Hsse and smarter planet 201200722 v4

IBM University Programs worldwide, accelerating regional development (IBM Upward)

The Human Side of
Service Engineering & Smarter Planet

IBM Centennial Icon of Progress

Smarter Planet T-shaped People

Dr. James (“Jim”) C. Spohrer, spohrer@us.ibm.com
Innovation Champion and Director IBM UPward
(University Programs worldwide, accelerating regional development)

Association of Human Factors & Ergonomics & HSSE 2012
San Jose State University, San Jose, CA, USA, Sunday July 22, 2012

© 2012 IBM Corporation

Today’s Talk
 HSSE Challenges
– The “Big Four” in Crisis
– How did we get here?

 Seeing Service Systems More Clearly
– Through the Lens of Quality-of-Life
– What is Quality-of-Life?

 Human Side of Service Engineering (HSSE)
– Empowering People To See & Improve Service Systems
– Some Scientific Foundations

 Why Cities Are Important
– Holistic Product-Service Systems
– “Whole Service” & Quality-of-Life

 Why Universities Are Important
– Because They Are Mini-Cities!!!
– Holistic Product-Service Systems

 Thank-You’s

2 IBM UPward (University Programs worldwide – accelerating regional development) © 2012 IBM Corporation

Challenges: Human Side of Service Engineering (HSSE)
 The “Big Four” in Crisis
– Financial
– Healthcare
– Education
– Government


Evert Gummesson:
Rise of Service
Human Activity Shifts: Sociotechnical System Evolution Relationship Networks

Estimated world (pre-1800) and then U.S. Labor Percentages by Sector
120

100
Services (Info)
80
Services (Other)
60 Industry (Goods)
Agriculture
40
Hunter-Gatherer
20

0
A

A
A

A

50

00

50
00

00

50
Y

Y
Y

Y

18

18

19

19
0

20

20
0

0

00
00

00

00

20
00

10
20
20

Estimations based on Porat, M. (1977) Info Economy: Definitions and Measurement

The Company of The Pursuit of
Strangers : A Natural Organizational
History of Economic Intelligence,
Life by James G. March
by Paul Seabright Exploitation vs exploration

Human Population: Sociotechnical System Evolution
Information Technologies, etc.

Scientific Method, Industrialization
Colonial Expansion & Economics,

Rise of the modern managerial firm
& Politics, Education, Healthcare &

Effects of Agriculture,

Shadows in the Sun, The Visible Hand: The
by Wade Davis Managerial Revolution in
“Ethnosphere. sum total of all
the thoughts, beliefs, myths, and American Business
institutions brought into being by the by Alfred Dupont Chandler
human imagination”


Economic Shift in National Economies
World’s Large Labor Forces US shift to service jobs
A = Agriculture, G = Goods, S = Service
2010
2010

Nation Labor
% WW
A
%
G
%
S
%
40yr Service
Growth (A) Agriculture:
Value from
China 25.7 49 22 29 142%
harvesting nature

India 14.4 60 17 23 35%
(G) Goods:
U.S. 5.1 1 23 76 23% Value from
making products
Indonesia 3.5 45 16 39 34%
(S) Service:
Brazil 3.0 20 14 Daryl Pereira/Sunnyvale/IBM@IBMUS,
66 61% Value from
IT augmented workers in smarter systems
Russia 2.4 10 21 69 64% that create benefits for customers
and sustainably improve quality of life.
Japan 2.2 5 28 67 45%

Nigeria 1.6 70 10 20 19%

Bangladesh 2.1 63 11 26 37%

Germany 1.4 3 33 64 42%

NationMaster.com, International Labor Organization
Note: Pakistan, Vietnam, and Mexico now larger LF than Germany


Growth of Service Revenue at IBM
2010 Pretax Income Mix Revenue Growth by Segment
SYSTEMS
(AND FINANCING)

SOFTWARE

17% Services
44%

Software
39% Systems

SERVICES

IBM Annual Reports
What do IBM Service Professionals Do? Run IT & enterprise systems for customers,
help Transform customer processes to best practices, and Innovate with customers.

