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© 2011 IBM Corporation
IBM University Programs World Wide (IBM UP)
Regional Innovation Ecosystems & Service Science
Dr. James (“Jim”) C. Spohrerspohrer@us.ibm.comInnovation Champion and Director, IBM University Programs WWRIT Service Innovation Event, Rochester, NY, USA, April 14th, 2011
Working Together to Build a Smarter Planet
2 © 2011 IBM CorporationIBM UP (University Programs) WW
Outline Stimulus: Service Growth
– The World (Rethinking Product-Service Systems)
– IBM (Overview, Centennial, Watson, Smarter Planet)
Response: Service Science Priorities– Cambridge University Report (2007, 2008, 2011)
– UK Royal Society Report (2009)
– Arizona State University Report (2010)
– Handbook of Service Science (2011)
– Open Services Innovation (2011)
Evolution: Regional Innovation Ecosystems– What is a “Smarter Planet”? “Quality of Life” Improvement?
• Quality of Life: Our growing dependence on networks of interconnected service systems
– Local optimization does not equal global optimization– Local problems can cascade into global significance– Global competition for talent (“vote with feet”)
– How are Cities & Universities Linked? What Jobs & Skills?
– How to visualize Service Science? Systems & Knowledge?
– What is a Holistic Service System (HSS)? Value-CoCreation (VCC)?
– Where is the “Real Science”? VCC Architectures & HSS
3 © 2011 IBM CorporationIBM UP (University Programs) WW
Regional Innovation Ecosystems: NY StateTop Employers (Healthy, Frugal, Wealthy, Innovative, Wealthy, Wise…)
4 © 2011 IBM CorporationIBM UP (University Programs) WW
42%6433 3 1.4Germany
37%261163 2.1Bangladesh
19%201070 1.6Nigeria
45%6728 5 2.2Japan
64%692110 2.4Russia
61%661420 3.0Brazil
34%391645 3.5Indonesia
23%7623 1 5.1U.S.
35%23176014.4India
142%29224925.7China
40yr ServiceGrowth
S%
G%
A %
Labor% WW
Nation
World’s Large Labor ForcesA = Agriculture, G = Goods, S = Service
20102010
CIA Handbook, International Labor OrganizationNote: 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 systemsthat create benefits for customers
and sustainably improve quality of life.
Service Growth: The World
5 © 2011 IBM CorporationIBM UP (University Programs) WW
Factory as a Product-Service Systemhttp://www.youtube.com/watch?v=nd5WGLWNllA
6 © 2011 IBM CorporationIBM UP (University Programs) WW
Rethinking “Product-Service Systems”F
B
ServiceSystem Entity
Product-Service-System
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
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SSE
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SSE
B
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SSE
B
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SSE
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ServiceBusiness
ProductBusiness
Front-Stage Marketing/Customer Focus
Back-Stage Operations/Provider Focus
Ba
sed
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vitt
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(1
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Pro
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ach
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e.g., Citibank
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od
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7 © 2011 IBM CorporationIBM UP (University Programs) WW
0
20
40
60
80
100
Year
Reven
ue (
$B
)
Services
Software
Systems
Financing
Service Growth: IBM
B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc.
What do IBM Service Professionals Do? Run things on behalf of customers,help Transform customers to adopt best practices, and Innovate with customers.
Revenue Growth by Segment
8 © 2011 IBM CorporationIBM UP (University Programs) WW
IBM operates in 170 countries around the globe
IBM has 426,000 employees worldwide 2010 Financials
Revenue - $ 99.9B Net Income - $ 14.8B EPS - $ 11.52 Net Cash - $11.7B
21% of IBM’s revenue in growth market countries; growing at 13% in late 2010
Number 1 in patent generation for 18 consecutive years ; 5,896 US patents awarded in 2010
More than 40% of IBM’s workforce conducts business away from an office
5 Nobel Laureates
Smarter
Planet9 time winner of the President’s National Medal of Technology & Innovation - latest award for Blue Gene Supercomputer
9 © 2011 IBM CorporationIBM UP (University Programs) WW
IBM Centennial – 100 Years of Innovation!
