IBM SPJIMR ACPS 2011_Smarter Services

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  • Let’s take a closer look at the environment enterprises of every size face today. Some of it can feel like relentless pressure, but in many instances, there’s a flip-side for growth and opportunity. Commoditization is factor for almost every industry, whether products or services Competition can today come from halfway around the world – and from companies that used to be partners, distributors, suppliers or from enterprises that were until recently in completely different channels and industries Just as competition can come from anywhere in the world, so can revenue, even for small companies. In fact, half of the exports from some of the world’s leading economies now go to emerging economies. Competition may come from unexpected sources, but nowadays so can new market opportunities – thanks to improved analysis, flexible distribution channels, and faster time to market capabilities. These opportunities are now available, in part, because of the increased integration of the world’s economies, societies, and information – but this same interrelated nature of the world means that when disasters and price fluctuations occur in part of the world, it can create effects almost immediately, almost anywhere. And, increasingly, alternative business models that can provide another industry player with competitive advantage have to be considered both a threat and an opportunity for an enterprise today -- depending on their flexibility and openness to change. In IBM’s recent global survey of CEOs, 87% predicted they needed to enact moderate to major change in their organizations in the next two years to address the pressures and opportunities before them. [Click on any of the categories on the left for more information about that item – OR – NEXT to advance presentation to demonstrate new capabilities available ]
  • For businesses and institutions everywhere, there have never been so many new possibilities at our disposal -- a whole new generation of tools, techniques and models has come of age: Innovation enablers that are more powerful, affordable and accessible than ever before. Consider just a few. Smart Objects : They’re so common, we almost take for granted how much smaller the components of computing have become and, at the same time, how much more powerful they are getting all the time. They’ve also become so low in cost, we can use them in almost everything. They’re so abundant, they’re almost disposable, which makes the decision to use these components even easier, even for throw-away purposes. Connectedness of Everything : Another capability that’s available today is the vast interconnected web of people and things. We already have a billion people online, and we’re approaching the point where we’ll have a trillion machines, devices, and other objects connected as well. Supercomputing for Everyone : Supercomputing is an area you would expect IBM to be talking about. But what’s really different today, however, is that you don’t need to be a big Fortune 500 company or a government to access the power of supercomputing. It’s now available to companies of every size, in every industry – even individuals. Information Put to Work : The amount of data that gets generated every day is just phenomenal. But it wasn’t until recently that we actually had the capability to make effective use of all that data. In fact, we’re quickly getting to a situation where enterprises are getting a handle on all their data and are very close to getting real business intelligence from it, thanks to new technology, advanced analytics and the mass adoption of standards. Just as networking standards made the Internet possible, so data and process standards in financial services, manufacturing, retail and virtually every other field are unlocking insights, answers — and revelations. Collaboration and Co-creation : New kinds of relationships in business are creating a new understanding of how intellectual capital can be created and managed in ways that’s very different from the old notions of idea creation and ownership. Marketplace for Expertise : We already know the importance of seeking economies of scale in growing a business. The next advance is going to be what might be considered “economies of expertise,” where the wide variety and availability of different kinds of skills and expertise can be accessed 24 hours a day, 7 days a week. Virtual Corporation : People use to talk about the virtual corporation about the same way they’d refer to the paperless office. And it was about as believable. But thanks to many of the capabilities mentioned here, it somehow went from hype to reality, almost overnight. [Click on any of the categories on the left for more information about that item – OR – NEXT to advance presentation to demonstrate different kinds of innovation]