From Sociotechnical Systems to Smarter Service Systems

INSTRUMENTED INTERCONNECTED INTELLIGENT
We now have the ability People, systems and We can respond to changes
to measure, sense and objects can communicate quickly and accurately,
see the exact condition and interact with each and get better results
of practically everything. other in entirely new by predicting and optimizing
PRODUCTS ways.
IT NETWORKS COMMUNICATIONS
for future events.
WORKFORCE SUPPLY CHAIN TRANSPORTATION BUILDINGS


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)

IBM University Programs worldwide, accelerating regional development (IBM Upward)
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions

Service Service Service Stakeholder The white paper offers
a starting point to -
Innovation Systems Science Priorities
Growth in service Customer-provider To discover the Education
GDP and jobs interactions that underlying
enable value principles of Skills Develop programmes
Service quality cocreation complex service & Mindset & qualifications
& productivity systems
Dynamic Research
Environmental configurations of Systematically Encourage an
Knowledge
friendly & resources: people, create, scale and interdisciplinary
& Tools approach
sustainable technologies, improve systems
organisations and
Urbanisation & information Foundations laid Business
aging population by existing Employment
Increasing scale, disciplines Develop and improve
& Collaboration
Globalisation & complexity and service innovation
technology drivers connectedness of Progress in
Government roadmaps, leading to a
service systems academic studies doubling of investment
Opportunities for and practical tools Policies in service education
businesses, B2B, B2C, C2C, & Investment and research by 2015
governments and B2G, G2C, G2G Gaps in knowledge
individuals service networks and skills

Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
© 2012 IBM Corporation

Priorities: Research Framework
for the Science of Service
Pervasive Force: Leveraging Technology to Advance Service

Strategy Development Execution
Priorities Priorities Priorities

Fostering Service Stimulating Effectively Branding
Infusion and Growth Service Innovation and Selling Services

Improving Well-Being Enhancing the Service
Enhancing
through Experience through
Service Design
Transformative Service Cocreation

Optimizing Measuring and
Creating and Maintaining
Service Networks Optimizing the Value of
a Service Culture
and Value Chains Service

Source: Global Survey of Service Research Leaders (Ostrom et al 2010)

Why is it hard to see service systems clearly?

Design/
Cognitive Science Systems
Engineering
“service science is “a service system is a
the transdisciplinary study of human-made system to improve
service systems & provider-customer interactions
value-cocreation” and value-cocreation outcomes,
by dynamically configuring resource
Marketing access via value propositions,
most often studied by many disciplines,
one piece at a time.”

The ABC’s:
The provider (A)
and a customer (B)
transform a target (C)

Computer Science/
Artificial Intelligence Economics & Law Operations

Our ambition is to reach K-12 students with Service Science & STEM:
“The systems we live in, and the systems we are…”
 Challenge-based Project to Design Improved Service Systems
– K - Transportation & Supply Chain Systems
– 1 - Water & Waste Recycling that focus on
Flow of things
– 2 - Food & Products (Nano)
– 3 - Energy & Electric Grid
– 4 – Information/ICT & Cloud (Info)
Systems
– 5 - Buildings & Construction that focus on
– 6 – Retail & Hospitality/Media & Entertainment (tourism) and
Human Activities
Development
– 7 – Banking & Finance/Business & Consulting
– 8 – Healthcare & Family Life/Home (Bio)
– 9 – Education /Campus & Work Life/Jobs & Entrepreneurship (Cogno)
– 10 – City (Government) Systems
that focus on
– 11 – State/Region (Government) Governing
– 12 – Nation (Government)
– Higher Ed – T-shaped depth added, cross-disciplinary project teams
– Professional Life – Adaptive T-shaped life-long-learning & projects

“Imagine smarter systems, explain why better (service systems & STEM language)”
STE(A)M = Science, Technology, Engineering, (Arts) 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


“Service is the application of competence [knowledge]
for the benefit of another entity.”
Seeing Our World And Us Vargo,SL & RF Lusch (2004).
Evolving to a new dominant logic for marketing.
Journal of Marketing, 68, 1 – 17.

