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Transcript of The future of cities and regions 20110929 v4
© 2011 IBM Corporation
IBM University Programs worldwide, accelerating regional development (IBM UPward)
The Future of Cities and Regions:U-BEEs Accelerating Regional Upward Spirals
Dr. James (“Jim”) C. SpohrerInnovation Champion and Director IBM UPwardIBM University Programs Worldwide, accelerating regional developmentFor Foundation Roundtable on “Future of Cities and Regions”Sept 29th, 2011, Madrid, [email protected]
Used with permission eVolo.us
2 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Outline
Introduction: IBM & Smarter Cities– Who I am, my team
– IBM & the Smarter Planet Initiative
Trend: Universities & Regional Development
– Universities have long been the key to regional development in many ways…
– …But many are in crisis, and will re-invent themselves as “cities within cities” – becoming U-BEE living labs inventing the future
Evolution: Cities Getting Smarter– McKinsey Study
– IBM Study
“Let’s Build a Smarter Planet"
3 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Who I am Director IBM Global University Programs worldwide (since 2009)
– Global team works with 5000 university world wide (http://www.ibm.com/university)
– 6 R’s: Research (Awards), Readiness (Skills), Recruiting, Revenue, Responsibility, Regions
– Transform “IBM on Campus” brand awareness (“Smarter Planet/Smarter Cities”)
– Create “Urban Service System” Research Centers & U-BEEs Founding Director of IBM's first Service Research group (2003-2009)
– Almaden Research Center, San Jose, CA
– 10x ROI with four IBM outstanding and eleven accomplishment awards
– Improve existing offerings, create new, portfolio synergies, partners, patents, publications
– I know/work with service research pioneers from many academic disciplines• I advocate for Service Science, Management, Engineering, and Design (SSME+D)
– Short-term: Curriculum (T-shaped people, deep in an existing discipline)– Long-term: New transdiscipline and profession (awaiting CAD tool)
• I advocate for SRII (“one of the founding fathers”)• Co-editor of the “Handbook of Service Science” (Springer 2010)
Founding CTO IBM’s Venture Capital Relations Group Silicon Valley (1999-2003)– Headlights and win-win strategies for alignment and growth
Other background– Apple Computer’s (Distinguished Engineer Scientist and Technologist) award (90’s)
– Ph.D. Computer Science/Artificial Intelligence from Yale University (80’s)
– Dialog Systems/Verbex Speech Recognition Start-up (acquired by Exxon, late 70’s)
– B.S. in Physics from MIT (70’s)
4 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Who We Are: Sampling of Regional U-BEE Leads
Region Contact Name
Africa Sean Mclean
Australia Jay Hannon
ASEAN Seow Khun Lum
Canada Stephen Peregut
China Jean Li
Egypt Hisham El-Shishiney
EMEA Diem Ho
GCG Wang Hao
India Bhooshan Kelkar
Japan Kohzoh Kitamura
Latin America Juan Duran
Middle East Andrea Emiliiani
Nordics Jyrki Koskinen
Russia Sergey Belov
Turkey Jale Akyel
5 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
IBM operates in 170 countries around the globe
~425K employees ~100 acquisitions in 10 years 2010 Financials
Revenue - $ 99.9B Net Income - $ 14.8B EPS - $ 11.52 Net Cash - $11.7B
21% of IBM’s revenue in growth market countries; growing at 13% in late 2010
Number 1 in patent generation for 18 consecutive years ; 5,896 US patents awarded in 2010
More than 40% of IBM’s workforce conducts business away from an office
5 Nobel Laureates
9 time winner of the President’s National Medal of Technology & Innovation - latest award for Blue Gene Supercomputer
“Let’s Build a Smarter Planet"
The Smartest Machine On Earth
100 Years of Business & Innovation
6 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Where are the opportunities? Every city and region!
'building smarter systems isn't simply a proposal or theory, but a practical reality, with clear steps, quantifiable benefits and best practices'
- Sam Palmisano
7 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Smarter Planet: The Three I’s and Smarter Systems
INSTRUMENTED
We now have the ability to measure, sense and see the exact condition of practically everything.
INTERCONNECTED
People, systems and objects can communicate
and interact with each other in entirely new
ways.
INTELLIGENT
We can respond to changes quickly and accurately, and get better results
by predicting and optimizing
for future events.
WORKFORCE
PRODUCTS
SUPPLY CHAIN
COMMUNICATIONS
TRANSPORTATION BUILDINGS
IT NETWORKS
8 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Communication$ 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
9 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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%
10 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Quality-of-Life: How to measure?
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)”
11 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Our 21st Century World: System of SystemsRegional Nested, Networked Holistic Product-Service Systemshttp://www.service-science.info/archives/1056 Holistic Product-Service Systems provide
access to “Whole Service” to people inside, including Transportation, Water, Food, Energy, Communications, Buildings, Retail, Finance, Health, Education, Governance, etc.
