Ssmed india 20080128

Service Research and Innovation | Almaden Research Center © 2007 IBM Corporation1

Almaden Service Research Overview

Jim SpohrerAlmaden Service ResearchJanuary 28th, 2007

Service Science,

Management, Engineering, and Design Emerging

IBM Service Research

© 2007 IBM Corporation2 Service Research and Innovation | Almaden Research Center

What kinds of things are we investing in to innovate (build, scale, improve)?

Antiquity Weapons & Defense– Military Engineering

1852 Buildings, Roads & Bridges– Civil Engineering (ASCE)

1880 Steam Engines & Machinery– Mechanical Engineering (ASME)

1884 Electric Grid & Circuits– Electrical Engineering (AIEE/IEEE)

1907 Better Farms & Crops– Agriculture & Biological Engineering

(ASAE/ASABE)

1908 Fuels, Fertilizers,etc.– Chemical Engineering (AICE)

1948 Better Factories & Automation– Industrial Engineering (ASIE/IIE)

1948 Computers– Computing Machinery (ACM)

1954 Power Plants– Nuclear Engineering (ANS)

1955 Sustainable Construction– Environmental Engineering (AAEE)

1963 Jets and Rockets– Aerospace Engineering (AIAA)

1968 Medical Instruments– Biomedical Engineering (BMES)

1985 Better Plants & Animals– Genetic Technologists (AGT)

1992 Financial Instruments– Financial Engineering (IAFE)

1993 Applications & Web Sites– Software Engineering (JCESEP)

2007 Better Service Systems & Service– Service Research & Innovation Initiative (SRII)– Service Science, Management, and Engineering (SSME)– Service Enterprise Engineering (SEE)– Service Systems Engineering (SSE)

3

SSME: Service Science, Management, and Engineering

IBM Research © 2007 IBM Corporation

To nations, innovation sustains skilled employment/export growth

1800- England Industrial Revolution

1850- Germany Chemical Revolution

1900- USA Electrical & Information Revolution

1950- Japan Quality Innovation: Product Revolution

1990- Finland Mobile Communication Revolution

2000- China Cost Innovation: Product Revolution

2000- India Cost Innovation: Service Revolution

? ? The Next Innovation & Revolution

Sustainable growth depends on innovation viaregional government, industry, academic collaboration.

© 2005 IBM Corporation4 Service Research and Innovation | Almaden Research Center © 2007 IBM Corporation

Nation Labor %

A %

G%

S%

ServiceGrowth

China 21.0 50 15 35 191%

India 17.0 60 17 23 28%

U.S. 4.8 3 27 70 21%

Indonesia 3.9 45 16 39 35%

Brazil 3.0 23 24 53 20%

Russia 2.5 12 23 65 38%

Japan 2.4 5 25 70 40%

Nigeria 2.2 70 10 20 30%

Bangladesh 2.2 63 11 26 30%

Germany 1.4 3 33 64 44%

Ten NationsTotal 50% of World Wide Labor

A = Agriculture, G = Goods, S = Services 1980-2005PC Age

2005United States

The largest labor force migration in human history is underway, driven by global

communications, business and technology growth, urbanization and low cost labor

(A) Agriculture:Value from

harvesting nature

(G) Goods:Value from

making products

(S) Services:Value from enhancing the

capabilities of things (customizing, distributing, etc.) and interactions between things

Economic Change…

International Labor Organization

US Employment History & Trends


Service Scientists Innovate Service Systems

Service Systems Worldview

Population Entities: Service Systems

Interactions: Value Propositions

Outcomes: Value-Cocreation or Disputes

Service Scientists

Entrepreneur+Architect+Engineer

Consultant+Manager+

Mathematician

CREATE SCALE IMPROVE

SERVICE SYSTEMSINNOVATIONS


Global Change and SSME

In 2006 the service sector’s share of global employment overtook agric. for the first time, increasing from 39.5% to 40%. Agric.decreased from 39.7% to 38.7%. The industry sector accounted for 21.3% of total employment. - International Labour Organization

Germany $87M Innovation with ServicesEU $100M NESSI pendingChina 5 Yr Plan Modern ServicesJapan $30M Service ProductivityUS $4M+ NSF SEE HR 2272/1106. . . And More!(>$300M total)Related activities to date