Ha
rt sP
Pa art
H as

Building Smarter Cities =
Natural Systems Service Systems Apply Service Systems
Planetary Systems
Knowledge To Realize Benefits
water, electricity, transportation, education, healthcare, etc.
Be ts
n ef i n ef i
ts Be
Carbon Capabilities,
Footprint Experience

(Choices) (Choices)

Quality of Life

California Human Development Report 2011:
Measuring quality-of-life….

http://www.measureofamerica.org/docs/APortraitOfCA.pdf

What improves Quality-of-Life? Service System Innovations
* = US Labor % in 2009.

A. Systems that focus on flow of things that humans need (~15%*) 20/10/10
1. Transportation & supply chain
2/7/4
2. Water & waste recycling/Climate & Environment2/1/1
7/6/1
3. Food & products manufacturing 1/1/0
4. Energy & electricity grid/Clean Tech
5/17/27
5. Information and Communication Technologies (ICT access)
B. Systems that focus on human activity and development (~70%*)
1/0/2
6. Buildings & construction (smart spaces) (5%*) 24/24/1
7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*)
2/20/24
7/10/3 (wealthy) (21%*)
8. Banking & finance/Business & consulting
5/2/2
9. Healthcare & family life (healthy) (10%*)
10. Education & work life/Professions & entrepreneurship (wise) (9%*)
3/3/1
C. Systems that focus on human governance - security and opportunity (~15%*) 0/0/0
11. Cities & security for families and professionals (property tax)
1/2/2
12. States/regions & commercial development opportunities/investments (sales tax)
0/19/0
13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax)
Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities
“61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)”


Sciences underlying HSSE
Service Science
Transdiscipline

Foundations Disciplines Professions

Phenomena: Run
Past Present Future
Value-Cocreation Operators & Maintain

Historical Studies: Future Studies:
Research Anthrop, Economics & Law
Stakeholders & Resources &
Design & Mgmt of Innovation
Transform
Challenges Measures Access Rights Consultants Managers
HumantesSocialScience Arts-Decision Sciences

Customer & Quality People & PA
Concepts & Marketing Psychology, Design
Innovate
Questions Behavioral Sciences Cognitive Sciences Scientists & Designers

Provider & Productivity Technology & OO
Tools & Operations Research & Mgmnt Indust. & Systems Engineering
Work & Job Category
Methods Management Sciences Engineering Sciences Evolution

Authority & Compliance Information & SA
Governance & Policymaking Management of Info Systems
Political Sciences Computer & Info Sciences

Rule Innovations Tech Innovations
Competitors & Sust. Innov. Organizations & LC
Strategy/Game Theory Project Management Contracts
Learning Sciences Organization Science

From: Spohrer, J. & Maglio, P. P. (2009). Service science: Toward a smarter planet.
In W. Karwowski & G. Salvendy (Eds.), Introduction to service engineering. NY: Wiley.

Service Science and Policymaking

 EN: FN(PRW) -> {RE}

– Entities
– Frameworks
– Problems
– Recommendations

From: Spohrer, J, P Piciocchi, CBassano (2012). Three Frameworks for Service Research:
Exploring Multilevel Governance in Nested, Networked Systems. Service Science 4:147-160


Four measures

 Innovativeness

 Equity

 Sustainability

 Resiliency


Service Science: Conceptual Framework
Ecology
(Populations & Diversity)

Entities Interactions Outcomes
(Service Systems, both (Service Networks, (Value Changes, both
Individuals & Institutions) link, nest, merge, divide) beneficial and non-beneficial)

Identity Value Proposition Governance Mechanism Reputation
(Aspirations & Lifecycle/ (Offers & Reconfigurations/ (Rules & Constraints/ (Opportunities & Variety/
History) Incentives, Penalties & Risks) Incentives, Penalties & Risks) History)

Access Rights Measures
(Relationships of Entities) (Rankings of Entities)
lose-win win-win prefer sustainable
lose-lose win-lose non-zero-sum
Resources Stakeholders outcomes,
(Competences, Roles in Processes, (Processes of Valuing, i.e., win-win
Specialized, Integrated/Holistic) Perspectives, Engagement)

 Resources: People, Organizations, Technology, Shared Information
 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.