  • All the capabilities we’ve just mentioned are the elements that enable innovation. But applying them is not, by itself, innovation. Innovation comes when you take those elements, integrate them with your products, your operations and your corporate culture. You combine them in a new ways with some new thinking about why you’re in business and what you have to offer your customers, and then you can start to tackle the things shown here on the left. We’ll walk through each of those. On the right, you can see how CEOs responded in IBM’s most recent global study. Who’s responsible for implementing innovation in the company? Over a third of the CEOs say they and their direct teams are. Others spread the responsibility around, and more than a quarter of CEOs admit that there really isn’t anyone driving an innovation agenda for their organizations. There isn’t necessarily a right answer here, though it obviously requires a commitment and a focus from corporate leaders, or else it just won’t happen. But it can’t just be another top-down initiative like “quality” and “excellence” and such things we’ve seen before. That’s because innovation requires collaboration, it requires openness and a willingness to “let go to grow.” In other words, every part of the company has a part to play if an enterprise is to be an innovation organization. And it’s only with a cross-company focus that you’re able to innovate the following ways... [NEXT to discuss innovation in products]
  • The amount of effort and expense put into innovation. Product-dominated firms spend the vast majority of their innovation efforts on Product Performance and associated components (the Product System). These two types of innovation alone represent nearly 80% of the total innovation level of effort for tangible goods. Peer Insight’s analysis of 100 service innovation projects reveals a much more even distribution of effort. No single type of innovation is off the chart the way Product Performance is for tangible products (gap A). The more even distribution of effort for service innovations is rooted in the very nature of services: they are intangible. For this reason, consumers of services need more cues to judge quality than when they are consuming goods. We are going to examine Innovation efforts in service businesses and look at a few case studies. For example, in the U.S., a person may get tax advice in a Wal-Mart or from a $500/hour tax attorney. To judge the quality of tax advice, therefore, we may need to think about price, timeliness, the use of outside experts, how professional the receptionist was, the conference room we sat in, and who referred them to us. These considerations are rooted in Business Model (price), Core Process (timeliness), Networking (outside experts), Customer Service (receptionist), Customer Experience (conference room), and Brand (referral). The example above may explain why service innovations devote more effort to the overall Customer Experience (gap B) than any other type of innovation. The second most common focus for service innovation is Core Process (gap C) because that is where the IT systems and service fulfillment processes are developed. IT can be thought of as the services “ factory”, since robust IT systems can make complex customer experiences less expensive and more reliable. Finally, services are far more likely than goods to innovate the Business Model (gap D). In the goods-era, the Channels, Business Models, and Value Networks were relatively fixed. But services environments are highly fluid, and the rise of the Internet has made distribution of information based services essentially free, enabling a number of new potential business models.
  • From our framework, we found three types, or paths to business model innovation. Industry innovators may move into a new industry (Virgin), redefine an existing one (Dell) or create an entirely new value chain (iPod/iTune) Revenue innovators develop new value propositions (Cirque du Soleil) and pricing models (Gillette) Enterprise innovators may become more integrated in their operations (Zara), or they may become more specialized by focusing on core functions and partnering for the others (Bharti). They also may fundamentally change the way they collaborate with partners. (P&G) We’ll explain each more thoroughly, but first let’s look at financial results of various approaches
  • Next, there’s the work that goes into defining a company’s current and target positions so a path can be created Assessments related to industry model innovation tackle these questions How can you leverage new / emerging business models in your industries? From other industries? How does new/emerging technology change the parameters? Are you a leader of follower when it comes to industry change? Revenue model questions Are there ways to reconfigure / re-allocated sources of revenue in your business? How can you sell elements of your services / offerings differently? How can you reconfigure value elements in your business? Enterprise model questions How can you select and leverage unique assets & capabilities in your business that provide competitive differentiation? What should you do yourself vs where should you partner for optimal value? A path is created by assessing answers in relation to most effective degree and timing of innovations.