IBM Centennial Film: 100 People & 100 Yearshttp://www.youtube.com/watch?v=39jtNUGgmd4
© 2011 IBM Corporation
IBM University Programs World Wide (IBM UP)
StakeholderPriorities
Education
Research
Business
Government
StakeholderPriorities
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 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 existingdisciplines
Progress in academic studies and practical tools
Gaps in knowledge and skills
Service Science
To discover the underlying principles of complex service systems
Systematically create, scale and improve systems
Foundations laid by existingdisciplines
Progress in academic studies and practical tools
Gaps in knowledge and skills
Develop programmes & qualifications
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
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
Skills& Mindset
Knowledge& Tools
Knowledge& Tools
Employment& Collaboration
Employment& Collaboration
Policies & Investment
Policies & Investment
Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015
Develop and improve service innovation roadmaps, leading to a doubling of investment in service education and research by 2015
Encourage an interdisciplinary approach
Encourage an interdisciplinary approach
The white paper offers a starting point to -
The white paper offers a starting point to -
Priorities: Succeeding through Service Innovation - A Framework for Progress(http://www.ifm.eng.cam.ac.uk/ssme/)
Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008)
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions
12 © 2011 IBM CorporationIBM UP (University Programs) WW
Priorities: Research Priorities: Research Framework Framework
for the Science of Servicefor the Science of ServicePervasive Force: Leveraging Technology to Advance Service
Strategy Priorities
Execution Priorities
Fostering ServiceInfusion and Growth
Improving Well-Being through
Transformative Service
Creating and Maintaining a Service Culture
Stimulating Service Innovation
Enhancing Service Design
Optimizing Service Networks and Value Chains
Effectively Branding and Selling Services
Enhancing the Service Experience through
Cocreation
Measuring andOptimizing the Value of
Service
Development Priorities
Source: Global Survey of Service Research Leaders (Ostrom et al 2010)
13 © 2011 IBM CorporationIBM UP (University Programs) WW
UK Royal Society Report: Science in Service Innovationhttp://royalsociety.org/Hidden-wealth-The-contribution-of-science-to-service-sector-innovation/
14 © 2011 IBM CorporationIBM UP (University Programs) WW
What is Smarter Planet? Harmonized smarter product-service systems.
INSTRUMENTED
We now have the ability to measure, sense and see the exact condition of practically everything.
INTERCONNECTED
People, systems and objects can communicate
and interact with each other in entirely new
ways.
INTELLIGENT
We can respond to changes quickly and accurately, and get better results
by predicting and optimizing
for future events.
WORKFORCE
PRODUCTS
SUPPLY CHAIN
COMMUNICATIONS
TRANSPORTATION BUILDINGS
IT NETWORKS
15 © 2011 IBM CorporationIBM UP (University Programs) WW
Communication$ 3.96 Tn
Transportation$ 6.95 Tn
Leisure / Recreation / Clothing
$ 7.80 Tn
Healthcare$ 4.27 Tn
Food$ 4.89 Tn
Infrastructure$ 12.54 Tn
Govt. & Safety$ 5.21 Tn
Finance$ 4.58 Tn
Electricity$ 2.94 Tn
Education$ 1.36 Tn
Water$ 0.13 Tn
Global system-of-systems$54 Trillion
(100% of WW 2008 GDP)
Same IndustryBusiness SupportIT SystemsEnergy ResourcesMachineryMaterials Trade
Legend for system inputsNote:1. Size of bubbles represents
systems’ economic values2. Arrows represent the strength of
systems’ interaction
Source: IBV analysis based on OECD
Our planet is a complex, dynamic, highly interconnected $54 Trillion system-of-systems (OECD-based analysis)
This chart shows ‘systems‘ (not ‘industries‘)
Our planet is a complex system-of-systems
1 Tn
16 © 2011 IBM CorporationIBM UP (University Programs) WW
Economists estimate, that all systems carry inefficiencies of up to $15 Tn, of which $4 Tn could be eliminated
Global economic value of
System-of-systems
$54 Trillion100% of WW 2008 GDP
Inefficiencies$15 Trillion28% of WW 2008 GDP
Improvement potential
$4 Trillion7% of WW 2008 GDP
How to read the chart:
For example, the Healthcare system‘s value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can be eliminated (= 34% x 42%).