Specialization has benefits

Adam Smith: David Ricardo:
Division of Labor Comparative Advantage


Technology has a cost

 “The burden of knowledge”

Cesar Hidalgo:
Societal Knowledge


~250 years of infrastructure transformations
Installation Crash Deployment
Irruption Frenzy Synergy Maturity
• Formation of Mfg. industry
1 The Industrial 1771
Panic • Repeal of Corn Laws 1829
Revolution 1797
opening trade

• Standards on gauge, time
Age of Steam Panic
2 and Railways
1829
1847
• Catalog sales companies 1873
• Economies of scale

Age of Steel, Depressio • Urban development
3 Electricity 1875
n • Support for interventionism
1920
1893
and Heavy
Engineering • Build-out of Interstate
Age of Oil, Crash
4 Automobiles
1908
1929 highways 1974
• IMF, World Bank, BIS
and Mass Production
Coming period of
Age of Information Credit Crisis
5 and
1971 2008 Institutional Adjustment
and Production Capital
Telecommunications
Source: Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages; (Edward Elar Publishers, 2003).


~100 years of US job transformations

Source: US Bureau of Economic Analysis; McKinsey Global Institute Analysis

We need better frameworks, theories, and models of…
 Four I’s
Cultural Information
– Infrastructure
(Quality-of-Life Measures)
– Individuals
– Institutions
– Information
Individuals Institutions
 Four Measures (Skills) (Rules, Jobs)
– Innovativeness
– Equity
– Sustainability Societal Infrastructure
– Resiliency (Technologies & Environment)

26 IBM GMU External Relations 2012

Cities: land-population-energy-carbon

Carlo Ratti:
Senseable Cities


City challenge: buildings and transportation

Ryan Chin:
Smart Cities


Resiliency: Capability to rebuild (and recycle) rapidly

China Broad Group:
30 Stories in 15 Days


Self-driving cars

Steve Mahan:
Test “Driver”


Manufacturing as a local recycling & assembly service

Ryan Chin:
Urban Mobility


Advanced Product-Service Systems: Cirque Du Soleil
http://www.youtube.com/watch?v=nd5WGLWNllA


University: Four Missions
Nation

 Knowledge State/Province
– 1. Transfer (Teaching) City/Metro
For-profits U-BEE
– 2. Creation (Research)
Job Creator/Sustainer
– 3. Application (Benefits) Cultural & University
Hospital
Medical
Conference College
Research
• Commerce/Entrepreneurship Hotels K-12

• Governance/Policymaking
Worker Family
– 4. Re-Integration (Challenge) Non-profits (professional) (household)

• Innovativeness, Equity
• Sustainability, Resilience

 Nested, Networked Holistic Service Systems
– Flows
Third Mission (Apply to Create Value)
– Development is about U-BEEs =
– Governance University-Based
Entrepreneurial Ecosystems


Nations compete and cooperate: Universities important
% WW GDP and % WW Top-500-Universities (2009 Data)
9

Japan
8

7 y = 0,7489x + 0,3534
R² = 0,719 China
6 Germany

5
France

4 United Kingdom
Italy
%
G
D
o
b
P
a
g
l

3
Russia Brazil Spain
Canada
2 India
Mexico South Korea Australia
Turkey Netherlands
1
Sweden

0
0 1 2 3 4 5 6 7 8 9

% top 500 universities


What are the benefits of more education? Of higher skills?

…But it can be costly, American student loan debt is over $900M


~30 years of skill transformations: depth & breadth

15

10 Expert Thinking

5 Complex Communication

0 Routine Manual

Non-routine Manual
-5

Routine Cognitive
-10
1969 1974 1979 1984 1989 1994 1999

Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How
Computers Are Creating the Next Job Market. Princeton University Press.