Examples: Nations, States, Cities, Universities, Hotels, Hospitals, Homes
Definition: An holistic product-service system is a type of complex value-cocreation system that can provide “whole service” to its primary population of people, independent of all external systems, for an extended period of time, balancing independence with interdependence (outsourcing limits, re-cycle to sustain, etc.)
University-Based Entrepreneurial Ecosystems (U-BEE’s): Universities are usually in the “top five” job creators of regions, when they have associated incubators & science-technology parks, super-computing data centers, hospitals, cultural & conference hotels, K-12 schools, etc.
Nation
State/Province
City/Region
UniversityCollege
K-12
Cultural &ConferenceHotels
HospitalMedical
Research
Worker(professional)
Family(household)
For-profits
Non-profits
U-BEEJob Creators
~25-50% of start-ups are newIT-enabled service offerings
SaaSPaaSIaaS
http://www.thesrii.org
12 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
13 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Recent McKinsey Study and IBM Study
14 © 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.”
15 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Universities and Regional Development% WW GDP and % WW 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
16 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Success breeds a crisis in higher education…
…But it can be costly, American student loan debt is over $900M
17 © 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
18 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Pegasus Global Holdings $200M Smart City Living Lab
7 September 2011
The Center for Innovation, Testing and Evaluation will cover 20 square miles in New Mexico, and will resemble a mid-sized American city, including urban canyons, suburban neighborhoods, rural communities and distant localities.
Potentially be able to house up to 35,000 people and will operate as if people are actually living there
The facility will allow technology companies, university and urban planners to test the "positive and negative impacts emerging technologies - Smart Grid, intelligent traffic systems, cyber security and more
estimated cost $200 million to build/launch (or ~$6K per person for infrastructure)– Economy Hotel Projects ~$30K per person to build/launch
– Highest Priced Luxury Resort Hotels ~$600K per person to build/launch
19 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
20 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Systems-Disciplines Framework
Systems Focus– Flows
– Human Development
– Governance
Disciplines Focus– Stakeholders
– Resources
– Change
– Value
Stakeholders
Resources
Change
Value
Flow
s Hum
an D
evelopment
Governanc
e Governanc
e
Systems
Discipline
s
21 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
The Goal: Adaptive Innovators, so called T-shaped professionalsReady for Life-Long-LearningReady for T-eamworkReady to build a Smarter Planet
SSME+D = Service Science, Management, Engineering + Design
Many disciplines(understanding & communications)
Many systems(understanding & communications)
Deep in one discipline
(ana
lytic thinking & problem
solving)
Deep in one system
(analytic thinking & problem
solving)
Many multi-cultural-team service projects completed(resume: outcomes, accomplishments & awards)
BREADTH
DE
PT
H
22 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
What’s the best way to predict the future?
The best way to predict the future is….– To create it. (Moliere)
– To invent it. (Kay)
– To inspire and enable the next generation to build it better (IBM UPward)
23 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
24 © 2011 IBM CorporationIBM UP (University Programs) WW
Thank-You! Questions?
Dr. James (“Jim”) C. SpohrerDirector, IBM University Programs worldwide, accellerating regional development (IBM Upward)[email protected]
“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
25 © 2011 IBM CorporationIBM UP (University Programs) WW
Thanks for visiting IBM Almaden Research Center, San Jose, CA
Upcoming Conferences– Sept 27th, 2011
• Future Technologies,Skills & Jobs
– July 2012• ISSS & SRII San Jose• HSSE San Francisco
More Information– Blog
• www.service-science.info– Twitter
• @JimSpohrer– Presentations
• www.slideshare.net/spohrer– Email
26 © 2011 IBM CorporationIBM UP (University Programs) WW
Frameworks, Theories, and Models that connect…
The 4 I’s– Infrastructure
– Individuals
– Institutions
– Information Remember
– Questions
– Connections
– Book
– Speed! Societal Infrastructure(Technologies & Environment)
Individuals(Skills)
Institutions(Jobs)
Cultural Information(Quality-of-Life Measures)
27 © 2011 IBM CorporationIBM UP (University Programs) WW
NPR: Out of Economic Chaos, A New Order May Be Rising
HAWLEY: The grand total of U.S. automotive fatalities from 1975 to the present, about one and a half million people. Now, the grand total of U.S. fatalities from 1775 to the present in every military conflict we've had is 1.3 million. So in other words, in the last roughly 35 years we've killed more people with cars than we have in more than 300 years of warfare.
I think if you step back and look at cars from a sort of 35,000 foot level, you've got to wonder why we're doing this to ourselves. And there's a tremendous amount of industry and employment built up around it. But suppose it all changed.
One way it could change is if human weren't allowed to drive cars anymore. Or let me put it differently. If cars were much more appealing because they drove themselves and did it safely.
And this isn't just Jetson stuff. There's a brilliant computer scientist, artificial intelligence researcher at Stanford, named Sebastian Thrun. He's invented a car that drives itself. You can hop in the car and you never touch the wheel or the pedals. It navigates through all the traffic snarls. It won't run over little old ladies in Pasadena. It won't even run over a squirrel.