- ACM, IEEE, INFORMS, SRII SIGs - 130 Programs, 44 Countries - Over 100 conference and journal papers - >100 Press, >10,000 Web site mentions - IBM – 500 Service Researchers WW

What is SSME really-- Focus on systematic service innovation-- Emerging discipline & professions-- Research area


Impact: IBM’s Component Business Model/Service Systems

Business Service Components

Work Practices & Processes

Technical Architecture

Nations, Industries, Components-Measure (KPIs)IEEE Computer, Jan 2007


Impact: Business Insights Solutions/BISON

Valium (Trade Name)

Diazepam(Generic Name)

CAS # 439-14-5(Chemical ID #)

Valium>149 “names” Also New Book: Mining the Talk, Spangler & Kreulen

Courtesy ofJean Paul Jacob, IBM


Impact: Intelligent Document Gateway Solutions

Process

Digitization

Business Logic


Impact: Call Centers – Agent ServicesSolutions that put it all together

Components

Analytics

Processes

Dashboard

Performance


Service Science Lab: Design, Improve, Innovateservice system, value proposition, governance mechanisms

Service Systems

Real World Sensor augments

Semantic augments

Virtual World Design servicescape

Rehearsals

Simulated World Design exploration

Service systems CAD

“We expect a production increase of 5–10 percent with Intelligent Oilfield," Jonathan Krome, IBM.

Jacob Hall

“IBM's Traffic Prediction Tool predicted traffic flows … …results were well above the target accuracy

of 85 percent,” Teresa Lim IBM

Courtesy ofJean Paul Jacob, IBM



Why understanding service innovation matters to IBM

Fundamental Service Science Challenge: Scaling & learning curves are different for IT manufacturing and IT services

How to invest to make progress (efficiency, effectiveness and sustainable growth)?


Service System1. People 2. Technology3. Shared Information4. Organizations

connected by value propositionsComputational System

More transistors, more powerful More win-win interactions, more value

What would a service science breakthrough look like? How about a Moore’s Law of Service Systems? Why not?


0 25 50 100 125 150

Automobile

75

Years

50

100TelephoneElectricity

Radio

Television

VCR

PC

Cellular

Inte

rnet

% A

do

pti

on

Question: What limits sustainable growth rates?(new knowledge to new value for populations)

Supply:Invention

Demand:Customeradoption

Servicesystemgrowth

Access

Laws

Skills

ROI


SSMED – T-shaped professionals are adaptive innovators

Social Science (People)

Management(Business)

Engineering (Technology)

Core Field of Study

Interactional Expertise Across Other Fields

Tower of Babel“Biggest problem in businessis people don’t know how to talk to other people in the

language they understand.”Charles Holliday, CEO Dupont

Based on slides by Jean Paul Jacob, IBM

Across industriesAcross culturesAcross functions

Across disciplines=

More experiencedMore adaptive

More collaborative

Designed together



“Service science is just ___<name your discipline>____”

OR/IEMS

CS/AIMultiagent Systems

Economics & LawGame Theory

MIS Anthropology& Psychology

General SystemsTheory

A ServiceSystem is Complex

ServiceOperationsMarketing

ManagementQuality

Supply ChainHuman Factors

DesignInnovation

EngineeringSystems

ComputingEconomics

ArtsScience

InformationScience

(i-schools)

Organization Theory


Succeeding through Service Innovation

Service systems are dynamic value co-creation configurations of people, technology, organizations, and shared information (such as language, laws, measures, models, etc.), connected internally and externally by value propositions, with governance mechanism for dispute resolution.

http://www.ifm.eng.cam.ac.uk/ssme/

19

ProductivityProductivity

SustainableSustainableInnovationInnovation

RegulatoryRegulatoryComplianceCompliance

N a t i o n s

N a t i o n s

MeasuresMeasuresof Front Stage (direct customer interactions) and Back Stage (supporting activities)of Front Stage (direct customer interactions) and Back Stage (supporting activities)

Components of Businesses, Government Agencies, Non-Profits, etc.Components of Businesses, Government Agencies, Non-Profits, etc.