We now have the capabilities to manage a system-of-systems planet
Source: IBM economists survey 2009; n= 480
System inefficiency as % of total economic value
Impr
ovem
ent
pote
ntia
l as
% o
f sy
stem
inef
ficie
ncy
Education1,360
Building & Transport Infrastructure
12,540
Healthcare4,270
Government & Safety5,210
Electricity2,940
Financial4,580
Food & Water4,890
Transportation (Goods & Passenger)
6,950
Leisure / Recreation /
Clothing7,800
Communication3,960
Analysis of inefficiencies in the planet‘s system-of-systems
Note: Size of the bubble indicate absolute value of the system in USD Billions
42%
34%
This chart shows ‘systems‘ (not ‘industries‘)
15%
20%
25%
30%
35%
40%
15% 20% 25% 30% 35% 40% 45%
17 © 2011 IBM CorporationIBM UP (University Programs) WW
Well Being Index January 10, 2011
By Mark Whitehouse at mark.whitehouse@wsj.com
One approach is to enhance GDP with other objective factors such as inequality, leisure and life expectancy. In a paper presented Saturday at the American Economic Association meeting, Stanford economists Peter Klenow and Charles Jones found that doing so can make a big difference.
Making everybody work 120 hours a week could radically boost a country's GDP per capita, but it wouldn't make people happier. Removing pollution limits could boost GDP per hour worked, but wouldn't necessarily lead to a world we'd want to live in.
18 © 2011 IBM CorporationIBM UP (University Programs) WW
What improves Quality-of-Life? Product-Service System Innovations
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
2/7/42/1/1
7/6/11/1/0
5/17/27
1/0/2
24/24/1
2/20/247/10/3
5/2/2
3/3/10/0/0
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)”
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Regional Innovation Ecosystems& Holistic Service Systemshttp://www.service-science.info/archives/1056
Examples: Nations, States, Cities, Universities, Luxury Hotels, Cruise Ships, Households
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
Nation
State/Province
City/Region
HospitalMedicalResearch
UniversityCollegesK-12
LuxuryResortHotels
Family(household)
Person(professional)
For-profits
Non-profits
Start-Ups
~25-50% of start-ups are newIT-enabled service offerings
SaaSPaaSIaaS
A Day Made of Glass: Corninghttp://www.youtube.com/watch?v=w12B02eJpaM&feature=fvst
20 © 2010 IBM CorporationIBM University Programs (IBM UP) WW
A. Flow of things1. Transportation: Traffic congestion; accidents and injury
2. Water: Access to clean water; waste disposal costs
3. Food: Safety of food supply; toxins in toys, products, etc.
4. Energy: Energy shortage, pollution
5. Information: Equitable access to info and comm resourcesB. Human activity & development
6. Buildings: Inefficient buildings, environmental stress (noise, etc.)
7. Retail: Access to recreational resources
8. Banking: Boom and bust business cycles, investment bubbles
9. Healthcare: Pandemic threats; cost of healthcare
10. Education: High school drop out rate; cost of educationC. Governing
11. Cities: Security and tax burden
12. States: Infrastructure maintenance and tax burden
13. Nations: Justice system overburdened and tax burden
Cities as Holistic Service Systems: All the systems
Example: Singapore
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Universities as Holistic Service Systems: All the systems
A. Flow of things1. Transportation: Traffic congestion; parking shortages.
2. Water: Access costs; reduce waste
3. Food: Safety; reduce waste.
4. Energy: Access costs; reduce waste
5. Information: Cost of keeping up best practices.B. Human activity & development
6. Buildings: Housing shortages; Inefficient buildings
7. Retail: Access and boundaries. Marketing.
8. Banking: Endowment growth; Cost controls
9. Healthcare: Pandemic threat. Operations.
10. Education: Cost of keeping up best practices..C. Governing
11. Cities: Town & gown relationship.
12. States: Development partnerships..
13. Nations: Compliance and alignment.
22 © 2011 IBM CorporationIBM UP (University Programs) WW
Luxury Hotels as Holistic Service Systems: All the systemshttp://www.youtube.com/watch?v=Hm7MeZlS5fo
23 © 2011 IBM CorporationIBM UP (University Programs) WW
University & Regional Innovation Ecosystems (Why?)