If you could eliminate the seven million accidents per year, the 2.9 million injuries, the 40,000 fatalities, that would be enormous boon. But if you think about what would happen in the short term. Let's suppose in the next five or ten years this idea comes to fruition.
Think about all the disruption that could cause. You might not have to own a car. Well, that might be good. You'd have a garage that you could use to start up a company instead of storing a couple of rusting hulks of metal in it. You'd never have to call Tom and Ray Magliozzi again, because you wouldn't have to fix your car.
There wouldn't be a parking problem, because you'd push a little button on your iPhone, a smart car would zip up, pick you up, drop you off where you need to go. That means no more valets, no more taxi drivers, no more meter maids, no more traffic cops. You'd never hear a car horn, because why would a robot car honk at another robot car. Makes no sense.
But that's an example of the sort of change that in the short term can cause immense of amounts of anxiety and upheaval.
http://www.npr.org/2011/09/24/140766796/out-of-economic-chaos-a-new-order-may-be-rising
28 © 2011 IBM CorporationIBM UP (University Programs) WW
California Human Development Report 2011 http://ww
w.m
easureofamerica.org/docs/A
PortraitO
fCA
29 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
What are the characteristics of highly innovative regions?
Frequent Alignment Meetings (monthly, quarterly, annual)– City’s Innovation Roadmap (Mayor’s Office)
– University’s Innovation Roadmap (President of University)
– Incubator’s Innovation Roadmap (Head of University-based Incubator)
– Smart Specialization (LNU Vaxjo Wood, UA Tuscon Border Security, etc.)
Local Role Model(s) – Investment in Risk-Taking– Local success stories and role models
– Ideally, a billionaire local entrepreneur & Foundation
– At least $10M annual investment in entrepreneurship programs & local incubator
Local Culture – “Just Say Yes to Entrepreneurs”– University as a first customer, City as a second customer
– Sometimes “born global” on the cloud
– Smarter local risk-taking, smarter global scale-out planning
Early Identification and Alignment with Scale-Up Partner– Which firms/organizations already have many customers that will need the innovation
– Finding ways to establish win-win growth strategies as early as possible
30 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
A major societal transformation is underway…“If we’re number one in technology, why do I have to call India for tech support?” – Jay Leno“Ideas are the new currency in a global knowledge economy.” – Ben Wildavsky, Senior Fellow, Kauffman Foundation“No country can lead in today’s world unless it leads in science.” – Speaker Nancy Pelosi“A history of modernization is in essence a history of scientific and technological progress… I firmly believe science is the ultimate revolution.” – Wen Jiabao, Premier, People’s Republic of China
Driven by “The Death of Distance” & “Algorithmic Revolution”- Cairncross, Economist (1997)
- Zysman, CACM (2006)
Manifesting in new forms of “Global Competition”– Friedman, The World is Flat (2005)
Characterized as a “Gathering Storm” by Americans– US National Academies (2005, 2007, 2011)
31 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
The Gathering Storm Report“The committee concluded that the United States appears to be on a course that will lead to declining, not growing, standard of living for our children and grandchildren.” – Gathering Storm“Gentlemen, we have run out of money. It is time to start thinking.” – Rutherford
“The Gathering Storm report is focused upon the ability of Americans to compete for employment in a job market that increasingly knows no geographic boundaries.”
“The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and out hope that our children and grandchildren will inherit every greater opportunities.”
“The possession of quality jobs is the foundation of a high quality life for the nations citizenry.”
“While only four percent of the nations workforce is composed of scientists and engineers, this group disproportionately creates jobs for the other 96 percent.”
“Further, the pace of creation of new knowledge appears by almost all measures to be accelerating.”
“While this progress by other nations is to be both encouraged and welcomed, so too is the notion that Americans wish to continue to be among those people who do prosper.”
