the University at Buffalo, 2007

11. Economic impact: University at Buffalo Indirect and induced effects Direct effects 2005-2006 academic year Type: Public Students: 28,881 Endowment: $410,500,000 Ranking: 230 Source: The Difference a University Makes: An Impact Analysis of the University at Buffalo, 2007

12. Economic impact: Harvard and Boston Universities *Purchasing of goods and services. * Type: Private Students: 21,125 Endowment: $26,035,000,000 Ranking: 1 Type: Private Students: 31,766 Endowment: $892,100,000 Ranking: 74

13. U.S. The net contribution to the U.S. economy by foreign students and their families for 2005-06 is almost $13.5 billion and for 2007-08 is $15.543 billion with 623,805 International students (21.51% of global students) . Education is the fourth largest source of net exports in the U.S. behind: 1.Royalties & license fees 2.Business, professional, and technical services 3.Financial services Canada After bringing in $6.5 billion in 2008, Canada’s education export now tops the regular revenue the country gains from exporting certain natural resources, such as coal, which normally accounts for $6.07 billion per year. Nearly 65,000 jobs in the education services industry were directly supported by the funds generated by international students, equal to 5.5 per cent of all jobs in the sector. Source: Power Point presentation “ TRENDS IN INTERNATIONAL HIGHER EDUCATION” , Marguerite J. Dennis, 2007; “The economic impact of UK higher education institutions”, Universities UK, 2006; http://www.bmimedia.net/bmi/news.php?cod=13 International Higher Education is a big business In 2006, there were over 2,9 million international students worldwide, a 3% increase over the previous year. The impact of International Higher Education Contribution to the economic impact

14. United Kingdom Personal (off-campus) expenditure of international students attending UK HEIs in 2003-2004 was estimated to be £1.5 billion. This was equivalent to 9% of all UK receipts from overseas visitors to the UK for the year 2004. • In 2003/04 there were 300,050 students from outside the UK registered at UK institutions. These made up around 13% of the total student population. Australia Australia’s exports of education were worth $15.5 billion in 2008. Education as an export has displaced tourism as Australia’s largest service export. Education is Australia’s third largest export, behind only coal and iron ore. Australia’s international student program generates a total of 126,240 jobs, increasing employment in Australia by about 1.2%. Source: Power Point presentation “ TRENDS IN INTERNATIONAL HIGHER EDUCATION” , Marguerite J. Dennis, 2007; “The economic impact of UK higher education institutions”, Universities UK, 2006; http://www.bmimedia.net/bmi/news.php?cod=13; The Nature of International Education in Australian Universities and its Benefits The impact of International Higher Education Contribution to the economic impact

15. University in the top ten largest employers Impact on employment 21903

16. Largest Silicon Valley employers The role of higher education in the region’s economy: stability and growth University in the top ten largest employers Impact on employment

17. Universities as economic growth engines (the supply side effects) Regional contexts Contribution to Regional Capacity Building Contribution of research to regional innovation Contribution of teaching and learning to labour market and skills Contribution to social and cultural development and environmental sustainability Regional/ National Higher Education systems

18. Effects of research, spin offs, start ups companies Impact upon knowledge Complex to study and analyze but, at the same time, very important. Harvard University * National Institutes of Health (NIH). * Influence on the local area

19. Effects of research, spin offs and start up companies Spinoff companies that have built on knowledge created at Colorado State University: Stanford University: 14 of the 17 companies are located in the same area of the university (Fort Collins)

20. Huge contribution of the University Medical Centers University Medical Centers bring together state-of-the-art research with the highest-quality clinical care. At the same time, their location - frequently in the heart of downtown areas - makes them play a cruciant role in providing health care to the local community. Increasing importance of Health Care and Higher Education Services Consequent bigger impact of the University when it has a Medical Center inside

21. University Medical Centers are the biggest sources of revenues and, at the same of time, the biggest source of expenditures for the University Huge contribution of the University Medical Centers