T-shaped professionals
depth & breadth

Many cultures
Many disciplines
Many systems
(understanding & communications)

BREADTH

Deep in one discipline

Deep in one system
Deep in one culture
DEPTH

(analytic thinking & problem solving)

37

Systems-Disciplines Framework: Depth & Breadth
systems Systems that focus on flows of things Systems that support people’s activities Systems that govern
transportation & ICT & retail & healthcare
food & education city state nation
disciplines supply chain water & energy
products & electricity
cloud building & hospitality banking & family
&work secure scale laws
waste construction & finance
behavioral sciences
Customer
stakeholders

e.g., marketing

Provider management sciences
e.g., operations
Observe Stakeholders (As-Is)
political sciences
Authority
e.g., public policy
learning sciences
Competitors e.g., game theory
and strategy
cognitive sciences
People
e.g., psychology
resources

system sciences
Technology
e.g., industrial eng.
information sciences
Observe Resource Access (As-Is)
Information
e.g., computer sci
organization sciences
Organizations
e.g., knowledge mgmt

History social sciences
change

e.g., econ & law
(Data Analytics)
decision sciences
Imagine Possibilities (Has-Been & Might-Become)
Future e.g., stats & design
(Roadmap)
run professions
Run
e.g., knowledge worker
Transform
value

(Copy)
transform professions
e.g., consultant
Realize Value (To-Be)
Innovate innovate professions
(Invent)
e.g., entrepreneur


Working with universities-cities worldwide
A long term investments to develop talent & skills
Government Global Placements & Collaboration with
Partnerships Mentoring Universities
Transferring knowledge and IBM works with 5,000 universities
By helping governments to and 10,000 faculties around the
establish new national expertise to the growth markets is
critical. One of the ways we do this globe. We have joint initiatives
research facilities, we are and investments with universities
helping to create new is to move experts into the market to
in Vietnam, Malaysia, India,
industries, helping to develop coach and train local teams. Russia, Brazil, Bulgaria, Egypt,
long terms skills curriculums China and Africa to encourage
like SSME. the training of skills required.

39 IBM GMU External Relations 2012

We Are All Part Of Nested, Networked Service Systems

Matryoska dolls:
Origin Japanese


I am nested in at least 10 systems

Level AKA ~No. People ~No. Entities Example
0. Individual Person 1 10,000,000,000 Jim
1. Family Household 10 1,000,000,000 Spohrer’s
2.Neighborhood Street 100 100,000,000 Kensington
3. Community Block 1000 10,000,000 Bird Land
4. Urban-Zone District 10,000 1,000,000 SC Unified
5. Urban-Center City 100,0000 100,000 Santa Clara
6.Metro-Region County 1,000,000 10,000 SC County
7. State Province 10,000,000 1,000 CA
8. Nation Country 100,000,000 100 USA
9. Continent Union 1,000,000,000 10 NAFTA
10. Planet World 10,000,000,000 1 UN


A Framework for Global Civil Society

 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


AHFE-HSSE 2012: Thank-you!


~14B Evolution of Natural Systems & Service Systems ~10K
Big Bang Cities
(Natural Unraveling the mystery of evolving hierarchical-complexity in new populations… (Human-Made
Time
World) To discover the world’s architectures and mechanisms for computing non-zero-sum World)

writing
(symbols and scribes,
stored memory
and knowledge)

written laws

ECOLOGY
(governance and
stored control)

sun (energy) money
earth (governed
(molecules & transportable value
stored energy) stored value,
“economic energy”)
bacteria
(single-cell life)

bees (social
sponges transistor
division-of-labor)
(multi-cell life) (routine
cognitive work) universities
(knowledge workers
clams (neurons) printing press (books
trilobites (brains) 200M 60 steam engine (work)

Co-Evolution (Michael Gallis & Associates)

http://www.scribd.com/doc/46259459/Co-Evolution


Visit IBM Almaden Research Center, San Jose, CA

 Upcoming Conferences
– July 2012
• ISSS San Jose
• HSSE San Francisco

 More Information
– Blog
• www.service-science.info
– Twitter
• @JimSpohrer
– Presentations
• www.slideshare.net/spohrer
– Email
• spohrer@us.ibm.com


Thank-You! Questions?