“The Gathering Storm committee contends that it is strongly in America’s interest for all nations to prosper. Aside from its humanistic merit this outcome should produce a safer world for everyone…”
32 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
The Gathering Storm Recommendations“It would be impossible not to recognize the great difficulty of carrying out Gathering Storm recommendations, such as doubling the research budget, in today’s fiscal environment… However… One seemingly relevant analogy is that a non-solution to make an over-weight aircraft flight-worthy is to remove an engine.” – Gathering Storm Revisited
“The fate of empires depends on how they educate their children.” – Aristotle“The best way to predict the future is to inspire & enable the next generation to build it better.” –IBM UPward
I. Improve inputs to universities– Fix “broken” K-12 system (invest in K-12)
III. Improve outputs from universities– Fix “broken” University system (invest in Higher Education)
II. Improve transitions from university to first job– Fix “broken” Employment system (increase R&D funding)
IV. Improve speed of regional innovation– Fix “broken” Governance system (align visa, tax, etc. regulations)
33 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
The Gathering Storm, Revisited for All Regions“There is nothing as practical as a good theory.” – Kurt Lewin“History is a race between education and catastrophe.” – H.G. Wells
Regions are entities that must learn to learn better– Regions = Nations, States, Cities, etc…
– Learning = Improving the global competitiveness performance of a region
Regional entities = “Holistic product-service systems”– that provision access to high-quality “whole service” to the people in them
– that also provision access to high quality products & services globally
– to contribute to a higher quality-of-life, both inside and outside their region
– service science studies product-service systems & customer-provider interactions (value-cocreation mechanisms, including the servitization of products and productization of service by the algorithmic revolution and other means)
Regional innovation = “Entities learning”– “Run-Transform-Innovate Learning Framework”
– “T-Shaped Professionals & the Systems-Disciplines Framework”
– University-Based Entrepreneurial Ecosystems (U-BEEs)
34 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Societal Transformation: Changing Rules of Competition“The purpose of business is to create new customers.” – Peter Drucker
From Value-Creation Worldview: Compete Against Others - Zero-Sum Mindset– During different time intervals some regions begin to pull ahead, and some fall behind…
eventually the people in lagging regions immigrate to leading regions, some lagging regions “collapse” and are absorbed into other regions or remain dysfunctional… not only is human capital squandered in lagging and collapsed regions, but human suffering grows over time in these regions…. disenfranchised populations create a security threat for all….
To Value-CoCreation Worldview: Compete With/For Others - Non-Zero-Sum Mindset– The gains of innovators are “taxed” based on geography of their customers as well as home
location of provider (providers cannot succeed without customers)… as innovators seek to expand their markets into other regions successfully the “governments” of both provider and customer regions see tax revenues increase… accelerating both “transform” and “innovate” capabilities… accelerating entities learning and regional innovation.
– Innovator regions benefit the most, but the incentive is not to pull so far ahead that other regions lag too far behind or collapse; the incentive is to also create wealthier more capable customers over time, and regions compete in cycles of progress that move everyone forward…
Simple Examples of Value-CoCreation Model: – Toyota locating manufacturing plants in the US
– “The Huppenthal Method” Style of Learning Competition• Students compete, but “winning” is defined as everyone completing the work as fast as
possible, to beat their individual and collective previous best time• Leaders help those lagging behind catch-up, peer-mentoring and win-win NZS mindset• Demonstrated accelerated learning times and elevated student engagement levels
35 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
In Sum…“College is more valuable to the future economy than petroleum.” – Greg Easterbrook, Author“You can always depend on the Americans to do the right thing, after exhausting all other possibilities.” – Churchill
Gathering Storm reflects a major societal transformation underway– Driven by “The Death of Distance” and “Algorithmic Revolution”
– Manifesting in new, challenging forms of “Global Competition”
The nature of regional competition is being transformed (accelerating)…– From Value-Creation Worldview: “Compete Against” - Zero-Sum Mindset
– To Value-CoCreation Worldview: “Compete With/For” - Non-Zero-Sum Mindset
The transformation depends on increasing “trust” … a hard thing to do– However, increasing interconnectedness suggests there is no other viable alternative
– Cascade failures in globally interconnected economies are a real threat to stability
Increased trust can only be earned by performance against a shared innovation roadmap, or a shared vision for a better future for all…
– For example, climate change and sustainable environment
– For example, increased global security and financial stability
It is time to get our priorities straight and focus on what matters most…
36 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Complex Buildings: Economy to Luxury Hotels & Resortshttp://www.youtube.com/watch?v=Hm7MeZlS5fo
37 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Installation DeploymentIrruption
The Industrial Revolution
Age of Steam and Railways
Age of Steel, Electricityand Heavy EngineeringAge of Oil, Automobilesand Mass ProductionAge of Information and Telecommunications
Frenzy Synergy Maturity
Panic1797
Depression
1893
Crash
1929
Credit Crisis 2008
Coming period ofInstitutional Adjustment and Production Capital
1
2
3
4
5
Panic1847
1771
1829
1875
1908
1971
1873
1920
1974
1829
Crash
•Formation of Mfg. industry
•Repeal of Corn Laws opening trade
•Standards on gauge, time•Catalog sales companies •Economies of scale
•Urban development•Support for interventionism
•Build-out of Interstate highways
•IMF, World Bank, BIS
Source: Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages; (Edward Elar Publishers, 2003).
Five waves of infrastructure transformation
38 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
~Up-Skilling Adjustment Period: A Decade-Level Phenomenon
Source: US Bureau of Economic Analysis; McKinsey Global Institute Analysis
39 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
40 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Cities
“Cities are the defining artifacts of civilisation. All the achievements and failings of humanity are here… We shape the city, and then it shapes us. Today, almost half the global population lives in cities.”