I n d u s t

r i e s

I n d u s t

r i e s

QualityQuality

The world consists of service systems interacting,allowing many thousands of possible

Service Science Lab projects

Courtesy ofSteve Kwan, SJSU

20

San José State University

Developing a Developing a Service Science, ManagementService Science, Management

and Engineering (SSME)and Engineering (SSME)Program at SJSUProgram at SJSU

Prepared for discussion at Frontiers in Service ConferencePrepared for discussion at Frontiers in Service ConferenceOctober 4-7th, 2007October 4-7th, 2007

Stephen K. Kwan, Ph.D.Stephen K. Kwan, Ph.D.Professor, MISProfessor, MIS

College of BusinessCollege of Business

Lou Freund, Ph.D.Lou Freund, Ph.D.Chair, Industrial & Chair, Industrial & Systems EngineeringSystems Engineering

College of EngineeringCollege of [email protected][email protected]

21


http://www.usnews.com/usnews/edu/grad/articles/brief/gbeng_brief_2.php

22


http://www.ilo.org/public/english/region/asro/bangkok/public/releases/yr2007/pr07_02sa.htm

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Industrial & Systems Engineering 142 / 242Industrial & Systems Engineering 142 / 242 “Service Engineering and Management”

• Introduction to services / experiential economy and role of systems Introduction to services / experiential economy and role of systems engineeringengineering

• Goal: Introduce students to applications of ISE concepts and Goal: Introduce students to applications of ISE concepts and methodologies in the services environmentmethodologies in the services environment

• Text: Service Management – Text: Service Management – Fitzsimmons and FitzsimmonsFitzsimmons and Fitzsimmons, McGraw-, McGraw-HillHill

• Cases to illustrate concepts and strategiesCases to illustrate concepts and strategies• Guest speakers Guest speakers • Teaching experience will form basis for future program designTeaching experience will form basis for future program design

Offered Fall 2007

Offered Fall 2007

MBA 297DMBA 297D “Service Systems Management”

To Be Offered Spring 2008

To Be Offered Spring 2008

Grad

Undergrad

24


Integrating the Curriculum with a Shared Integrating the Curriculum with a Shared Service Systems LabService Systems Lab

What are the Characteristics of a Service Systems Lab?What are the Characteristics of a Service Systems Lab?(as compared to a Manufacturing Systems Lab (as compared to a Manufacturing Systems Lab ) )

25


What are the Characteristics of a Service Systems Lab?What are the Characteristics of a Service Systems Lab?(Computer Lecture Lab is (Computer Lecture Lab is notnot a Service Systems Lab a Service Systems Lab ) )

26


Service Science Lab Layout

Characteristics of a Characteristics of a Service Science LabService Science LabPhysical World

Simulated WorldVirtual World


Service Research and Innovation | Almaden Research Center © 2007 IBM Corporation28

Service Research to Improve/Innovate Service Systems:Entities (service systems), Interactions (value propositions),Outcomes (value co-creation or disputes/governance mechanisms)

Jim SpohrerAlmaden Service ResearchDecember 3, 2007

Service Science,

Management, Engineering, and Design Emerging

© 2005 IBM Corporation29 Service Education, Research, and Innovation | Almaden Research Center © 2007 IBM Corporation

US News – Smart Choices Graduate Engineering

ENVIRONMENTAL ENGINEERING It's a growing field, and engineers are

needed to clean up existing pollution problems and prevent future ones.

SERVICE SCIENCE, MANAGEMENT, AND ENGINEERING (SSME)

This emerging discipline is getting a big push from industry, including IBM and Hewlett-Packard. SSME combines engineering, computer science, economics, and management to improve the service sector.

http://www.usnews.com/usnews/edu/grad/articles/brief/gbeng_brief_2.php


The U.S. National Innovation Investment Act

US House and Senate voted to approve on August 2nd,, 2007; President has signed.

SEC. 1005. STUDY OF SERVICE SCIENCE.

(a) Sense of Congress- It is the sense of Congress that, in order to strengthen the competitiveness of United States enterprises and institutions and to prepare the people of the United States for high-wage, high-skill employment, the Federal Government should better understand and respond strategically to the emerging management and learning discipline known as service science.

(b) Study- Not later than 270 days after the date of enactment of this Act, the Director of the Office of Science and Technology Policy, through the National Academy of Sciences, shall conduct a study and report to Congress regarding how the Federal Government should support, through research, education, and training, the emerging management and learning discipline known as service science.