“Instrumented, Interconnected, Intelligent – Let’s build a Smarter Planet.” – IBM
“If we are going to build a smarter planet, let’s start by building smarter cities” – CityForward.org
“Universities are major employers in cities and key to urban sustainability.” – Coalition of USU
“Cities learning from cities learning from cities.” – Fundacion Metropoli
“The future is already here… It is just not evenly distributed.” – Gibson
“The best way to predict the future is to create it/invent it.” – Moliere/Kay
“Real-world problems may not/refuse to respect discipline boundaries.” – Popper/Spohrer
“Today’s problems may come from yesterday’s solutions.” – Senge
“History is a race between education and catastrophe.” – H.G. Wells
“The future is born in universities.” – Kurilov
“Think global, act local.” – Geddes

Dr. James (“Jim”) C. Spohrer
Innovation Champion &
Director, IBM University Programs & open worldwide entrepreneurship research (IBM UPower) WW
spohrer@us.ibm.com


IBM’s Leadership Changes

IBM has 426,000
employees worldwide
2011 Financials
22% of IBM’s revenue
 Revenue - $ 106.9B
in Growth Market
 Net Income - $ 15.9B
countries; growing at
11% in 2011  EPS - $ 13.44
 Net Cash - $16.6B More than 40% of IBM’s
workforce conducts business
away from an office

55% of IBM’s Workforce
IBM operates in 170 is New to the company in
countries around the globe the last 5 years
Number 1 in patent
generation for 19
100 Years of Business consecutive years ;
& Innovation in 2011 6,180 US patents
awarded in 2011 The Smartest Machine On Earth
9 time winner of the 5 Nobel
President’s National Laureates
Medal of Technology
& Innovation - latest “Let’s Build a Smarter
award for Blue Gene Planet"
Supercomputer


Service systems entities learn to apply knowledge

Learning
To Apply Knowledge

Do It Invent It
Exploitation Exploration

Run Transform Innovate

Operations L Internal Incremental

Maintenance
Copy It External Radical

Insurance Interaction Super-Radical

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.


Service Science: Conceptual Framework
Ecology
(Populations & Diversity)

Entities Interactions Outcomes
(Service Systems, both (Service Networks, (Value Changes, both
Individuals & Institutions) link, nest, merge, divide) beneficial and non-beneficial)

Identity Value Proposition Governance Mechanism Reputation
(Aspirations & Lifecycle/ (Offers & Reconfigurations/ (Rules & Constraints/ (Opportunities & Variety/
History) Incentives, Penalties & Risks) Incentives, Penalties & Risks) History)

Access Rights Measures
(Relationships of Entities) (Rankings of Entities)
lose-win win-win prefer sustainable
lose-lose win-lose non-zero-sum
Resources Stakeholders outcomes,
(Competences, Roles in Processes, (Processes of Valuing, i.e., win-win
Specialized, Integrated/Holistic) Perspectives, Engagement)

 Resources: Individuals, Institutions, Infrastructure, Information
 Resources: People, Organizations, Technology, 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.


Service Systems Thinking: ABC’s Example Provider: College (A)
A B Example Target: Student (C)
Discuss: Who is the Customer (B)?
A. Service Provider
Forms of
Service Relationship
B. Service Customer - Student? They benefit…
• Individual
(A & B co-create value) • Individual - Parents? They often pay…
• Institution • Institution
• Public or Private
- Future Employers? They benefit…
• Public or Private
- Professional Associations?
Forms of
Service Interventions
- Government, Society?
(A on C, B on C)

Forms of
Responsibility Relationship
(A on C)
C Forms of
Ownership Relationship
(B on C)

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,
“Service is the application of
physical dimensions of
• Information or Knowledge, symbolic dimensions
competence for the benefit
of another entity.”
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new
toward a science of service systems. Computer, 40, 71-77. dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
From… Gadrey (2002), Pine & Gilmore (1998), Hill (1977)


Service system entities configure four types of resources
Rights No-Rights

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

Service system entities calculate value from multiple stakeholder
perspectives
Value propositions coordinate & motivate resource access
 Second foundational premise of
service science Stakeholder Measure Pricing Basic Value
Perspective Impacted Decision Questions Proposition
– Service system entities calculate (the players) Reasoning
value from multiple stakeholder
perspectives

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

Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In
Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..