– John Reader, author of Cities
IBM Releases ``IBM and the Future of our Cities'' Podcast
– IBM Press Release 2005
41 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
42 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Overview: Elements of Interest
Infrastructure & Environment(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life & Demographics(Careers)
Policies & InvestmentsRun-Transform-Innovate
Governance
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
Infrastructure(Technologies Deployed)
Individuals &Certified
Competences(Skills)
Institutions &Roles(Jobs)
Information, Quality-of-Life Demographics(Careers)
City Ecosystem 1 City Ecosystem 2
Futur
eP
resent
Histor
y
Policies & InvestmentsRun-Transform-Innovate
Governance
Policies & InvestmentsRun-Transform-Innovate
Governance
Policies & InvestmentsRun-Transform-Innovate
Governance
Policies & InvestmentsRun-Transform-Innovate
Governance
FrameworksTheoriesModels
43
Universities connect information flows between city ecosystems
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)
44
University Trend: More Locally Connected Research Centers
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
45 © 2011 IBM CorporationIBM UP (University Programs) WW
World Population & Holistic Product-Service System Scaling
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Systems-Disciplines Matrix: Scope of Service ScienceSystems 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: Observing the Stakeholders (As-Is)
Starting Point 2: Observing their Resources & Access (As-Is)
Change Potential: Thinking (Has-Been & Might-Become)
Value Realization: Doing (To-Be)
disciplines
systems
47 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Data: Why and how technology is changing jobs
-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.
Expert Thinking
Complex Communication
Routine Manual
Non-routine Manual
Routine Cognitive
Why: Technology replaces many routinehuman activities (provider economics)
48 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Our ambition is to reach K-12 students with Service Science & STEM: Smarter Planet: “The systems we live in, and the systems we are…”
“Imagine smarter systems, explain why better (service systems & STEM language)”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/Home (Bio)
– 9 – Education /Campus & Work Life/Jobs & Entrepreneurship (Cogno)
– 10 – City (Government)
– 11 – State/Region (Government)
– 12 – Nation (Government)
– Higher Ed – T-shaped depth added, cross-disciplinary project teams
– Professional Life – Adaptive T-shaped life-long-learning & projects
Systemsthat focus onGoverning
Systemsthat focus on
Human Activities andDevelopment
Systemsthat focus onFlow of things
49 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Smarter = Sustainable Innovation (reduce waste, expand capabilities)
Computational System
Building Smarter TechnologiesRequires investment roadmap
Service Systems: Stakeholders & Resources
1. People/Individuals 2. Technology & Environment/Infrastructure3. Shared Information4. Organizations/Institutions
connected by win-win value propositions
Building Smarter Universities & CitiesRequires investment roadmap
50 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
A major societal transformation is underway…
Driven by “The Death of Distance”- Cairncross, Economist (1997)
Manifesting in new forms of “Global Competition”– Friedman, The World is Flat (2005)
Characterized as a “Gathering Storm” by Americans– US National Academies (2005, 2007, 2011)
Characterized as the “Knowledge/Innovation/Interaction Age” – The accelerating creation and application of knowledge and competences to create
value for and/or co-create value with other entities
– Value from innovations
– Value from interactions
Characterized as the “Decade of Smart/Smarter Planet” by IBM– Instrumented, Interconnected, and Intelligent
51
Time
ECOLOGY
14BBig Bang
(NaturalWorld)
10KCities
(Human-MadeWorld)
sun (energy)
writing(symbols and scribes,
stored memoryand knowledge)
earth(molecules &
stored energy)
written laws(governance and
stored control)
bacteria(single-cell life)
sponges(multi-cell life)
money(governed
transportable valuestored value,
“economic energy”)
universities(knowledge workers)
clams (neurons)trilobites (brains)
printing press (books)steam engine (work)200M
bees (socialdivision-of-labor)
60
transistor(routine
cognitive work)
Where is the “Real Science” - mysteries to explain?In the many sciences that study the natural and human-made worlds…
Unraveling the mystery of evolving hierarchical-complexity in new populations…To discover the world’s architectures and mechanisms for computing non-zero-sum
Entity Architectures (ЄN) of nested, networked Holistic-Product-Service-Systems (HPSS)
52 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
A Game of Life: Essentials
Game = board with squares & rules– Infrastructure both Environmental and Technological
• PS (Physical Systems - Environment)– Natural Endowment (hidden & observable information)
• PSS (Physical Symbol Systems – Environment & Technology)– Biological PSS (observable information – DNA, RNA, proteins, etc.)– Technological PSS (observable information – states of system, bits, etc.)
