1. IBM University Programs worldwide, accelerating regional development (IBM Upward)Future Avenues InIndustrial Service Research and BusinessJim Spohrer, Director IBMIBM Almaden Research CenterSan Jose, CAFor: BestServ Forum, Helsinki, FinlandService Day Tuesday May 29, 2012 2012 IBM Corporation

2. Outline: Learning to learn - faster Growth of service offerings from product firms KPIs and value propositions Engineering culture and customer constraints Some Finnish businesses in Forbes 2000 list Future Avenues Europe 2020: Service Innovation Outcome-based & Life-Cycle (Irene Ng) Sector analysis (IBM CBM) Acquisitions & Universities (Ecosystems) New Directions - Accelerated Co-Learning Learning to invest (doing more with less) Learning to balance new measures (new competitive framework)2IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 3. Growth of service offerings from product firms Kowalkowski, C. (2011), The service function as a holistic management concept,Journal of Business & Industrial Marketing, Vol. 26 No. 7, Over the past decade, a growing amount of attention has been paid to serviceofferings in manufacturing, information technology, and other non-service sectorsaround the world. This phenomenon is often described as a goods-services transition,in which firms such as Caterpillar, Ericsson, Huawei, Siemens, and Tata haveincreased their provision of services. The phenomenon is often ascribed to industrycommoditization, which is characterized by increasing homogeneity of products,higher price sensitivity among customers, and lower switching costs (Reimann et al.,2010); it is also ascribed to opportunities to achieve competitive advantage throughcloser customer relationships and higher profit margins (e.g., Gebauer and Friedli,2005; Jacob and Ulaga, 2008; Matthyssens and Vandenbempt, 2008; Raddats andEasingwood, 2010). The increasing strategic importance of service offerings tomarket-leading industrial firms has made the ability to manage the service business ina manufacturing context ever more vital (Kowalkowski et al., 2011a; 2011b).Furthermore, the differences between an industrial, goods-dominant business logicand a coproduction/ creation, service-dominant business logic (Kingman-Brundage etal., 1995; Normann, 2001; Ramrez, 1999; Vargo and Lusch, 2008) have made itparticularly interesting to investigate the management of firms that produce goods aswell as services. 3 IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 4. KPIs and Value Propositions (see book Value Merchants)Value propositions coordinate & motivate resource access Second foundational premise ofservice science StakeholderMeasure Pricing BasicValuePerspectiveImpactedDecisionQuestionsProposition Service system entities calculate(the players) Reasoning value from multiple stakeholder perspectives Value propositions are the building1.Customer Quality Value Should we? Model of customer: Do blocks of service networks(Revenue) Based (offer it) customers want it? Is there amarket? How large? Growthrate? A value propositions can be viewed asa request from one service system toanother to run an algorithm (the value ProductivityCost Model of self: Does it play to2.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 stakeholderperspectives are: customer, provider, 3.AuthorityComplianceRegulated 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. InIntroduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..4 IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 5. Some Finland Businesses on Forbes Global 20005 IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 6. Europe 2020 aging population welfare servicesunder pressure climate change andsustainable growth.6IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 7. Learning to invest Learning To Invest Do It Invent It Exploitation Exploration RunTransform InnovateOperations L Internal Incremental Maintenance Copy ItExternalRadical InsuranceInteractionSuper-RadicalMarch, 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.7IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 8. New competitiveframework tobalance measures Innovativeness Equity Sustainability Resiliency8IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 9. Industrial and Business Services - BestServ Juha Hulkkonen Welcome and why service? (1985) Service level economic cycles; Long-term relationships; profitable; growth; new job opportunities; closer to clients; smarter business Jarmo Hyvonen Toward a service mindset custom solutions (1981) Fastems; Automation solutions; Machine tools; 8760 annual production hours; 1500 robot application & flexible manufacturing systems; Customized tools co-created with customers; Risto Gylden Rapid prototyping listening to co-create value Engineering company; Power and productivity for a sustainable world; Deal with infrastructure; Stage-gate model; Service product development is based on listening and communications; Measuring service value;9IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation 10. Panel: History and future from BestServ experience Petri Kalliokoski Feasibility study; Report; Results Hannu Tuominen Beverage company; Visala; Juha Hulkkonen Strategy, development, execution; tough period survival; culture change and people skills Iiro Salkari Multidisciplinary10 IBM UPward (University Programs worldwide accelerating regional development) 2012 IBM Corporation