  • IBM SPJIMR ACPS 2011_Smarter Services

    1. 1. IBM SPJIMR ACPS 2011 Services Innovation Zaheer Travadi - IBM General Business Geo Expansion June 19, 2011 Views presented here are individual and may not be endorsed by IBM
    2. 2. Agenda <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is </li></ul></ul><ul><ul><li>D4D </li></ul></ul><ul><ul><li>I2I </li></ul></ul><ul><ul><li>R=G; n=1 </li></ul></ul><ul><ul><li>- TMTCu Ver.2 </li></ul></ul>IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    3. 3. Why have Services become Predominant? IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services Need for trade in services Productivity Specialization Complexity
    4. 4. Economy has reached a New Era IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services A SMARTER PLANET INSTRUMENTED INTERCONNECTED INTELLIGENT PEOPLE COMPANIES, INSTITUTIONS, INDUSTRIES MAN-MADE SYSTEMS NATURE’S SYSTEMS Network Ubiquity More than a billion Internet users today Open Standards Widely-adopted technical and transaction specifications New Business Designs Horizontally-integrated operations + +
    5. 5. The Nature of Innovation is Changing Science & Technology People & Culture Business Models & Processes The marketplace requires innovation that combines people, technology and business value IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    6. 6. Enterprise Pressures & Opportunities commoditization pressures new/increased competition global market opportunities adjacent market opportunities global volatility & disruption competing business models 65% 13% 22% CEOs: Extent of fundamental change needed over next two years A lot Moderate Little or no IBM Global CEO Study 2006 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    7. 7. It’s time to take advantage of… smart objects the connectedness of everything supercomputing for everyone information put to work collaboration & co-creation the marketplace for expertise the virtual corporation IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    8. 8. It’s time to innovate products services business processes business models management and culture policy and society 35% CEOs/Leaders 24% Functional Mgrs 14% Division Mgrs 27% No Owner CEOs’ View: Primary Responsibility for Innovation Leadership IBM Global CEO Study 2006 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    9. 9. <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is – The 4 Is of Services </li></ul></ul><ul><ul><li>D4D </li></ul></ul><ul><ul><li>I2I </li></ul></ul><ul><ul><li>R=G; n=1 </li></ul></ul><ul><ul><li>- TMTCu Ver.2 </li></ul></ul>Agenda - 1 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    10. 10. Goods Vs Services Innovation <ul><li>All the smart people in our field work for us </li></ul><ul><li>To profit from R&D must discover, develop & distribute </li></ul><ul><li>We have get to market first to win if we innovate </li></ul><ul><li>We must control our IP and clearly define our Firm’s boundaries </li></ul><ul><li>Learn by “using” & “doing” </li></ul><ul><li>We must collaborate with smart people outside & inside </li></ul><ul><li>We need not originate research to benefit </li></ul><ul><li>Building better business model more important than first to market </li></ul><ul><li>We can profit from others’ use of our IP and benefit from theirs </li></ul><ul><li>Learn continuously through Feedback loops and client linkages </li></ul>IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Consumer Insight Consumer Experience Smarter Services
    11. 11. Goods Vs Services Innovation IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    12. 12. Service Marketing IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Courtesy: Fujitsu Smarter Services
    13. 13. T-shaped Adaptive Innovator IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services Social Science (People) Management (Business) Engineering (Technology) Depth Breadth
    14. 14. <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is </li></ul></ul><ul><ul><li>D4D – Design for Delight </li></ul></ul><ul><ul><li>I2I </li></ul></ul><ul><ul><li>R=G; n=1 </li></ul></ul><ul><ul><li>- TMTCu Ver.2 </li></ul></ul>Agenda - 2 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    15. 15. Service User Experience Design – Honeycomb Model Courtesy: Semantic Studios IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    16. 16. Services Blueprint Courtesy: Spire IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    17. 17. Democratization of Design IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services <ul><li>Increasingly capable & cheaper tools that require less skill and training to use </li></ul><ul><li>Make it easier for user-innovators to gain access to rich libraries of modifiable components that have been placed in the public domain </li></ul><ul><ul><li>Today users design sophisticated new products, services, music and art </li></ul></ul><ul><ul><li>Open source software movement </li></ul></ul><ul><ul><li>Web 2.0 explicitly recognizes users add value </li></ul></ul>