Life = multiple generations of entities– Entities = SSE (Service System Entities)
• Individuals with Competencies & Life-Spans– Competencies (vary with age)– Life-Spans (vary with stage)
• Institutions with Roles & Rules– Roles (Competency-Levels and Pay-Levels)– Rules (Compliance-Levels and Tax-Levels)
Physical
Not-Physical
Rights No-Rights
2. Technology/EnvironmentalInfrastructure
4. SharedInformation
1. People/Individuals
3. Organizations/Institutions
1. Dynamically configure resources (4 I’s)
53 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Life = Multiple Generations of Entities (200 years = 10 generations x 20 years)Pedagogy: Ten Social-Technological-Economic-Environmental-Political (STEEP) StagesThought Experiment: Binary-Board-Space (Rule: Toggles Each Generation)
1. Hunter-Gatherer Knowledge-Value Economy 1- 2K population (20 people/sq mile * 100 sq miles)
2. Transition Hunter-Gatherer Knowledge-Value Economy 2- 4K population (40 people/sq mile * 100 sq miles)
3. Agricultural Knowledge-Value Economy 1- 8K population (80 people/sq mile * 100 sq miles)
4. Transition Agricultural Knowledge-Value Economy 2- 16K population (160 people/sq mile * 100 sq miles)
5. Manufacturing Knowledge-Value Economy 1- 32K population (320 people/sq mile * 100 sq miles)
6. Transition Manufacturing Knowledge-Value Economy 2- 64K population (640 people/sq mile * 100 sq miles)
7. Service-Information Knowledge-Value Economy 1- 128K population (1,280 people/sq mile * 100 sq miles)
8. Transition Service-Information Knowledge-Value Economy 2- 256K population (2,560 people/sq mile * 100 sq miles)
9. Sustainable-Innovation Knowledge-Value Economy 1- 512K population (5,120 people/sq mile * 100 sq miles)
10.Transition Sustainable-Innovation Knowledge-Value Economy 2- 1024K population (10,240 people/sq mile * 100 sq miles)
11. And beyond!
10 miles
In Use
Recycle
Rule:Toggles EachGeneration
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Game = Board with Squares & Rules Example: Possible STEEP Stages 9 & 10 (infrastructure, sustainable-innovation cities)
Imagine nested holistic product-service-systems entities…– 10 Continents/planet
– 10 Nations/continent
– 10 States/nation
– 10 Cities/state
– 4 Sectors/city (interconnect to others)
– 11 Systems/sector
Rules: Board-space toggles each generation– 20 years/generation
– New infrastructure/generation
World: Further Pedagogical Purposes– “World Simulator” benchmarking
– Search to accelerate learning • 10,000 city experiments/generation• Low skill/raw materials > Hi-talent/tech
– Each generation new outcomes• Talents (skills & jobs)• Technologies (recycle & rebuild)• Investments (script & performance)
Occupied(In Use)
Recycling(De-construction &
Re-construction)
waterfood/products
energyICT
R&H/M&E/C&Sfinancehealth
educationgovernance
transportation
buildings/family
Sector 1city
interconnect
11 Systems
Sector 2state
interconnect
Sector 3nation
interconnect
Sector 4continent
interconnect
Toggle each generation – 20 year
cycle
55 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Entities = Life-Cycle Script Example: Possible STEEP Stages 9 & 10 (individuals, multiple generations of entities)
Children – Age 0-20– (Local & Global) Grow, Learn, & Have Fun
Parents – Age 20-40 (offspring 2)– (Next Local) Reproduce, Raise Children, & Build New “City” SET Stage
Grand-Parents – Age 40-60 (offspring 4)– (Local) Run the “City” You Built & Connect with Family
Great-Grand-Parents – Age 60-80 (offspring 8)– (Global) Travel the World, Enjoy Experiences, & Share Ideas
Great-Great-Grand-Parents – Age 80-100 (offspring 16)– (Local) Return, Reconnect, and Document History & Future Plans
Great-Great-Great-Grand-Parents – Age 100-120 (offspring 32)– (Local & Global) Celebrate, Tell Stories, Depart & Explore Further Realms
56 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
The Game of Life: Service Science Framework
The Game Board: A configuration of PS (Physical Systems), with interspersed PSS (Physical Symbol Systems) and SSE (Service System Entities).
– The SSE are PSS are PS
– The infrastructure is PS + PSS
• The PS have hidden information (state)• The PSS have observable information (state and read-write)
– The SSE use information to co-create value
• World model – information about the world (The Game Board)• Self model – information about self (SSE)• The SSE have a beginning and an end (life-cycle)• The SSE judge quality-of-life across their life-cycle
– The game is each generation of SSE try to improve quality-of-life, by improving the capabilities of the infrastructure (less waste, more support for SSE activities) and the capabilities of the SSE to co-create value (an SSE activity)
– The starting game board consists of PS with a few PSS, and the goal is to see how quickly and with how little energy and with how few types and tokens of PS, the PSS can become SSE and reconstruct a high level infrastructure and high quality of life and continuously improve at a sustainable pace.
• Processes of valuing are based on the above
57 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Quality-of-Life measures continuously improveQuality-of-Life = Quality-of-Service + Quality-of-Jobs + Quality-of Investments-Returns
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)”
58 © 2010 IBM CorporationIBM University Programs Worldwide (IBM UP)
What is service science? A service system? The ABC’s?
Economics & Law
Design/ Cognitive Science Systems
Engineering
OperationsComputer Science/
Artificial Intelligence
Marketing
“a service system isa human-made system to improve
provider-customer interactionsand value-cocreation outcomes,
studied by many disciplines,one piece at a time.”