(c) Outside Resources- In conducting the study under subsection (b), the National Academy of Sciences shall consult with leaders from 2- and 4-year institutions of higher education, as defined in section 101(a) of the Higher Education Act of 1965 (20 U.S.C. 1001(a)), leaders from corporations, and other relevant parties.

(d) Service Science Defined- In this section, the term `service science' means curricula, training, and research programs that are designed to teach individuals to apply scientific, engineering, and management disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, and social and legal sciences, in order to encourage innovation in how organizations create value for customers and shareholders that could not be achieved through such disciplines working in isolation.

Almaden Services Research

© 2007 IBM Corporation31 Service Science

Service Research and Innovation Initiative

http://www.thesrii.org/http://www.thesrii.org/

© 2005 IBM Corporation32 Service Science | Almaden Research Center © 2007 IBM Corporation

What is science?

Data (Observation) Model (Theory) Analytics (Testing Validity) Take Action (Utility)

Scientific Method (Standards of Rigor) Scientific Community (Body of Knowledge) Scientific Instrumentation (Tools & Math) Value of Science (Professional Relevance)

Mature Emerging


Summary: What should a service scientist know?

I. Theoretical & Practical Foundations1. Service Concepts & Questions2. Service Tools & Methods

II. Disciplines & Interactional Expertise3. History: Service Economics & Law (Evolution)4. Service Marketing & Quality Measure5. Service Operations & Productivity Measure6. Service Governance & Compliance Measure7. Service Design & Innovation Measure8. Service Anthropology & People Resources9. Service Engineering & Technology Resources10. Service Computing & Information Resources11. Service Sourcing & Organization Resources12. Future: Management & Strategy (Investment)

III. Professions & Contributory Expertise13. Service Mindset & Entrepreneurship14. Service Science & Leadership

Service systems are dynamic value co-creation configurations of people, technology, organizations, and shared information (such as language, laws, measures, models, etc.), connected internally and externally by value propositions, with governance mechanisms for dispute resolution.


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Component Business Model to Help Decompose Your Business Experience and Know-how from Thousands of Client Engagements

70+ maps supporting 17 industries 23 enhanced with key performance

indicators (KPI) Over 2,000 trained CBM specialists

armed with the CBM tool 30 CBM patents filed CBM tool license available to clients

Component Business Modeling tool 2.0

Integrates with WebSphere Business Modeler

Presentation to Gartner in October 2007, by R. Leblanc

36

Integrating Component Business Models with Industry Process Models

+ =

IBM is bringing together its Business Process Management Center of Excellence (BPM CoE), IBM Research, and the Global Business Solution Center (GBSC) to map Component Business Models (CBM) to Industry

Process Models

Component Business Models (CBM) and Tool

Industry Process Models in WBM, built by BPM CoE,

leveraging APQC’s Process Classification Framework

Result: business transformation engagements delivered more quickly,

through more industry-specific insights and more powerful CBM Tool

Presentation to Forrester in November 2007, by T. Rosamilia

37

Creating New Industries

• “History teaches us that we have hugely underestimated capacity to create new industries and recreate existing ones. In fact, the half century old Standard Industrial Classification (SIC) system published by the US Census was replaced in 1997 by the North American Industry Classification Standard (NAICS) system. The new system expanded the ten SIC industry sectors into twenty sectors to reflect the emerging realities of new industry territories. The services sector under the old system, for example, is now expanded into seven business sectors ranging from information to healthcare and social assistance.”

• Kim, W. Chan and Renee Mauborgne (2005) Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Harvard Business School Press. Boston, MA.


“Everybody is in service.” – Theodore Leavitt, 1972

“This idea that any manufacturing or service delivery involves activities in both the front stage and the back stage was expressed by Theodore Leavitt as early as 1972. ‘There are no such things as service industries. There are only industries whose service components are greater or lesser than those of other industries. Everybody is in service.’” (Pp. 14-15); “Every activity, therefore, consists of both an interaction (the service aspect) and a material transformation (the product aspect).” (Pg 19)

Teboul, James (2006) Service Is Front Stage: Positioning Services for

Value Advantage, INSEAD Business Press,

Palgrave MacMillan.