22. You probably can’t have a great university without a great city. The presence of a city that supports the university is essential in a value co-creation and growth perspective. The importance of the city for having a good university CITY UNIVERSITY How important is the city for the university? It is not coincidental that the best universities are in U.S. ; the U.S. expenditures per student at the postsecondary level (from public and private sources) were $25,109 in 2006, more than twice as high as the OECD average of $12,336. Source: Pdf report, “The condition of education 2010”, NCES R&D projects, spin offs, start ups companies rely on the quality of the city in terms of: wealth and GDP; industrial and technological growth; presence of good companies intended to grow and invest money; investments of the city on education.

23. Conclusions CITY UNIVERSITY City important for the university University important for the city Key success factor A strong relation between Universities and Cities The WIN WIN solution for the future! The growth of the city is really influenced by the presence of a great university. The extent of the university impacts strongly relies on the support of the local city.

24. University as a Complex Service System: Developing a Multiple-Stakeholder Tool for Satisfaction Improvement University of Rome Tor Vergata Giovanna Lella Masters student in Management Engineering Tor Vergata University Rome- Italy

25. UNIVERSITY Output Process Input STUDENTS FACULTIES AND ADMINISTRATION BUSINESSES Main stakeholders

26. After a study of 11 University around the world, we came up with a general structure of the University

27. F U N C T I O N S University SERVICES STUDENTS FACULTIES BUSINESSES ADMINISTRATION The same stakeholder could be the service provider, or the service customer, or both.

28. Service Blueprinting for multiple stakeholders

29. Components of Service Blueprints There are five components of a typical service blueprint : Line of interaction Line of visibility Line of internal interaction PHYSICAL EVIDENCE USER ACTIONS FRONT STAGE BACK STAGE SUPPORT

30. An example: Exam

31. Exam: student - professor student - administration student professor administration PHYSICAL EVIDENCE Computer Outside the classroom Outside the classroom, other students Classroom Desk, chair, professor Classroom Professor’s office USER ACTIONS Book the exam Wait outside the classroom Show the ID Take place Take the exam Delivery and leave Verbalize (signature) FRONT STAGE Call the student reading the list Distribution of the exam’s papers Supervision Collect exam’s papers Validation BACK STAGE Grade and publication of the results Update of the database SUPPORT Automatic booking system Post on line Database

32. Exam: professor - student professor - administration student professor administration PHYSICAL EVIDENCE Administration office Computer Classroom and office Computer Professor’s office USER ACTIONS Request of classroom for exam date Publication of the exam date Exam and grate Publication of the grade Validation FRONT STAGE Take the information Student takes the exam Student accept the rate and sign BACK STAGE Time schedule and classroom management Administration confirms the date/ Student books the exam SUPPORT Database Post on line Database

33. MULTIPLE USERS: student and professor student professor administration PHYSICAL EVIDENCE Administration office Computer Computer Outside the classroom Outside the classroom Classroom Desk, chair, professor Classroom Computer Professor’s office USER ACTIONS Request of classroom for exam date Publication of the exam’s date Book the exam Wait outside the classroom Call the student reading the list Take place Take the exam Delivery and leave the classroom Publication of the grade Verbalize (signature) FRONT STAGE Administration takes the information Show his ID Distribution of the exam’s papers Supervision Collect exam’s papers Validation BACK STAGE Time schedule and classroom management Administration confirms the date Grade the students’ exams Registration on the database SUPPORT Database Automatic booking system Post on line Database

34. Tool: IBM Business Process Management Blueprint http://blueprint.lombardi.com/

35. Date and classroom Choice of the date Communication of exam's date Administration takes the information Time schedule and classroom management Administration confirms the date Booking of the exam Publication of the date Books the exam on line Roll call Wait outside the classroom Read the students‘ list Show his ID Take place Exam phase Distribuction of the exam's papers Take the exam Supervision Delivery and leave the classroom Collect the papers Grade Grade the exam Publish the grade Verbalization Signature Validation Update the information M I L E S T O N E S A C T I V I T I E S DISCOVERY MAP student professor administration