“service science isthe transdisciplinary study of
service systems &value-cocreation”
The ABC’s:The provider (A)
and a customer (B)transform a target (C)
59 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service Systems Thinking: ABC’s
A. Service Provider
• Individual• Institution• Public or Private
A. Service Provider
• Individual• Institution• Public or Private
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,
physical dimensions of• Information or Knowledge, symbolic dimensions
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,
physical dimensions of• Information or Knowledge, symbolic dimensions
B. Service Customer
• Individual• Institution• Public or Private
B. Service Customer
• Individual• Institution• 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)
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.From… Gadrey (2002), Pine & Gilmore (1998), Hill (1977)
Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
“Service is the application ofcompetence for the benefitof another entity.”
Example Provider: College (A)Example Target: Student (C)Discuss: Who is the Customer (B)?- Student? They benefit…- Parents? They often pay…- Future Employers? They benefit…- Professional Associations?- Government, Society?
A B
C
60 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service Science: Conceptual Framework
Resources: Individuals, Institutions, Infrastructure, Information Stakeholders: Customers, Providers, Authorities, Competitors Measures: Quality, Productivity, Compliance, Sustainable Innovation Access Rights: Own, Lease, Shared, Privileged
Ecology(Populations & Diversity)
Entities(Service Systems, both Individuals & Institutions)
Interactions(Service Networks,
link, nest, merge, divide)
Outcomes(Value Changes, both
beneficial and non-beneficial)
Value Proposition (Offers & Reconfigurations/
Incentives, Penalties & Risks)
Governance Mechanism (Rules & Constraints/
Incentives, Penalties & Risks)
Access Rights(Relationships of Entities)
Measures(Rankings of Entities)
Resources(Competences, Roles in Processes,
Specialized, Integrated/Holistic)
Stakeholders(Processes of Valuing,
Perspectives, Engagement)
Identity(Aspirations & Lifecycle/
History)
Reputation(Opportunities & Variety/
History)
prefer sustainable non-zero-sum
outcomes,i.e., win-win
win-win
lose-lose win-lose
lose-win
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.
61 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service system entities configure four types of resources
First foundational premise of service science:
– Service system entities dynamically configurefour types of resources
– Resources are the building blocks of entity architectures
Named resources are:– Physical or – Not-Physical– Physicist resolve disputes
Named resources have:– Rights or– No Rights– Judges resolve disputes
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
Physical
Not-Physical
Rights No-Rights
2. Technology/EnvironmentInfrastructure
4. SharedInformation/
SymbolicKnowledge
1. People/Individuals
3. Organizations/Institutions
Formal service systems can contract to configure resources/apply competenceInformal service systems can promise to configure resources/apply competence
Trends & Countertrends (Balance Chaos & Order):(Promise) Informal <> Formal (Contract)
(Relationships & Attention) Social <> Economic (Money & Capacity)(Power) Political <> Legal (Rules)
(Evolved) Natural <> Artificial (Designed)(Creativity) Cognitive Labor <> Information Technology (Routine)
(Dance) Physical Labor <> Mechanical Technology (Routine)(Relationships) Social Labor <> Transaction Processing (Routine)
(Atoms) Transportation <> Communication (Bits)(Tacit) Qualitative <> Quantitative (Explicit)
(Secret) Private <> Public (Shared)(Anxiety-Risk) Challenge <> Routine (Boredom-Certainty)
(Mystery) Unknown <> Known (Justified True Belief)
62 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service system entities calculate value from multiple stakeholder perspectives
Second foundational premise of service science
– Service system entities calculate value from multiple stakeholder perspectives
– Value propositions are the building blocks of service networks
A value propositions can be viewed as a request from one service system to another to run an algorithm (the value proposition) from the perspectives of multiple stakeholders according to culturally determined value principles.
The four primary stakeholder perspectives are: customer, provider, authority, and competitor
– Citizens: special customers– Entrepreneurs: special providers– Parents: special authority– Criminals: special competitors
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. .
Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?
Will we?(invest tomake it so)
StrategicSustainable Innovation(Marketshare)
4.Competitor(Substitute)
Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?
May we?(offer anddeliver it)
RegulatedCompliance(Taxes andFines, Quality of Life)
3.Authority
Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?
Can we?(deliver it)
CostPlus
Productivity(Profit, Mission, Continuous Improvement, Sustainability)
2.Provider
Model of customer: Do customers want it? Is there a market? How large? Growth rate?
Should we?(offer it)
ValueBased
Quality(Revenue)
1.Customer
ValuePropositionReasoning
BasicQuestions
PricingDecision
MeasureImpacted
StakeholderPerspective(the players)
Value propositions coordinate & motivate resource access
63 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service system entities reconfigure access rights to resources by mutually agreed to value propositions
Third foundational premise of service science
– Service system entities reconfigure access rights to resources by mutually agreed to value propositions
– Access rights are the building blocks of the service ecology (culture and information)
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.)
