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©Kanji Ueda

Value Creation and Decision Making toward Sustainable Society

Kanji UedaVice President, The National Institute of Advanced Industrial Science and Technology

Emeritus Professor, The University of Tokyo

Manufuture 2009, Göteborg

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©Kanji Ueda

Outline of the National Institute ofAdvanced Industrial Science and Technology

AIST Network throughout Japan and networks throughout the world

More than 8,000 researchers including about 5,000 visiting researchers

The largest National Institute in Japan

Active International Partnerships

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Developmentand Application

Acquisitionand Clarificationof Knowledge

Type-IBasic Research

Basic Researchfor Science & Technology

Research forLong-Term

Government Policies

Advanced Research

Geological Surveyand AppliedGeoscience

Metrology andMeasurement

Science

Life Science andBiotechnology

Environmentand Energy

Nanotechnology,Materials andManufacturing

InformationTechnology

and ElectronicsUniting and

Application ofKnowledge

Type-IIBasic Research

Six specialized fields; • Life Science and Biotechnology • Information Technology and Electronics• Nanotechnology, Materials and Manufacturing• Environment and Energy• Metrology and Measurement Science• Geological Survey and Applied Geoscience

Integrated research system with different scientific backgrounds to participate in scenario-oriented research projects.

AIST Organization and Specified Research Fields

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©Kanji Ueda

Value and Value CreationThe value of an artifact is not determined solely by its functionality. 

Globalization brings two conflicting goals:1.Price competition >> Commoditization of products 2.Value competition >> Service‐oriented manufacturing

Information networking changes the values and lifestyles of consumers: 1.Diversification >> Long tail phenomenon and niche markets2.Homogenization >> de facto standards, network externality

Social complexity and  instability: global networking has gradually come to entail negative aspects. >> large‐scale accidents of information systems

Sustainable  development:  Maintaining  sustainability  often  creates  a  dilemmabetween values of a whole society and values of individuals. 

We must rethink values from relations among humans, artifacts, and society as decision-making problems.

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History of Axiology

K. Ueda et al: CIRP Annals - Manufacturing Technology 58 (2009) 681–700

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Historical approaches to value

Two Origins: •Plato(Idea), Aristotle: Absolute value >> Idealism, Realism •Epicurus(Hedonism): Natural value >> Utilitarianism (J. Bentham, J. Mill) , EgoismPhilosophy (in the 17th century):•Descartes(Cartesian dualism) : Objective value >> Mechanical Materialism•J. Locke, F. Bacon, D. Hume >> Empiricism Philosophy (in the 18th -19th century):•I. Kant (Epistemology): Subjective value >> H. Rickert, G. Hegel, E. HusserlPhilosophy (in the 20th century):•F. Nietzsche, F. Saussure, J.P. Sartre, L. Wittgenstein, Levi-Strauss, M. Polanyi :Metaknowledge valuePsychology:S. Freud, B. Skinner, J. Piaget , A. Maslow: Psychological valueEconomics:•F. Quesnay, A. Smith, K Marx (Classical economics): Absolute/Objective Economic value•C. Menger, V. Pareto, J. Neumann(Neo-Classocal economics): Relative Economic value•D. Kahneman , A. Tversky (Behavioral economics) : Subjective Economic valueEngineering:•F.W. Taylor, C. Peirce’s, , H. Simon, H. Yoshikawa: Pragmatic valueEcology:•Club of Rome, UN, ICSU: Environmental value

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Value and sustainability

Value for Whole Society (“value as it should be”) VS.

Value for Individuals (“values as they are”)

•To resolve this dilemma, greater attention must be devoted to the mechanism of human value judgments and social value systems including market mechanisms. Moreover, this is not an analysis problem but a synthesis problem. •For this purpose, we should integrate values such as ecological value, pragmaticvalue, economic value, psychological value and meta-knowledge value.

Sustainability is the most recent topic of axiology and was originally raisedas a social issue or an environmental issue. (The Club of Rome, 1972, International Council for Science Union (ICSU) , 2002)

To realize sustainable society, we must solve the dilemma between two conflicting values.

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From analysis of existing value to value creation

Real worldComplex andDynamic

Real worldComplex andDynamic

Value Creation Model

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Sustainability, Sustainable Development and Sustainable ManufacturingSustainability: In an ecological context, sustainability can be defined as thecapacity of ecosystems to maintain necessary processes and functions and to retain biological diversity without impoverishment.

According to Seliger(2007), sustainability is directed to enhancing human living standards while improving the availability of natural resources and ecosystems for future generations.

Sustainable Development: The World Commission on Environment and Development (WCED) declared that “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

Sustainable Manufacturing: Jovane et al. (2008) deeply discussed competitive sustainable manufacturing (CSM) as supportive of sustainable development. The CIRP can play a relevant role at strategic, scientific and technological levels for the coming global technological and industrial revolution: CSM.

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Sustainable Manufacturing

(Jovane, F, et al., 2008, The incoming global technological and industrial revolution towards competitive sustainable manufacturing, CIRP Annals, 57(2), 641-659.)