Service system entities reconfigure access rights to resources by
mutually agreed to value propositions

 Third foundational premise of service
Competitor Provider Customer Authority
science
S P C A
– Service system entities reconfigure
access rights to resources by mutually
agreed to value propositions (substitute)
OO OO
– Access rights are the building blocks of LC LC
the service ecology (culture and
information) SA SA
 Access rights PA PA
value-proposition
– Access to resources that are
change-experience
owned outright (i.e., property)
dynamic-configurations
– Access to resource that are

time
leased/contracted for (i.e., rental
car, home ownership via
mortgage, insurance policies, etc.)
– Shared access (i.e., roads, web
service = value-cocreation
information, air, etc.) B2B
B2C
– Privileged access (i.e., personal
thoughts, inalienable kinship B2G
relationships, etc.) G2C
provider resources G2B customer resources
Owned Outright G2G Owned Outright
C2C
Leased/Contract C2B Leased/Contract
Spohrer, J & Maglio, P. P. (2009)
Service Science: Toward a Smarter Planet. Shared Access C2G Shared Access
In Introduction to Service Engineering. Privileged Access *** Privileged Access
Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..


Service system entities interact to create ten types of outcomes
ISPAR descriptive model

 Four possible outcomes
from a two player game

lose-win win-win
Win

(coercion) (value-cocreation)
Provider

lose-lose win-lose
Lose

(co-destruction) (loss-lead)

Lose Win
Customer
 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)


Service system entities learn to systematically exploit technology:
Technology can perform routine manual, cognitive, transactional work

“Try to Learning Systems
(“Choice & Change”) “Double
operate
monetize,
inside
internal win
the Exploitation Exploration
(James March) (James March) and ‘sell’ to
comfort
external”
zone”
Run/Practice-Reduce Transform/Follow Innovate/Lead
(IBM) (IBM) (IBM)

Operations Costs L Internal Incremental
“To be
the best,
Maintenance Costs learn from External Radical
the rest”
Incidence Planning &
Interactions Super-Radical
Response Costs (Insure)

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.


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.


Summary Rights No-Rights

• People/ 2. Technology/
Physical Individuals Infrastructure

3. Organizations/ 4.. Shared
Not-Physical Institutions Information

1. Dynamically configure resources (4 I’s) 4. Ten types of outcomes (ISPAR)
Stakeholder Measure Pricing Questions Reasoning
Perspective Impacted

1.Customer Quality Value Should we? Model of customer: Do
Based customers want it?

2.Provider Productivity Cost Can we? Model of self: Does it
Plus play to our strengths?

3.Authority Compliance Regulated May we? Model of authority: Is it
legal?

4.Competitor/ Sustainable Strategic Will we? Model of competitor:
Innovation Does it put us ahead?
Substitutes

2. Value from stakeholder perspectives 5. Exploit information & technology

S P C A

3. Reconfigure access rights 6. Physical-Symbol Systems
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..

Service Management:
Learning More Operations, Strategy,
About Service Systems… and Information
Technology
 Fitzsimmons & Fitzsimmons By Fitzsimmons and
– Graduate Students Fitzsimmons, UTexas
– Schools of Engineering & Businesses

 Teboul
– Undergraduates
– Schools of Business & Social Sciences Service Is Front Stage:
– Busy execs (4 hour read) Positioning services for
 Ricketts value advantage
– Practitioners By James Teboul, INSEAD
– Manufacturers In Transition