Communications of the ACM, July 2006


Complex Systems“The goal of science is to make the wonderful and complex understandable and simple – but not less wonderful.” – Herb Simon, Sciences of the Artificial

A. Informal Service Systems B. Formal Service Systems

1. Social Systems Human Systems

2. Political Systems Governed Systems Value Systems

3. Economics Systems 4. Legal Systems 5. Organizational Systems

Managed Systems 6. Information Systems

Linguistic Systems Mathematical Systems

7. Engineered Systems Technological Systems Designed Systems

8. Ecological Systems Evolved Systems

A.

B.

1.2.

3.

4.5.

6.

7.

8.



University of California – Berkeley SSME certificate program

Michigan Technical University – Houghton Engineering degree specialization

Virginia Tech Center focused on service systems

A glance at 3SSME Programs

Universities taking action and testing the water


http://ssme.berkeley.edu/index.php

University of California - Berkeley

Certificate in SSME

Born of CITRIS, a center created to support service research and the development of SSME program at UC Berkeley

Blend of services theory and pragmatic learning

Awarded to UC Berkeley graduate students in the schools of Business, Engineering, or Information

Requirements Two required core courses

The Information and Services Economy Information and Business Architecture

SSME lecture series Select number of elective courses


Michigan Technical University

http://www.sse.mtu.edu/

Service Systems Engineering (SSE)

Developed new engineering curriculum devoted entirely to and especially for industries within the service sector

The emphasis on design and operation of service processes and systems for industry, academic and government enterprises

Focus on Engineering rather than Business Engineering methodology for design, operation, & problem

solving Emphasis on process over product—not tied to manufacturing or

mechanical engineering legacy Emphasis on people and human behavior

Focus on customer interaction with service processes and systems

Degree specialization Housed in the School of Engineering – BSE (Bachelor of

Science in Engineering Degree) Curriculum Elements

General Education (28 credits) Basic Math & Science (32 credits) Engineering Fundamentals (28 credits) Specific Engineering Emphasis (Service Sector Core – 27

credits) Technical Electives (Service Sector Electives – 9 credits)


Virginia Tech

Center for Service Science, Quality and Innovation

Coordinates research, instruction and outreach activities for the design, improvement and innovation of service systems

SSQI promotes a systematic approach to service design that combines an understanding of business processes, customer needs and emerging technologies

It seeks to develop measures of effectiveness for service systems and improve those systems through quality initiatives and innovation

Research Projects Designing a Sustainable Performance

Management System for the Hospitality Industry Consolidated Disaster Recovery and Planning

Services for the United States Department of Defense

Collaborative Education as a Service: The Living in the Knowledge Society Initiative

http://www.ssqi.pamplin.vt.edu/


“The IBM SSME Palisades event was the biggest and most diverse gathering ever in support of service education.” – Roland Rust

What IBM is doing… www.thesrii.org

47



http://www.nytimes.com/2006/04/18/business/18services.htmlhttp://www.nytimes.com/2006/04/18/business/18services.html

Stay tuned!

TheJourney

Continues


49



SSME: Growing Body of Knowledge about Service

Economics and Social Science

Management

Engineering

Smith

1750 1800 1850 1900 1950 2000

100%

75%

50%

25%

Marx Clark

Percentage of labor force in service sector: US (blue) and World (green)

Argyris

Glushko

Alter

Bryson et alMilgrom& Roberts

Jaikumar & Bohn

March& Simon

Lusch & Vargo

Berry (1999), Teboul (2006)Fisk, Grove, & John (2000) .Davis

Fitzsimmons & Fitzsimmons (2001) Grönroos (2000), Sampson (2000)

Hoffman & Bateson (2002) Lovelock & Wright (2001)Zeithaml & Bitner (2003)

Hesket, Sasser, & Hart, Rust, RamirezPine & Gilmore, Schneider, Chase

Murmann, Seabright, Latour, SenCohen & Zysman, Triplett & Bosworth,Abbott, Baumol, Hill, Gadrey & Gallouj

StermanGanz, Weinhardt, RouseTiene & Berg, Carley

Herzenberg, Alic&Wial

Taylor Deming

Bastiat

50



Textbooks

Berry (1999) Chase, Jacobs, Aquilano Davis Fisk, Grove, & John (2000) Fitzsimmons & Fitzsimmons (2001) Grönroos (2000)

Hoffman & Bateson (2002) Lovelock & Wright (2001) Sampson (2000) Teboul (2006) Zeithaml & Bitner (2003)

Service Management: Operations, Strategy, and Information Technologies

by James Fitzsimmons and Mona Fitzsimmons

51



Journal and Conference

52



On what foundational logic, could we build a science of service?