$
Cities & Public Safety
Government Service to Individuals & Institutions
Education
Transportation
Energy
ICT (Computing & Communications)
Retail & Hospitality
Food & Products
Health
Building
Finance
University:
The Heart of
Regional Innovation
Ecosystems
School ofPublic Policy
School ofEngineering
School ofBusinessMngmnt
School ofMedicine
School ofEducation
School ofArchitecture
School ofUrban
Planning
School ofHospitality
School ofInformation
School ofScience &
Arts
University:The Heart of
Regional InnovationEcosystems
Incubator& Start-Ups
24 © 2011 IBM CorporationIBM UP (University Programs) WW
Universities & Regional Innovation Ecosystems (Data)% GDP and % Top-500-Universities
Japan
ChinaGermany
France
United KingdomItaly
Russia SpainBrazilCanada
IndiaMexico AustraliaSouth Korea
NetherlandsTurkey
Sweden
y = 0,7489x + 0,3534R² = 0,719
0
1
2
3
4
5
6
7
8
9
0 1 2 3 4 5 6 7 8 9
% g
loba
l G
DP
% top 500 universities
Strong Correlation (2009 Data): National GDP and University Rankingshttp://www.upload-it.fr/files/1513639149/graph.html
25 © 2011 IBM CorporationIBM UP (University Programs) WW
UNIVERSITIES:Research Centers & Real-World Systems
CITIES/METRO REGIONS:Universities Key to Long-Term Economic Development
Accelerating Regional Innovation: Universities as “Living Labs” for Host Cities
26 © 2011 IBM CorporationIBM UP (University Programs) WW
Edu-Impact.Com: Growing Importance of Universities with Large, Growing Endowments
“When we combined the impact of Harvard’s direct spending on payroll, purchasing and construction – the indirect impact of University spending – and the direct and indirect impact of off-campus spending by Harvard students – we can estimate that Harvard directly and indirectly accounted for nearly $4.8 billion in economic activity in the Boston area in fiscal year 2008, and more than 44,000 jobs.”
27 © 2011 IBM CorporationIBM UP (University Programs) WW
Growing Importance of HPC to Universities
HPC = High Performance Computing (2006 NSF Data)
$0
$20
$40
$60
$80
$100
$120
Fund
ing
in M
illio
ns o
f Dol
lars
$0
$20
$40
$60
$80
$100
$120
Fund
ing
in M
illio
ns o
f Dol
lars
Average NSF funding: $30,354,000
Average NSF funding: $7,781,000
95 of Top NSF-funded Universities with HPC 98 of Top NSF-funded Universities w/out HPC
With HPC Without HPC
Journal of Information Technology, Volume 10, Issue 2 (accepted) www.jiti.net
28 © 2011 IBM CorporationIBM UP (University Programs) WW
Urban-Age.Net
Currently, the world’s top 30 cities generate 80% of the world’s wealth.The Urban Age
For the first time in history more than 50% the earth’s population live in cities - by 2050 it will be 75%The Endless City
31
University Trend: “Sister Campuses” (People Flows)
University sub-systemsDisciplines in Schools (circles)Innovation Centers (squares)
E.g., CMU Website (2009)“Research Centers:where it all happens – to solve real-world problems”
Disciplines in SchoolsAward degreesSingle-discipline focusResearch discipline problems
Innovation Centers (ICs)Industry/government sponsorsMulti-disciplinary teamsResearch real-world systems
D
D
D
D
D
D
Engine
ering
Schoo
l
Social
Scie
nces
,
Human
ities
Professional
Studies
Business School
water & waste transportation
health energy/grid
e-government
Science &
Mathem
atics
I-School
Design
food & supply chain
32
City Trend: “Sister Cities” (People Flows)World as System of SystemsWorld (light blue - largest)Nations (green - large)Regions (dark blue - medium)Cities (yellow - small)Universities (red - smallest)
Cities as System of Systems-Transportation & Supply Chain-Water & Waste Recycling-Food & Products ((Nano)-Energy & Electricity-Information/ICT & Cloud (Info)-Buildings & Construction-Retail & Hospitality/Media & Entertainment-Banking & Finance-Healthcare & Family (Bio)-Education & Professions (Cogno)-Government (City, State, Nation)
Nations: Innovation Opportunities- GDP/Capita (level and growth rate)- Energy/Capita (fossil and renewable)