36. PROCESS DIAGRAM

37. PROCESS DIAGRAM and participants

38. STUDENTS : Good job (good salary, job quality) Good preparation (Good teachers, labs, teaching organization) Good value for money Services (Simple bureaucracy, scholarships, dormitories, transportation, sports…) 2. FACULTIES: Prestige and visibility Investments from public and private companies Good employees (teachers and researchers ) 3. ADMINISTRATION STAFF : Academic organization Resource management Cost reduction 4. BUSINESSES : Skilled students as future employees Research partners Different expectations for each stakeholder University

39. Since a University must satisfy many stakeholders, it has to be organized as a Service System to obtain value co-creation (win-win perspective) THE GOAL:

40. Tableau The tableau is a method that serves as a guide for the university to improve service quality by taking the value co-creation perspective on different stakeholders’ satisfaction. “ Tableau” is the French word for table

41. Tableau The complete analysis is organized in spreadsheets, one per service. Every service is described by the tableau :

42. I,II,III,IV Description of the table VI Figure out the main weaknesses VIII Act IX Repeat V Measure of the current level of satisfaction and of the existing gap with the target expectations Flow chart of the tableau method VII Potential solution and feasibility analysis

44. Take the activities from the “high priority box” Select one activity A i from the list Look at the subscript i of A i Look at the color of A i Typology of the decisions Activity and decision boxes Number of decision-makers Solution from the driving-question Expectations for the specific stakeholder Potential conflicts Evaluation of the complexity of the potential solutions Are the solutions too much complex? no yes STEP VIII : Act (Apply the potential solutions to improve the quality of the service) Re-engineering the activity A i Update the tableau (restart from the STEP I until STEP V ) End Start

45. Conclusions University is a Service System We have analyzed the University through: blueprinting tableau Different tools but with a common base: they are MULTIPLE STAKEHOLDERS-ORIENTED , with the purpose to co-create value not only for the University but also for the entire society.

46. Outline Service science: The study of service systems Service systems thinking: The ABC’s Service systems dynamics: Four drivers of change Service systems re-design: Some examples A College Course K-12 & Higher Education Higher Education Specialization Opportunities (Depth) K-12 General Education Preparation (Breadth) The Goal: Adaptive “T-shaped professionals” (life-long learning) & Quality-of-Life measures Why? Data and trends: Global growth of sophisticated service systems Why and how technology is changing jobs Why higher education & certification levels matter (to individuals) And therefore, why higher education matters (to nations) Why the study of service systems matters (to nations) Why the study of service systems matters (to businesses) End notes: Beyond fragile local specialization, toward robust regional sustainability The birth of service science (now related programs in 500+ universities worldwide) What about advanced manufacturing, outsourcing, sustainability challenges? Holistic-product-service-systems, regional capacity, regional innovation ecosystems Learning more about service systems - pointers to 200+ books & the conceptual foundations

47. Service Systems Thinking: ABC’s Example Provider: College (A) Example Target: Student (C) Discuss: Who is the Customer (B)? Student? They benefit… Parents? They often pay… Future Employers? They benefit… Professional Associations? Government, Society? A B C A. Service Provider Individual Institution Public or Private C. Service Target: The reality to be transformed or operated on by A, for the sake of B Individuals or people, dimensions of 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 Individual Institution 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.”