Defines service as the application of competencies for the benefit of another entity and sees mutual service provision, rather than the exchange of goods, as the foundational logic

This new paradigm is service-oriented, customer-oriented, relationship-focused, and knowledge-based

The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions

by Robert F. Lusch and Stephen L. Vargo

53



How to invest to make progress?

Service System (Value Creating System)1. People (division of labor, multi-tasking)2. Technology3. Value Propositions Connecting Internal and External Service Systems4. Shared Information (language, laws, measures)Computational System

Moore’s LawHigher density transistor

configurations

Normann’s Law?Higher density value co-creation

configurations

Reframing Business: When the Map Changes the LandscapeRichard Normann


Service Science Concepts

Service activity defined The application of knowledge &

competence for the benefit of another (win-win value co-creation)

Service systems Dynamic value co-creation

configurations of resources (people, technology, organizations, and shared information)

Improve measures: quality, productivity, regulatory compliance, sustainable innovation

Value propositions Formal service system: legal contract Informal service system: relationship

Governance mechanisms Dispute resolution/bounded coercion Authoritative decisions & parametersIEEE Computer, Jan 2007


56



A service system is a type of complex system

“People-Oriented, Services-Intensive, Market-Facing Complex Systems – complex systems and services – are very similar areas

around which we are framing the very complicated problems of business and societal systems that we are trying to understand.”

– Irving Wladawsky-Berger, IBM VP Innovation (Oct. 9, 2006)

57



Building tools & organizations – accelerating growth of capabilitiesBillion Years Ago Natural Processes

12 Big Bang (EMST)

11.5 Milky Way (Atoms)

8 Sun (Energy)

4.5 Earth (Molecules)

3.5 Bacteria (Cell)

2.5 Sponge (Body)

0.7 Clams (Nerves)

0.5 Trilobites (Brains)

0.2 Bees (Swarms)

0.065 Mass Extinctions

0.002 Humans Tools & Clans Coevolution

Generations Ago Human Processes

100,000 Speech

750 Agriculture

500 Writing

400 Libraries

40 Universities

24 Printing

16 Accurate Clocks

5 Telephone

4 Radio

3 Television

2 Computer

1 Internet/e-Mail

0 GPS, CD, WDM

Global Brain: The Evolution of Mass Mind from the Big Bang to the 21st Century

by Howard Bloom

Nonzero : The Logic of Human Destiny by Robert Wright

58



Progression of phenomena: Emergence of Complex Systems

h

Physical SystemPhysics

Chemical SystemChemistry

Biological SystemBiology

Human SystemAnthropology

Service SystemService Science

Culture

People withmental models

Language

Trust

Tools &Technology

OrganizationsAndInstitutions

Value Co-Creation(Service)

Things That Make Us Smart by Donald A. Norman

59



How did the service systems come to be?

0

20

40

60

80

100

120

Services (Info)

Services (Other)

Industry (Goods)

Agriculture

Hunter-Gatherer

Estimations based on Porat, M. (1977) Info Economy: Definitions and Measurement

Estimated world (pre-1800) and then U.S. Labor Percentages by Sector

The Pursuit of Organizational Intelligence, by James G. March Exploitation vs exploration

The Origin of Wealthby Eric D. Beinhocker

60



10,000 years ago – Agriculture & Cities

Evolution of Trust: Human beings are the only species in nature to have developed an elaborate division of labor between strangers. Even something as simple as buying a shirt depends on an astonishing web of interaction and organization that spans the world. But unlike that other uniquely human attribute, language, our ability to cooperate with strangers did not evolve gradually through our prehistory. Only 10,000 years ago--a blink of an eye in evolutionary time--humans hunted in bands, were intensely suspicious of strangers, and fought those whom they could not flee. Yet since the dawn of agriculture we have refined the division of labor to the point where, today, we live and work amid strangers and depend upon millions more. Every time we travel by rail or air we entrust our lives to individuals we do not know. What institutions have made this possible?