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
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
64 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service system entities interact to create ten types of outcomes
Four possible outcomes from a two player game
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
lose-win(coercion)
win-win(value-cocreation)
lose-lose(co-destruction)
win-lose(loss-lead)
Win
L
ose
Pro
vide
r
Lose WinCustomer
ISPAR descriptive model
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)
65 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service system entities learn to systematically exploit technology:Technology can perform routine manual, cognitive, transactional work
L
Learning Systems(“Choice & Change”)
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”
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.
66 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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.
67 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Summary
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. .
Physical
Not-Physical
Rights No-Rights
2. Technology/EnvironmentalInfrastructure
4. SharedInformation
1. People/Individuals
3. Organizations/Institutions
1. Dynamically configure resources (4 I’s)
Model of competitor: Does it put us ahead?
Will we?StrategicSustainable Innovation
4.Competitor/Substitutes
Model of authority: Is it legal?
May we?RegulatedCompliance3.Authority
Model of self: Does it play to our strengths?
Can we?CostPlus
Productivity2.Provider
Model of customer: Do customers want it?
Should we?Value Based
Quality1.Customer
ReasoningQuestionsPricingMeasureImpacted
StakeholderPerspective
2. Value from stakeholder perspectives
S AP C
3. Reconfigure access rights
4. Ten types of outcomes (ISPAR)
5. Exploit information & technology
6. Physical-Symbol Systems
68 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Proposed Guidelines
Please send feedback to Wendy Murphy
Help us devise better ways to visualize scope of service science
For use with:– Students– Faculty– Practitioners– Policy-makers– Scientists & Engineers– Government officials
69 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Students for a Smarter Planet
YouTube - animated!!– http://www.youtube.com/watch?
v=P7bEyPrtFHM
and another– http://www.youtube.com/watch?v=WklJujtIip4
Tweet comments to…– @wendywolfie
Continuously Improving Product-Service Systems = Smarter Systems
– Simplify the message
– Provide advanced organizers
70 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Service System Dynamics: Four Key Drivers of Change
Provider: Technology (Tech) & Sustainable Value-Cocreation Models– New technology to boost productivity & capacity (innovate)
– Use technology to perform routine manual, cognitive, and transactional work
– New relationship networks: Business models and new ventures (for-profit & non-profits)
Customer: Self Service– New self-service options to lower costs & expand choice (educate)
Authority: Rules– New rules to fix problems & achieve policy goals (regulate)
– Institutional diversity and governance of resource commons (Ostrom et. al.)
Competitors: Rankings– New rankings to guide decision-making & gain “valued” customers (differentiate)
– Hint: You want to be at the top of an independently ranked list of what customers are looking for…
– Especially for “valued” customers - calculating customer lifetime value (Rust et. al.)
71 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Example Service System Re-Design: A College Course
Problem: What if a college course had…– Input: Student quality lower
– Process: Faculty motivation lower
– Output: Industry fit lower
Solution: Tech + Self-Service– E: -20% E-learning enrollment
pre-certification
– F. +10% Faculty interest tuning
– J. +10% on-the-Job skills tuning
After a decade the course may look quite differentService systems are learning systems: productivity, quality, compliance, sustainable innovation
Maglio, P., Srinivasan, S., Kreulen, J.T., Spohrer, J. (2006), Service systems, service scientists, SSME, and innovation. Communications of the ACM, 49(7), 81-85.
Year 1: 20%
Year 2: 20%
Year 3: 20%
Year N: 20%
. . . . . . . .
E F J
72 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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.
Data: Why the study of service systems matters (to nations)
73 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Data: Why the study of service systems matters (to businesses)
SOFTWARE
SYSTEMS(AND FINANCING)
SERVICES
2010 Pretax Income Mix Revenue Growth by Segment
Services
Software
Systems
44%
17%
39%
IBM Annual Reports
© 2011 IBM Corporation
IBM University Programs worldwide, accelerating regional development (IBM UPward)
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 -
The Birth of Service Science: 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
© 2011 IBM Corporation
IBM University Programs worldwide, accelerating regional development (IBM UPward)
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 -
The Birth of Service Science: IBM Centennial Icon of 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
76 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
What about advanced manufacturing?http://www.youtube.com/watch?v=nd5WGLWNllA
77 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
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
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
F F
B B
ServiceBusiness
ProductBusiness
Front-Stage Marketing/Customer Focus
Back-Stage Operations/Provider Focus
Ba
sed
on
Le
vitt
, T
(1
97
2)
Pro
du
ctio
n-li
ne
ap
pro
ach
to
se
rvic
e.
HB
R.
e.g., IBM
e.g., Citibank
“Eve
ryb
od
y is
in s
erv
ice
...
So
me
thin
g is
wro
ng
…
Th
e in
du
stria
l wo
rld h
as
cha
ng
ed
fa
ste
r th
an
ou
r ta
xon
om
ies.
”.
78 © 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)
Learning MoreAbout Service Systems…
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