    18. 18. <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is </li></ul></ul><ul><ul><li>D4D </li></ul></ul><ul><ul><li>I2I – Idea to Implementation </li></ul></ul><ul><ul><li>R=G; n=1 </li></ul></ul><ul><ul><li>- TMTCu Ver.2 </li></ul></ul>Agenda - 3 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    19. 19. Deciding on your Services Innovation <ul><li>Check for Heuristic Affect – Has the team fallen in love with its proposal? </li></ul><ul><li>Check for Groupthink – How were the dissenting opinions in the team handled? </li></ul><ul><li>Check for Saliency Bias – could the diagnosis be overly influenced by an analogy? </li></ul><ul><li>Check for Confirmation Bias – Are credible alternatives proposed? </li></ul><ul><li>Check for Availability Bias – What if you had to make this decision later in time? </li></ul><ul><li>Check for Anchoring Bias – Do you know where the numbers came from? </li></ul><ul><li>Check for Halo Effect – Would a best practice replication be as successful? </li></ul><ul><li>Check for Sunk Cost Fallacy - Is the proposal based on a history of past decisions? </li></ul>IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    20. 20. Typology of Services Innovation In reality all 3 are interrelated as an iterative process IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services Business model innovation: Substantial organizational changes in how revenues and profits are earned Process/system innovation: Changes in how information exchanged between customer and service provider Asset innovation: Introduction of entirely new services as an Asset (service product)
    21. 21. Many efforts to transform services have often been hampered IBM SPJIMR ACPS 2011 Smarter Services <ul><li>January 9, 2012 </li></ul>Smarter Services Service Innovation Barriers Source: Forrester Research
    22. 22. Services Innovation Framework IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services “ The Ten Types of Innovation” by Larry Keeley, Doblin Inc.
    23. 23. “ Outside In” - Most Successful Areas for Services Innovation IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    24. 24. Approach to Services Innovation IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services Multi-disciplinary Globally Collaborative Open Venture Capitalists ISVs Business Partners University & Academia Thought Leaders Community Relationships Country General Managers Investors Legal Media IT Analysts Alumni Standards Bodies Gov’t Programs Keystone Clients Organization
    25. 25. <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is </li></ul></ul><ul><ul><li>D4D </li></ul></ul><ul><ul><li>I2I </li></ul></ul><ul><ul><li>R=G; n=1 – Business Model Innovation </li></ul></ul><ul><ul><li>- TMTCu Ver.2 </li></ul></ul>Agenda - 4 IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    26. 26. Business Model Innovation Smarter Services IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012
    27. 27. Assessing current and desired positions to create path High Low Revenue Model Industry Model Enterprise Model Moving from current to target position <ul><li>Are there ways to reconfigure / re-allocated sources of revenue in your business? </li></ul><ul><li>How can you sell elements of your services / offerings differently? </li></ul><ul><li>How can you reconfigure value elements in your business? </li></ul><ul><li>How can you select and leverage unique assets & capabilities in your business that provide competitive differentiation? </li></ul><ul><li>What should you do vs where should you partner for optimal value? </li></ul><ul><li>How can you leverage new / emerging business models in your industries? From other industries? </li></ul><ul><li>How does new/emerging technology change the parameters? </li></ul><ul><li>Are you a leader of follower when it comes to industry change? </li></ul>Current Position Target Position <ul><li>Degree of Innovation </li></ul><ul><li>How does the degree of innovation relate to your industry? How will it change in the future? </li></ul><ul><li>Do you have the right balance? </li></ul><ul><li>Timing of Innovation </li></ul><ul><li>Do you drive change in the industry, or is it imposed on you? Lead vs follow? </li></ul><ul><li>What are the disruptive technologies or models emerging today? </li></ul><ul><li>BMI Path </li></ul><ul><li>Which business model innovation paths are we / should you explore? </li></ul><ul><li>Which ones are most aligned with our industry, capabilities, vision? </li></ul>IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    28. 28. n=1; R=G IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services Courtesy: CK Prahlad Resources = Global Collaboration to co-create value N = 1 Consistent experience to all customers Scalability Technology Architecture Open doors in to Large Opportunities Drive excellence through Lean business processes Niche Well established Social Vision Engineered Experience Integrated workforce