The Company of Strangers : A Natural History of Economic Lifeby Paul Seabright

61



200 years ago – Railroads/Telegraphs & Businesses

Effects of A

griculture,C

olonial Expansion &

Econom

ics, S

cientific Method, Industrialization

& P

olitics, Education, H

ealthcare &

Information T

echnologies, etc.

The Visible Hand: The Managerial Revolution in American Businessby Alfred Dupont Chandler

Rise of the m

odern managerial

firm


63



The purpose of Service Systems is Value Co-creation(North’s economic institutions, Barnard’s cooperative systems, Trist’s sociotechnical systems, Engelbart’s augmentation systems, Normann’s value creation systems, Malone’s coordination science, Flores, Williamson TCE/NIE/Contracting, etc.)

Provider and client interact to co-create value

Value is achieving desired change or the prevention/undoing of unwanted change

Changes can be physical, mental, or social

Value is in the eye of the beholder, and may include complex subjective intangibles, bartered – knowledge intensive

trust matters

transaction costs matter Boundary of service experience in

space and time may be complex

Lose-win(coercion)

Win-win(co-creation)

Lose-Lose(co-destruction)

Win-Lose(loss lead)

Client

Pro

vide

r


Another perspective of service… systems of relationships

Customers and providers co-create value in and through their interactions with one another

Many services require the participation of a customer

hair stylist – client doctor – patient teacher – student IT service provider – business

client

Relationships matter!“… the important distinction is that the relationship has become a resource in itself… thus the returns have now more to do with extending the scope, content and process of the relationship.” Bryson, Daniels and Warf – from Service Worlds

A. Service Provider

• Individual• Organization• Public or Private

C. Service Target: The reality to be transformed or operated on by A, for the sake of B

• People, dimensions of• Business, dimensions of• Products, goods and material systems• Information, codified knowledge

B. Service Client


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)

- Based on Gadrey (2002)

65



Complexity 1: So many types of service jobs/industries

People Business

Products Information

enable develop enable transform

designoperate &maintain

create utilize

Industrial services Information services

Business servicesConsumer services

Non-market services

66



Complexity 2: So many academic disciplines…

People Business

Products &Nature

Information

Schools ofScience & Engineering Information Schools

Schools ofBusiness Management

Schools ofSocial Science

67



People

“All the information workers observed experienced a high level of fragmentation in the execution of their activities. People averaged about three minutes on a task and about two minutes on any electronic device or paper document before switching tasks.”

Gloria Mark and Victor M. Gonzalez, authors of “Research on Multi-tasking in the Workplace”

68



Families

"The family is the natural and fundamental group unit of society and is entitled to protection by society and the State".

Article 16(3) of the Universal Declaration of Human Rights

“Developing a Family Mission Statement”Stephen R. Covey, author of The 7 Habits of

Highly Effective Families

“In the agricultural age, work-life-and-family blended seamlessly.”

IBM GIO 1.0

69



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

70



Nations

“Understanding economic change including everything from the rise of the Western world to the demise of the Soviet Union requires that we cast a net much broader than purely economic change because it is a result of changes in (1) the quantity and quality of human beings; (2) in the stock of human knowledge particularly as applied to human command over nature; and (3) the institutional framework that defines the deliberate incentive structure of a society.”

Douglass C. North, author of Understanding the Process of Economic Change

71



Universities

“The contemporary American university is in fact a knowledge conglomerate in its extensive activities, and this role is costly to sustain.”

Roger L. Geiger, author of Knowledge and Money: Research Universities and the Paradox of the Marketplace

72



Businesses

“…of the 100 entities with the largest Gross National Product (GNP), about half were multi-national corporations (MNCs)… The MNCs do not exist on traditional maps.”

Alfred Chandler and Bruce Mazlish, authors of Leviathans

“The corporation has evolved constantly during its long history. The MNC of the late twentieth century … were very different from the great trading enterprises of the 1700s. The type of business organization that is now emerging -- the globally integrated enterprise -- marks just as big a leap. “

Sam Palmisano, CEO IBM in Foreign Affairs

73



Hospitals

“Modern medicine is one of those incredible works of reason: an elaborate system of specialized knowledge, technical procedures, and rules of behavior.”