Fundamentals of sustainable development

Pursuing CSM: referencemodel for proactive action.

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Sustainable Society

Sustainable decision-making.

Sustainable Society: A society in which both the overall purpose and individual happiness can be achieved concurrently through decision-making among various stakeholders.

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Approaches

Transdisciplinary approaches to values

Human Sciences(psychology, medical science,

sociology)

Engineering(IT, manufacturing,

Data mining)

Economic Sciences(economics, marketing,

management)

Transdisciplinary Sciences•Sustainability •Service Engineering•Lifecycle Engineering•Healthcare Science•Gerontology•Co-creation Engineering……

Converging technologies•The US Government refers to convergence as the integration of Nanotechnology, Biotechnology, Information Technology and Cognitive Science (NBIC) •The European Commission proposed Converging Technologies for the European Knowledge Society (CTEKS)•Jovane, Westkämper and Williams (2008) discussed promising technologies for sustainable manufacturing and propose the generic model of ManuFuture, Vision 2020 and the Strategic Research Agenda

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Emergent synthesis approaches

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• Emergent synthesis : system synthesis methodology based on the concept of emergence.

• Emergence: a global order of structure expressing new function is formed through bi‐directional dynamic processes.

Local interaction

Global behavior

Bottom‐up

Top‐down

System

environment

purpose

(a) Generation of global order from local interaction among elements

(b) Feedback of global behavior as environment of local elements

(c) Global order expressing new function is formed

Concept of emergence ‐ From Local Simplicity to Global Complexity ‐

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Class l: Problem with complete description:If the information concerning the environment and specification are wholly given, then the problem is completely described. However, it is often difficult to find an optimal solution. Optimization Strategy

Class II: Problem with incomplete environment description:The specification is complete, but the information on the environment is incomplete. Since the problem is not wholly described now, it is difficult to cope with the dynamic properties of the unknown environment. Adaptation Strategy

Class III: Problem with incomplete specification:Not only the environment description but also the specification are incomplete. The problem solving, therefore, has to start with an ambiguous purpose, and the human interaction becomes significant. Co-creation Strategy

Classification of Emergent Synthesis Problempu rp ose

environm en t

pu rp ose

u nd ete rmined sy stem fu nction fo

Q - 1

e

f o

inv ers e pr ob lemstructu re

Q

s

f

d ir ect p roblem

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Value co-creation among systems

Systems of Society Systems of Humans

Systems of Artifacts

EconomyPoliticsPublicCultureGroup

Language/SymbolCognition/ActionModalityBrain/NeuronGenome

DesignManufacturingUtilizationProduct LifecycleNetworks

ValueCo-Creation

price

cost

← utility function satisfaction

Isolated systems cannot create value!

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Co-creative Decision Making

Model of Co-creative Decision Making

Decision making system:・ consists of multiple agents, each of

which has its own purpose・ achieves its purpose as a whole・ determines a feasible solution・ under a certain environment

However, often・ environmental is unpredictable・ purpose is ambiguous・ agent’s behavior is bounded rational・ less information gives better results

Therefore,Co-creativeDecision Making under incomplete information is essential

environment

agents(human, artifact, organization…) purpose

actionsolution

Co-creation is “emergent process” to create an effective solution, heretofore unattained by an independently- acting agents, as a whole system with interaction among acting agents.

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P

P/S

E

Rinformation

providing

PP/S

E

R

PP/S

E

RValue co‐creation

Class I Value: Providing Value ModelProduct/Service provider and its receiver are defined independently. Their values (objectives), and environments are clear. Model can be described completely with a closed system. Optimization strategy is essential.

Class II Value: Adaptive Value ModelObjective of product/service receiver is defined completely, however, environment is changing and not predictable. Therefore, model is to be an opened system. Adaptive strategy is essential.

Class III Value: Co-creative Value ModelObjective of product/service receiver is uncertain even for itself, so that the provider and receiver cannot be separable each other. Value-Co-creation by the provider and receiver is essential.

adaptation

Co‐creation

P

R

EP/S

provider

Receiver

environment

Product/service

information

P,R: agent self-organizing internal structureE: changing with internal structureP/S for Class II and III: required self-organizing

internal structure

information

prod

uct

service

Value Creation Models

Classification of value creation.

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Research Interests in Study of Service

0

100

200

300

400

500

600

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

Complexity

GPS

Optimization

Mobility

Adaptation

Agent based

Innovation

Cognitive

Sustainable orSustainabilityPersonality

Recommendation

Large scale data

IC Card

Num

ber o

f Arti

cles

Articles including some technical keywords co-occurring with “service”.

Manufacturing industries must now confront how to expand their activities into service businesses to increase the value of their products. In contrast, service industries are expected to increase their productivity because many existing services are thought to be provided less efficiently than manufactured products.

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Value Creation in ServicesIn case I, 200 customers use the service. In case II, although the same service can be selected, the producer’s profit is less than that of case I, according to the decrease of the number of the service users (average approx. 180). However, the customers’ averaged profit is higher than in case I, relating to changes of each customer’s reservation value. In case III, the total profit of the producer and customers is highest of all the cases (average users are approx. 193). This occurs due to the increased value perception by the customers because of the network externalities.