48. Service System Dynamics: Four Key Drivers of Change Provider: Technology (Tech) & Sustainable Value-Cocreation Models New technology to boost productivity & capacity (innovate) Use technology to perform routine manual, cognitive, and transactional work New relationship networks: Business models and new ventures (for-profit & non-profits) Customer: Self Service New self-service options to lower costs & expand choice (educate) Authority: Rules New rules to fix problems & achieve policy goals (regulate) Institutional diversity and governance of resource commons (Ostrom et. al.) Competitors: Rankings New rankings to guide decision-making & gain “valued” customers (differentiate) Hint: You want to be at the top of an independently ranked list of what customers are looking for… Especially for “valued” customers - calculating customer lifetime value (Rust et. al.)

49. Example Service System Re-Design: A College Course Problem: What if a college course had… Input: Student quality lower Process: Faculty motivation lower Output: Industry fit lower Solution: Tech + Self-Service E: -20% E-learning enrollment pre-certification F. +10% Faculty interest tuning J. +10% on-the-Job skills tuning After a decade the course may look quite different Service systems are learning systems: productivity, quality, compliance, sustainable innovation Maglio, P., Srinivasan, S., Kreulen, J.T., Spohrer, J. (2006), Service systems, service scientists, SSME, and innovation. Communications of the ACM, 49(7), 81-85. Year 1: 20% Year 2: 20% Year 3: 20% Year N: 20% . . . . . . . . E F J

50. Example: Specialization Opportunities for Higher Education 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: Observing the Stakeholders (As-Is) Starting Point 2: Observing their Resources & Access (As-Is) Change Potential: Thinking (Has-Been & Might-Become) Value Realization: Doing (To-Be)

51. K-12 STEM: “The systems we live in, and the systems we are…” “ Imagine a better service system, and use STEM language to explain why it is better” STEM = Science, Technology, Engineering, and Mathematics See 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/Home (Bio) 9 – Education /Campus & Work Life/Jobs & Entrepreneurship (Cogno) 10 – City (Government) 11 – State /Region (Government) 12 – Nation (Government) Higher Ed – T-shaped depth added, cross-disciplinary project teams Professional Life – Adaptive T-shaped life-long-learning & projects Systems that focus on Governing Systems that focus on Human Activities and Development Systems that focus on Flow of things

52. The Goal: Adaptive Innovators, so called T-shaped professionals Ready for Life-Long-Learning Ready for T-eamwork Ready to 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

53. The Goal: Quality-of-Life measures improve Education system transfers and expands body-of-knowledge 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 2/7/4 2/1/1 7/6/1 1/1/0 5/17/27 1/0/2 24/24/1 2/20/24 7/10/3 5/2/2 3/3/1 0/0/0 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)”

54. Data: Why and how technology is changing jobs 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

55. Data: Why education certification levels matter (to individuals) … But it can be costly, American student loan debt is over $900M

56. Data: And therefore, why higher education matters (to nations) % 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

57. Data: Why the study of service systems matters (to nations) Parallels the growth of cities and the digital knowledge economy High Talent Individuals High Tech Infrastructure 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 % WW Nation World’s Large Labor Forces A = Agriculture, G = Goods, S = Service 2010 2010 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 IT augmented workers in smarter systems that create benefits for customers and sustainably improve quality of life.

58. Data: Why the study of service systems matters (to businesses) SOFTWARE SYSTEMS (AND FINANCING) SERVICES 2010 Pretax Income Mix Revenue Growth by Segment Services Software Systems 44% 17% 39% IBM Annual Reports

59. 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 - The Birth of Service Science: 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

60. 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 - The Birth of Service Science: IBM Centennial Icon of 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

61. What about advanced manufacturing? http://www.youtube.com/watch?v=nd5WGLWNllA

62. Rethinking “Product-Service Systems” F B Service System 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 Service Business Product Business Front-Stage Marketing/Customer Focus Back-Stage Operations/Provider Focus Based on Levitt, T (1972) Production-line approach to service. HBR. e.g., IBM e.g., Citibank “ Everybody is in service... Something is wrong… The industrial world has changed faster than our taxonomies.”.