Developed MarketNations
(> $20K GDP/Capita)
Emerging MarketNations
(< $20K GDP/Capita)
IBM UP WW: Tandem Awards: Increasing university linkages (knowledge exchange interactions)
33 © 2010 IBM CorporationIBM UP (University Programs) WW
What is a Service System? What is Service Science? …customers just name <your favorite provider> …researchers just name <your favorite discipline>
Economics & Law
Design/ Cognitive Science Systems
Engineering
OperationsComputer Science/
Artificial Intelligence
Marketing
“a service system is a human-made systemto improve customer-provider interactions,
or value-cocreation”
“service science isthe interdisciplinary study of
service systems &value-cocreation”
34 © 2011 IBM CorporationIBM UP (University Programs) WW
How to visualize service science? The Systems-Disciplines MatrixSystems that focus on flows of things Systems that governSystems 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
citysecure
statescale
nationlaws
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
stake
holders Customer
Provider
Authority
Competitors
resources
People
Technology
Information
Organizations
change History
(Data Analytics)
Future(Roadmap)
value
Run
Transform(Copy)
Innovate(Invent)
Starting Point 1: The Stakeholders (As-Is)
Starting Point 2: Their Resources (As-Is)
Change Potential: Thinking (Has-Been & Might-Become)
Value Realization: Doing (To-Be)
disciplines
systems
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What is the skills goal? T-Shaped professionals, ready for T-eamwork!
Many disciplines(understanding & communications)
Many systems(understanding & communications)
Deep in one discipline
(an
alytic th
inkin
g &
pro
ble
m so
lving
)
Deep in one system
(an
alytic th
inkin
g &
pro
ble
m so
lving
)
Many team-oriented service projects completed(resume: outcomes, accomplishments & awards)
SSME+D = Service Science, Management, Engineering + Design
36 © 2011 IBM CorporationIBM UP (University Programs) WW
Jobs: Expert Thinking & Complex Communications
-10
-5
0
5
10
15
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.
Based on U.S. Department of Labor’ Dictionary of Occupational Titles (DOT)
Expert Thinking(deep)
Complex Communication(broad)
Routine Manual
Non-routine Manual
Routine Cognitive
Increasing usage of job descriptive terms
37 © 2011 IBM CorporationIBM UP (University Programs) WW
Job Roles: IBM Building Smarter Enterprises & A Smarter Planethttps://jobs3.netmedia1.com/cp/find.ibm.jobs/location/
1. Consultant(trusted advisor to customer)
- a value proposition to addressproblems or opportunities and
enhance value co-creationrelationships
2. Sales- a signed contract that
defines work, outcomes, solution,rewards and risks
for all parties
4. Project Manager(often with co-PM from customer side)
a detailed project plan thatbalances time, costs, skills availability,
and other resources, as well asadaptive realization of plan
3. Architect(systems engineer, IT & enterprise architect)
-An elegant solution design that satisfiesfunctional and non-functional
constraints across thesystem life-cycle
5. Specialists(systems engineer, Research, engineer,
Industry specialist, application, technician, data, analyst, professional, agent)
-a compelling working system(leading-edge prototype systems
from Research)
~10%
~10% ~5%
~5%
~45%
6. Enterprise OperationsAdministrative Services, Other, Marketing & Communications
Finance, Supply Chain, Manufacturing, Human Resources, Legal,
General Executive Management
~25%
IBM Employees1. ~10% Consultant2. ~10% Sales3. ~5% Architect4. ~5% Project Manager5. ~45% Specialists6. ~25% Enterprise Operations
Project Mix From 90-10 to 80-20:B2B – Business to BusinessB2G – Business to Government
38 © 2011 IBM CorporationIBM UP (University Programs) WW
Teaching SSME+D
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 ConstraintsBy John Ricketts, IBM
Service Management:Operations, Strategy,