    29. 29. <ul><ul><li>- Conversation Starter </li></ul></ul><ul><ul><li>4Is </li></ul></ul><ul><ul><li>D4D </li></ul></ul><ul><ul><li>I2I </li></ul></ul><ul><ul><li>R=G; n=1 </li></ul></ul><ul><ul><li>- TMTCu Ver.2 – Too Much To Confuse You!! </li></ul></ul>Agenda IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services
    30. 30. Where does Six Sigma fall short in Services Innovation January 9, 2012 Smarter Services <ul><li>Six Sigma Thinking </li></ul><ul><li>Eliminate variability (reductive) </li></ul><ul><li>Eliminate waste </li></ul><ul><li>Minimize cost </li></ul><ul><li>Map processes </li></ul><ul><li>Test hypotheses </li></ul><ul><li>Rely on large numbers to create certainty </li></ul><ul><li>Use process capability as final arbiter for decision making </li></ul><ul><li>Customer-Experience Led Innovation </li></ul><ul><li>Introduce variability when it creates preference </li></ul><ul><li>Allow the customer to judge what is waste </li></ul><ul><li>Tolerate additional cost as when it creates a preference </li></ul><ul><li>Map customer journeys </li></ul><ul><li>Explore important questions to create new hypotheses </li></ul><ul><li>Rely on numbers to uncover new possibilities </li></ul><ul><li>Use demonstrated customer behavior as the final arbiter </li></ul>IBM SPJIMR ACPS 2011 Smarter Services
    31. 31. Are there “scale laws” of service innovation? <ul><li>Moore’s Law underlies much of the information technology and business capability growth over the last half century. Are there analogous “predictable capability doubling laws” that apply in the realm of services? </li></ul><ul><li>It seems three improvement or learning curve laws that might be applicable in services: </li></ul><ul><ul><li>The more an activity is performed (time period doubling, demand doubling) the more opportunities there are to improve the process </li></ul></ul><ul><ul><li>The better an activity can be measured (sensor deployment doubling, sensor precision doubling, relevant measurement variables doubling) and modeled the more opportunities there are to improve the process </li></ul></ul><ul><ul><li>The more activities that depend on a common process (doubling potential demand points), the more likely investment can be raised to improve the process </li></ul></ul>IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 <ul><li>Example: Amazon’s Book Buying Recommendation Service Quality </li></ul><ul><li>The quality of the recommendations depends on accurate statistics – the more purchases made, the better the statistical estimates for recommendations </li></ul><ul><li>Example: Call Centers Query-Response Productivity and Quality </li></ul><ul><li>The speed and quality of call center responses can be improved significantly given accurate statistics about the kinds and number of queries that are likely to be received. </li></ul><ul><li>Example: New Service Offerings </li></ul><ul><li>The viability of new service offerings often depends on the scale (amount of demand) in adjacent market segments where service satisfaction is low enough to result in sufficient critical mass of defections to bootstrap the new offering. </li></ul><ul><li>Example: Predictable Education Gains (Student Knowledge, Teacher Satisfaction) </li></ul><ul><li>If eLearning can be used to shift 20% of routine teacher activities into automation that can be covered in half the normal time, freeing up 10% of teacher time each year to innovate and add new content or exploratory activities to the curriculum, then each year students will be learning more and teachers will have time to try new things </li></ul>Smarter Services
    32. 32. Andragogy from IBM <ul><li>IBM Institute for Business Value </li></ul><ul><ul><li>http://www.ibm.com/iibv </li></ul></ul><ul><li>IBM University </li></ul><ul><ul><li>http://www.ibm.com/university </li></ul></ul><ul><li>IBM Services Science Management & Engineering </li></ul><ul><ul><li>http://www.ibm.com/university/ssme </li></ul></ul><ul><li>IBM INNOV8 Game </li></ul><ul><ul><li>http://www-01.ibm.com/software/solutions/soa/innov8/full.html </li></ul></ul><ul><li>IBM CityOne Game* </li></ul><ul><ul><li>http://www.ibm.com/software/solutions/soa/innov8/cityone/index.jsp </li></ul></ul>
    33. 33. Thank you! Zaheer N Travadi IBM India General Business Manager - Geo Expansion Phone: 91-97404-00211 E-mail: [email_address] IBM SPJIMR ACPS 2011 Smarter Services January 9, 2012 Smarter Services

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