63. Holistic Product-Service-Systems & Regional Innovation Ecosystems http://www.service-science.info/archives/1056 Examples: Nations, States, Cities, Universities, Luxury Hotels, Cruise Ships, Households “ Whole Service” 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 (outsourcing limits, maximum re-cycling for sustainability) ~25-50% of start-ups are new IT-enabled service offerings SaaS PaaS IaaS http://www.thesrii.org Nation State/Province City/Region Hospital Medical Research University Colleges K-12 Luxury Resort Hotels Family (household ) Person (professional ) For-profits Non-profits Start-Ups New Ventures

64. Thought Experiment: Pet-Cities (Petri-Dish Binary-Cities) Imagine nested holistic product-service-systems… 10 Continents/planet 10 Nations/continent 10 States/nation 10 Cities/state 4 Sectors/city 11 Systems/sectors City toggles each generation 20 years/generation New infrastructure/generation Purpose “ World Simulator” benchmarking Game: Search to accelerate learning 10,000 city experiments/generation Low skill/raw materials > Hi-talent/tech Each generation new outcomes Talents (skills & jobs) Technologies (recycle & rebuild) Investments (script & performance) High Talent Individuals High Tech Infrastructure Toggle each generation – 20 year cycle In-Use Occupied De-construction Re-construction water food/products energy ICT R&H/M&E/C&S finance health education governance transportation buildings/family Sector 1 11 Systems Sector 2 Sector 3 Sector 4

65. Learning More About Service Systems… 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 Constraints By John Ricketts, IBM Service Management: Operations, Strategy, and Information Technology By Fitzsimmons and Fitzsimmons, UTexas Service Is Front Stage: Positioning services for value advantage By James Teboul, INSEAD

66. Service Science: Conceptual Framework Resources: Individuals, Institutions, Infrastructure, Information Stakeholders: Customers, Providers, Authorities, Competitors Measures: Quality, Productivity, Compliance, Sustainable Innovation Access Rights: Own, Lease, Shared, Privileged 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

67. Service system entities configure four types of resources First foundational premise of service science: Service system entities dynamically configure four types of resources Resources are the building blocks of entity architectures Named resources are: Physical or Not-Physical Physicist resolve disputes Named resources have: Rights or No Rights Judges resolve disputes Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. . Formal service systems can contract to configure resources/apply competence Informal service systems can promise to configure resources/apply competence Trends & Countertrends (Balance Chaos & Order): (Promise) Informal <> Formal (Contract) (Relationships & Attention) Social <> Economic (Money & Capacity) (Power) Political <> Legal (Rules) (Evolved) Natural <> Artificial (Designed) (Creativity) Cognitive Labor <> Information Technology (Routine) (Dance) Physical Labor <> Mechanical Technology (Routine) (Relationships) Social Labor <> Transaction Processing (Routine) (Atoms) Transportation <> Communication (Bits) (Tacit) Qualitative <> Quantitative (Explicit) (Secret) Private <> Public (Shared) (Anxiety-Risk) Challenge <> Routine (Boredom-Certainty) (Mystery) Unknown <> Known (Justified True Belief) Physical Not-Physical Rights No-Rights 2. Technology/ Environment Infrastructure 4. Shared Information / Symbolic Knowledge People/ Individuals 3. Organizations/ Institutions

68. Service system entities calculate value from multiple stakeholder perspectives Second foundational premise of service science Service system entities calculate value from multiple stakeholder perspectives Value propositions are the building blocks of service networks A value propositions can be viewed as a request from one service system to another to run an algorithm (the value proposition) from the perspectives of multiple stakeholders according to culturally determined value principles. The four primary stakeholder perspectives are: customer, provider, authority, and competitor Citizens: special customers Entrepreneurs: special providers Parents: special authority Criminals: special competitors 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 coordinate & motivate resource access Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition? Will we? (invest to make it so) Strategic Sustainable Innovation (Market share) 4.Competitor (Substitute) Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard? May we? (offer and deliver it) Regulated Compliance (Taxes and Fines, Quality of Life) 3.Authority Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve? Can we? (deliver it) Cost Plus Productivity (Profit, Mission, Continuous Improvement, Sustainability) 2.Provider Model of customer: Do customers want it? Is there a market? How large? Growth rate? Should we? (offer it) Value Based Quality (Revenue) 1.Customer Value Proposition Reasoning Basic Questions Pricing Decision Measure Impacted Stakeholder Perspective (the players)