and Information Technology
By Fitzsimmons and Fitzsimmons, UTexas
Service Is Front Stage:Positioning services for
value advantageBy James Teboul, INSEAD
39 © 2011 IBM CorporationIBM UP (University Programs) WW
World Population & Product-Service System Scaling
40 © 2011 IBM CorporationIBM UP (University Programs) WW
L
Product-Service Systems as Learning Systems
Learning Systems(“Life = Choices”)
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 bethe best,
learn fromthe rest”
“Doublemonetize,
internal winand ‘sell’ to
external”
“Try tooperateinside
thecomfortzone”
Linda Sanford, IBM “Let Go To Grow”
41
How entities (service systems) learn and change over timeHistory and future of Run-Transform-Innovate investment choices
• Diverse Types– Persons (Individuals)
• Families– Regional Entities
• Universities• Hospitals• Cities• States/Provinces• Nations
– Other Enterprises• Businesses• Non-profits
• Learning & Change– Run = use existing
knowledge or standard practices (use)
– Transform = adopt a new best practice (copy)
– Innovate = create a new best practice (invent)
Transform
Innovate
Invest in each Invest in each type of changetype of change
Run
March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.
exploitexplore
42 © 2011 IBM CorporationIBM UP (University Programs) WW
Smarter = Sustainable Innovation (reduce waste, expand capabilities)
Computational System
Building Smarter TechnologiesRequires investment roadmap
Service Systems: Stakeholders & Resources
1. People 2. Technology3. Shared Information4. Organizations
connected by win-win value propositions
Building Smarter Universities & CitiesRequires investment roadmap
45 © 2011 IBM CorporationIBM UP (University Programs) WW
Corning: A Day Made of Glasshttp://www.youtube.com/watch?v=6Cf7IL_eZ38
46
Time
ECOLOGY
14BBig Bang
(NaturalWorld)
10KCities
(Human-MadeWorld)
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 engine200M
bees (socialdivision-of-labor)
60
transistor
Where is the “Real Science”?In the interdisciplinary sciences that study the natural and human-made worlds… Unraveling the mystery of evolving hierarchical-complexity in new populations…To discover the world’s structures and mechanisms for computing non-zero-sum
Value-CoCreation (VCC) Architectures & Holistic Service Systems (HSS)
47 © 2011 IBM CorporationIBM UP (University Programs) WW
Thank-You! Questions?
Dr. James (“Jim”) C. SpohrerDirector, IBM University Programs (IBM UP) WWspohrer@us.ibm.com
“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
48 © 2011 IBM CorporationIBM UP (University Programs) WW
Service System Ecology: Conceptual Framework
Resources: People, Technology, Information, Organizations Stakeholders: Customers, Providers, Authorities, Competitors Measures: Quality, Productivity, Compliance, Sustainable Innovation Access Rights: Own, Lease, Shared, Privileged
Ecology(Populations & Diversity)
Entities(Service Systems)
Interactions(Service Networks)
Outcomes(Value Changes)
Value Proposition (Offers/Reconfig/Risks/Incentives)
Governance Mechanism (Rules/Constraints/Penalties)
Access Rights(Relationships)
Measures(Rankings of Entities)
Resources(Roles in Processes, Specialization)
Stakeholders(Valuation Perspectives)
win-win
lose-lose win-lose
lose-win
Identity(Aspirations/Lifecycle)
Reputation(Opportunities/Variety)
prefer sustainable non-zero-sum
outcomes
© 2005 IBM Corporation49 © 2010 IBM Corporation
Service-dominant logic
Service is the application of competences for the benefit of another entity
Service is exchanged for service
Value is always co-created
Goods are appliances for delivery
All economies are service economies
All businesses are service businesses
Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
Resource Integrator/Beneficiary
(“Firm”)
Resource Integrator/Beneficiary
(“Customer”)
Value
Co-
crea
tion
Value Configuration
Den
sity
© 2005 IBM Corporation50 © 2010 IBM Corporation
What is value?