0200400600800

10001200

Case I Case II Case III

Producer's ProfitCustomers' ProfitTotal Profit

Averaged Producer’s Profit, Consumers’ Profit and their Total Profit in Value Creation Models

•Ueda, K., Kito, T., and Takenaka, T., 2008, Modelling of Value Creation Based on Emergent Synthesis. CIRP Annals,57/1:473–476.

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•DNA-type:genetic information, evolving through generations.

•BN-type: individually learned information, acquired during lifetime of an organism

BMS: Biological Manufacturing System

BMS is next generation manufacturing system which dynamically adapts to non-predeterministic changes in both internal and external environments based on biologically-inspired ideas such as self-recognition, self-organization, adaptation and evolution. BMS covers total product life cycle, dealing with complexity in whole process of manufacturing activities from planning to disposal. (1987 K. Ueda)

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Real world(incomplete conditions)

Human being(bounded-rational)

System(flexible, robust)

Agents’ bounded rationality might have Positive aspects to its use!

Decision makingSystem goal：To realize efficient production

How to behave?

Environment surrounding systemRequirements for system

Incompleteconditionsconsumer

workerdesigner

robot machine

Manufacturing system

Economic environment

Collective decision making that creates an effective solution,heretofore unattained by independently-acting agents, as a whole system that allows interaction among acting agents, for synthesis of an artifact.

Flexibility, Optimality < Robustness,

Adaptively

Co-Creative Decision Making

Co-Creative Decision Making by Introducing Bounded-Rational Agents (T. Kito, K. Ueda)

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（Change the number of bounded-rational ants）

0

4000

8000

12000

16000

0 25 50 75 100 125 150

限定合理的な蟻の数

採餌

所要

時間

4000

8000

12000

16000

00 25 50 75 100 150 175

Exe

cutio

n tim

e st

eps

Number of bounded-rational ants

Higher performance

0

10

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0 25 50 75 100 125 150Ave

. car

ryin

g am

ount

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Number of bounded-rational ants

Bounded-rational ant

Rational ant

- The system performance was improved by introducing bounded-rational ants.

- A differentiation of roles emerged: rational ants carries food bounded-rational ant searches for new feeding stations

Simulation Results

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Sustainable Manufacturing

Diversified requirements necessary for sustainability -Design components and solutions –- (H. Yoshikawa, Former President of AIST 2008).

Suppression of Climate Change

Conservation of bio- diversity

Sanitation

Control of chemical risk

Energy security

Drinking water security

Food security

Peace governance

Disaster mitigationEradication of poverty

Preventive medicine

Suppression of pollutionWaste minimization

Sustainable services

ElementCellMoleculeAtom

PartyOrganizationCorporationClub

IndividualFamilyCouplePerson

SocietyWorld*StateCommunity

Local Global

Range of problem = Design solution

H

i

e

r

a

r

c

h

i

c

a

l

l

e

v

e

l

o

f

d

e

s

i

g

n

=

D

e

s

i

gn

c

o

m

pon

e

n

t

(*In case of human)

Human security

Conservation of minerals

Nuclear Non-penetration

Sustainable manufacturing

Nation

Hie

rarc

hica

l Lev

el o

f Des

ign

= D

esig

n of

com

pone

nt

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HY

Related Researches for Sustainable Industry in AIST for Minimal Manufacturing and Maximal servicing (H. Yoshikawa)

Manufacturing

InverseManufacturing

UseInverse Use

Compact Chemistry

Security system

Biomass technology

Earth Science

Sustainable design

Nanotechnology

Bio informatics

Grid technology

Bio remedying

Green sustainability chemistry

RoboticsSustainable material

Environmental controlMetrology

BiotechnologyEnergy source technology

Energy supply systems

Novel processing

Artificial intelligenceBrain scienceHuman stressHuman science

Digital human

PhotonicsQuantum electronics

Risk managementComputational

science

Design theory

Sustainability metrics

Digital manufacturing

Design for manufacturing

Facility design

Service science

Renewable energy

Design offunctionality

Implementation offunctionality

Extraction of functionality

Dissolution offunctionality

Maximal servicing

Min

imal

Man

ufac

turin

g

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Concluding remarks

■Historically, values have been studied from philosophical, ethical, economical, psychological, and technological viewpoints. Values can be classified by absoluteness, objectivity, and subjectivity.

■However, the current problems of values confronting us are apparently new problems; they are not analysis problems but synthesis problems. The problem of sustainability is expected to be a decision-making problem in a society; discrepancies between overall purposes and individual happiness often present a dilemma structure. .

■In the real world, manufacturing industries must now confront how to expand their activities into service businesses to increase the value of their products. In contrast, service industries are expected to increase their productivity. The integration of both industries is needed from the viewpoint of value creation toward a sustainable society.

■Co-creation is a promising concept to integrate values of industries and those of consumers.

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©Kanji Ueda

Thank you very much for your attention.

Cool Analysis, but Hot Synthesis!