69. Service system entities reconfigure access rights to resources by mutually agreed to value propositions Third foundational premise of service science Service system entities reconfigure access rights to resources by mutually agreed to value propositions Access rights are the building blocks of the service ecology (culture and information) 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.) Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. . service = value-cocreation B2B B2C B2G G2C G2B G2G C2C C2B C2G *** provider resources Owned Outright Leased/Contract Shared Access Privileged Access customer resources Owned Outright Leased/Contract Shared Access Privileged Access OO SA PA LC OO LC SA PA S A P C Competitor Provider Customer Authority value-proposition change-experience dynamic-configurations (substitute) time

70. Service system entities interact to create ten types of outcomes Four possible outcomes from a two player game ISPAR generalizes to ten possible outcomes win-win: 1,2,3 lose-lose: 5,6, 7, maybe 4,8,10 lose-win: 9, maybe 8, 10 win-lose: maybe 4 Maglio PP, SL Vargo, N Caswell, J Spohrer: (2009) The service system is the basic abstraction of service science. Inf. Syst. E-Business Management 7(4): 395-406 (2009) lose-win (coercion) win-win (value-cocreation) lose-lose (co-destruction) win-lose (loss-lead) Win Lose Provider Lose Win Customer ISPAR descriptive model

71. Service system entities learn to systematically exploit technology: Technology can perform routine manual, cognitive, transactional work March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87. Sanford, L.S. (2006) Let go to grow: Escaping the commodity trap. Prentice Hall. New York, NY. L 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 be the best, learn from the rest” “ Double monetize, internal win and ‘sell’ to external” “ Try to operate inside the comfort zone”

72. Service system entities are physical-symbol systems Service is value cocreation. Service system entities reason about value. Value cocreation is a kind of joint activity. Joint activity depends on communication and grounding. Reasoning about value and communication are (often) effective symbolic processes. Newell, A (1980) Physical symbol systems, Cognitive Science , 4, 135-183. Newell, A & HA Simon(1976). Computer science as empirical inquiry: symbols and search. Communications of the ACM, 19, 113-126.

73. Summary Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. . 5. Exploit information & technology 6. Physical-Symbol Systems Physical Not-Physical Rights No-Rights 2. Technology/ Infrastructure 4.. Shared Information People/ Individuals 3. Organizations/ Institutions 1. Dynamically configure resources (4 I’s) Model of competitor: Does it put us ahead? Will we? Strategic Sustainable Innovation 4.Competitor/ Substitutes Model of authority: Is it legal? May we? Regulated Compliance 3.Authority Model of self: Does it play to our strengths? Can we? Cost Plus Productivity 2.Provider Model of customer: Do customers want it? Should we? Value Based Quality 1.Customer Reasoning Questions Pricing Measure Impacted Stakeholder Perspective 2. Value from stakeholder perspectives S A P C 3. Reconfigure access rights 4. Ten types of outcomes (ISPAR)

74. Smarter = Sustainable Innovation (reduce waste, expand capabilities) Computational System Building Smarter Technologies Requires investment roadmap Service Systems: Stakeholders & Resources 1. People 2. Technology 3. Shared Information 4. Organizations connected by win-win value propositions Building Smarter Universities & Cities Requires investment roadmap

75. Time ECOLOGY 14B Big Bang (Natural World) 10K Cities (Human-Made World) 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 engine 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 Service Systems (HSS) 200M bees (social division-of-labor) 60 transistor