Value depends on the capabilities a system has to survive and create beneficial change in its environment.
Taking advantage of the service another system offers means incorporating improved capabilities.
Value can be defined as system improvement in an environment.
All ways that systems work together to improve or enhance one another’s capabilities can be seen as being value creating.
Vargo, S. L., Maglio, P. P., and Akaka, M. A. (2008). On value and value co-creation: A service systems and service logic perspective. European Management Journal, 26(3), 145-152.
© 2005 IBM Corporation51 © 2010 IBM Corporation
What is a service system?
Service involves at least two entities applying competences and making use of individual and shared resources for mutual benefit.
We call such interacting entities service systems.
A. Service Provider
• Individual• Organization• Public or Private
C. Service Target: The reality to be transformed or operated on by A, for the sake of B
• People, dimensions of• Business, dimensions of• Products, goods and material systems• Information, codified knowledge
B. Service Client
• Individual• Organization• Public or Private
Forms ofOwnership Relationship
(B on C)
Forms ofService Relationship(A & B co-create value)
Forms ofResponsibility Relationship
(A on C)
Forms ofService Interventions
(A on C, B on C)
Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.
© 2005 IBM Corporation52 © 2010 IBM Corporation
Resources are the building blocks of service systems
Formal service systems can contractInformal service systems can promise/commit
Trends & Countertrends (Evolve and Balance):Informal <> FormalSocial <> Economic
Political <> LegalRoutine Cognitive Labor <> ComputationRoutine Physical Labor <> Technology
Transportation (Atoms) <> Communication (Bits)Qualitative (Tacit) <> Quantitative (Explicit)
First foundational premise of service science
Service system entitiesdynamically configure
four types of resources
The named resource isPhysical
orNot-Physical
(physicists resolve disputes)
The named resource hasRights
orNo-Rights
(judges resolve disputeswithin their jurisdictions)
Physical
Not-Physical
Rights No-Rights
2. Technology
4.. SharedInformation
1. People
3. Organizations
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
© 2005 IBM Corporation53 © 2010 IBM Corporation
Value propositions are the building blocks of service system networks
Second foundational premise of service science
Service system entitiescalculate value from multiple
stakeholder perspectives
A value propositions canbe viewed as a request from
one service system to anotherto run an algorithm
(the value proposition)from the perspectives of
multiple stakeholders accordingto culturally determined
value principles.The four primary stakeholderperspectives are: customer,
provider, authority, and competitor
StakeholderPerspective(the players)
MeasureImpacted
PricingDecision
BasicQuestions
ValuePropositionReasoning
1.Customer Quality(Revenue)
ValueBased
Should we?(offer it)
Model of customer: Do customers want it? Is there a market? How large? Growth rate?
2.Provider Productivity(Profit)
CostPlus
Can we?(deliver it)
Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?
3.Authority Compliance(Taxes andFines)
Regulated May we?(offer anddeliver it)
Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?
4.Competitor(Substitute)
Sustainable Innovation(Marketshare)
Strategic Will we?(invest tomake it so)
Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?
Value propositions coordinate & motivate resource access
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
© 2005 IBM Corporation54 © 2010 IBM Corporation
Access rights are the building blocks of service system ecology(culture and shared information)
service = value-cocreationB2BB2CB2GG2CG2BG2GC2CC2BC2G***
provider resourcesOwned OutrightLeased/ContractShared Access
Privileged Access
customer resourcesOwned OutrightLeased/ContractShared Access
Privileged Access
OO
SA
PA
LC
OO
LC
SA
PA
S AP C
Competitor Provider Customer Authority
value-proposition change-experience dynamic-configurations
(substitute)
time
Third foundational premise of service science
Service system entitiesreconfigure access rights to
resources by mutually agreed tovalue propositions
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..