 And 200 other books… Reaching the Goal:
– Zeithaml, Bitner, Gremler; Gronross, Chase, Jacobs,
Aquilano; Davis, Heineke; Heskett, Sasser,
Schlesingher; Sampson; Lovelock, Wirtz, Chew; Alter; How Managers Improve
Baldwin, Clark; Beinhocker; Berry; Bryson, Daniels,
Warf; Checkland, Holwell; Cooper,Edgett; Hopp,
Spearman; Womack, Jones; Johnston; Heizer, Render;
a Services Business
Milgrom, Roberts; Norman; Pine, Gilmore; Sterman;
Weinberg; Woods, Degramo; Wooldridge; Wright; etc. Using Goldratt’s
 URL: http://www.cob.sjsu.edu/ssme/refmenu.asp Theory of Constraints
 More Textbooks: By John Ricketts, IBM
http://service-science.info/archives/1931


 Our planet is a complex system-of-systems

Our planet is a complex, dynamic, highly interconnected
$54 Trillion system-of-systems (OECD-based analysis)
This chart shows ‘systems‘ (not ‘industries‘) Communication Transportation
$ 3.96 Tn $ 6.95 Tn
Education
$ 1.36 Tn

Water
$ 0.13 Tn
Leisure / Recreation /
Electricity Clothing
$ 2.94 Tn $ 7.80 Tn

Global system-of-systems
$54 Trillion
(100% of WW 2008 GDP)

Healthcare
$ 4.27 Tn

Infrastructure Legend for system inputs
$ 12.54 Tn
Note: Same Industry
1. Size of bubbles represents Business Support
systems’ economic values IT Systems
2. Arrows represent the strength of Energy Resources
systems’ interaction Machinery
Finance Food Govt. & Safety 1 Tn Materials
Source: IBV analysis based on OECD $ 4.58 Tn $ 5.21 Tn
$ 4.89 Tn Trade


 We now have the capabilities to manage a system-of-systems planet

Economists estimate, that all systems carry inefficiencies
of up to $15 Tn, of which $4 Tn could be eliminated
This chart shows ‘systems‘ (not ‘industries‘)

Analysis of inefficiencies in the
40%
planet‘s system-of-systems
Healthcare Global economic value of
Improvement potential as
% of system inefficiency

4,270
35% Building & Transport 34%
System-of- $54 Trillion
Infrastructure Education systems 100% of WW 2008
GDP
12,540 1,360
Financial
Electricity 42%
30% 2,940
4,580
Inefficiencies
$15 Trillion
28% of WW 2008
Food & Water GDP
4,890
25% Communication Government & Safety Improvement $4 Trillion
3,960 5,210 potential 7% of WW 2008 GDP
Transportation (Goods
& Passenger)
6,950
20%
Leisure /
Recreation / Note: Size of the bubble indicate
Clothing absolute value of the system in USD
15% 7,800 Billions
How to read the chart:
15% 20% 25% 30% 35% 40% 45% For example, the Healthcare system‘s
System inefficiency as % of total value is $4,270B. It carries an estimated
inefficiency of 42%. From that level of 42%
economic value inefficiency, economists estimate that
~34% can be eliminated (= 34% x 42%).
Source: IBM economists survey 2009; n= 480


The New Normal: Smarter Systems

Service Systems: Stakeholders & Resources
1. People
2. Technology
3. Shared Information
4. Organizations
Computational System connected by win-win value propositions
Smarter Technology Smarter Buildings, Universities, Cities
Requires investment roadmap Requires investment roadmap

Normann: Reframing Business

 Reframing Business:
When the Map Changes
the Landscape
 Richard Normann
 Value-Creating Systems


Deacon: Incomplete Nature

 Incomplete Nature: How Mind
Emerged From Matter
 Terrence W. Deacon
 Thermodynamics ->
Teleodynamics (purpose-
driven system dynamics)
 Purpose = map


Knowledge: Individuals & Society

Herbert Simon: Ben Jones:
Bounded Rationality Burden of Knowledge


The limits of our individual knowledge


Hsse and smarter planet 201200722 v4

Hsse and smarter planet 201200722 v4

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Viewers also liked

Viewers also liked (13)

Similar to Hsse and smarter planet 201200722 v4

Similar to Hsse and smarter planet 201200722 v4 (20)

More from ISSIP

More from ISSIP (20)

Recently uploaded

Recently uploaded (20)

Hsse and smarter planet 201200722 v4

Editor's Notes