© 2005 IBM Corporation55 © 2010 IBM Corporation
Premises of service science: What service systems do
Service system entitiesdynamically configure (transform)
four types of resources
Service system entitiescalculate value from multiple
stakeholder perspectives
Service system entitiesreconfigure access rights
to resources by mutually agreed to value propositions
S AP C
Physical
Not-Physical
Rights No-Rights
2. Technology
4.. SharedInformation
1. People
3. Organizations
StakeholderPerspective
MeasureImpacted
Pricing Questions Reasoning
1.Customer Quality Value Based
Should we? Model of customer: Do customers want it?
2.Provider Productivity CostPlus
Can we? Model of self: Does it play to our strengths?
3.Authority Compliance Regulated May we? Model of authority: Is it legal?
4.Competitor Sustainable Innovation
Strategic Will we? Model of competitor: Does it put us ahead?
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
56 © 2011 IBM CorporationIBM UP (University Programs) WW
Understanding the Human-Made World
See Paul Romer’s Charter Cities Video: http://www.ted.com/talks/paul_romer.html
Also see: Symbolic Species, DeaconCompany of Strangers, SeabrightSciences of the Artificial, Simon
57 © 2011 IBM CorporationIBM UP (University Programs) WW
Why 13 types of service systems? K-12 STEM and the human-made world
“Imagine a better service system, and use STEM language to explain why it is better”STEM = Science, Technology, Engineering, and MathematicsSee 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 (Bio)
– 9 - Education & Work Life/Jobs & Entrepreneurship (Cogno)
– 10 – City (Government)
– 11 – State/Region (Government)
– 12 – Nation (Government)
– Higher Ed – T-shaped teamwork, deep & broad education
– Professional Life – T-shaped teamwork, series of projects
Systemsthat focus onGoverning
Systemsthat focus on
Human Activities andDevelopment
Systemsthat focus onFlow of things
59 © 2011 IBM CorporationIBM UP (University Programs) WW59
Vision for the Educational Continuum: Individuals & Institutions Learning
Any Device Learning
TECHNOLOGY IMMERSION
PERSONAL LEARNING PATHS
Student-Centered Processes
KNOWLEDGE SKILLS
Learning Communities
GLOBAL INTEGRATION
Services Specialization
ECONOMIC ALIGNMENT
Systemic View of Education
Intelligent• Aligned Data• Outcomes Insight
Instrumented• Student-centric• Integrated Assessment
Interconnected• Shared Services• Interoperable Processes
ContinuingEducation
HigherEducation
SecondarySchool
PrimarySchool
WorkforceSkills
Individuals Learning Continuum TheEducationalContinuum
Institutio
ns Learn
ing Contin
uum
EconomicSustainability
http://www-935.ibm.com/services/us/gbs/bus/html/education-for-a-smarter-planet.html
60 © 2011 IBM CorporationIBM UP (University Programs) WW
Fun: CityOne Game to Learn “CityInvesting”Serious Game to teach problem solving for real issues in key industries, helping companies to learn how to work smarter. Energy, Water, Banking, Retail
http://www.ibm.com/cityone
61 © 2011 IBM CorporationIBM UP (University Programs) WW
Priority 1: Urban Sustainability & Service Innovation Centers
A. Research: Holistic Modeling & Analytics of Service SystemsModeling and simulating cities will push state-of-the-art capabilities for planning interventions in
complex system of service systems
Includes maturity models of cities, their analytics capabilities, and city-university interactions
Provides an interdisciplinary integration point for many other university research centers that study one specialized type of system
Real-world data and advanced analytic tools are increasingly available
B. Education: STEM (Science Tech Engineering Math) Pipeline & LLLCity simulation and intervention planning tools can engage high school students and build STEM
skills of the human-made world (service systems)
Role-playing games can prepare students for real-world projects
LLL = Life Long Learning
C. Entrepreneurship: Job CreationCity modeling and intervention planning tools can engage university
students and build entrepreneurial skills
Grand challenge competitions can lead to new enterprises
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