Paul Starr, author of The Social Transformation of American Medicine

74



Call Centers

“Call Centers For Dummies helps put a value on customer relations efforts undertaken in call centers and helps managers implement new strategies for continual improvement of customer service.”

Réal Bergevin, author of Call Centers For Dummies

75



Data Centers

“All data centers are unique, but they all share the same mission: to protect your company’s valuable information.”

Douglas Alger, author of Build the Best Data Center Facility for Your Business


77



On what theory of economics, could we build a science of service?

Firms: Viewed as historically situated combiners of heterogeneous and imperfectly mobile resources under conditions of imperfect and costly to obtain information, towards the primary objective of superior financial performance.

Resources: Viewed as tangible and intangible entities available to the firm that enable it to produce efficiently and/or effectively a market offering that has value for some market segment(s).

A General Theory of Competition : Resources, Competences, Productivity, Economic Growth (Marketing for a New Century)by Shelby D. (Dean) Hunt

78



How do new professions arise?

In The System of Professions Andrew Abbott explores central questions about the role of professions in modern life: Why should there be occupational groups controlling expert knowledge? Where and why did groups such as law and medicine achieve their power? Will professionalism spread throughout the occupational world? While most inquiries in this field study one profession at a time, Abbott here considers the system of professions as a whole. Through comparative and historical study of the professions in nineteenth- and twentieth-century England, France, and America, Abbott builds a general theory of how and why professionals evolve.

The System of Professions: An Essay on the Division of Expert Labor

by Andrew Abbott

79



How do new professions and new disciplines coevolve with government institutions?

Emergence of German dye industry, German mid-19th Century Emergence of chemistry as an academic discipline Emergence of patent protection in the new area of chemical

processes and formula Emergence of new relationships connecting firms, academic

institutions, government agencies, and clients Demonstrates needed coevolution of firms, technology, and national

institutions Took England and US over 70 years to catch up!!!

Knowledge and Competitive Advantage : The Coevolution of Firms, Technology, and National Institutions

by Johann Peter Murmann

80



How does the service economy and the innovation economy relate?

“… modern economies are both service economies and economies of innovation. Paradoxically, they are not regarded as economies of innovation in services, that is as economies in which service firms' innovation efforts are proportional to their contribution from the major economic aggregates. It is as if service and innovation were two parallel universes that coexist in blissful ignorance of each other.”

Gallouj, F. (2002). Innovation in the Service Economy: The New Wealth of Nations. Cheltenham UK: Edward Elgar.

Productivity, Innovation and Knowledge in Servicesby Jean Gadrey and Faiz Gallouj

81



Shared Information: Reasoning about Knowledge Formalization of shared mental models of the world

- Model of social world as multiple agents with shared knowledge/information, interacting based on that knowledge

Common Knowledge Defined (everyone knows…) Distributed Knowledge (collectively we know…) “Muddy Children Problem” Percentage Total Info: Less in memory, more on line

Reasoning About Knowledge by Ronald Fagin, Joseph Y. Halpern,

Yoram Moses, Moshe Y. Vardi

82




84



Under what conditions do value propositions exist between service systems to justify service-for-service exchanges?

Case 1 – complementary superior performance

Costs

A = 1 4, B = 3 2

Self Service

A: 10 + 40 = 50

B: 30 + 20 = 50

Over produce best by one and exchange

A: 11 + 36 = 47

B: 27 + 22 = 49

Case 2 – one with strictly superior performance, namely A

Costs

A = 1 2, B = 4 3

Self Service

A: 10 + 20 = 30

B: 40 + 30 = 70

Over produce best by one and exchange

A: 11 + 18 = 29

B: 36 + 33 = 69

Assume service system A and B (imagine two people, family-clans, cities, nations, or businesses) each produce two same kinds of service, each have demand for ten performances of the services each day, and each have different costs of producing the services for self-service consumption

Surprisingly, in Case 2, it still makes sense to exchange service for service as well! Of course, this ignores transaction costs associated with the exchange… What happens when the cost decreases with experience/learning/innovations? What about trading the skill to perform a service, rather than simply performances?

85



Under what conditions are compliance laws innovative in a service system of selfish optimizers?

Pigou’s ExampleA population of commuters must drive from point A to point B. There are two roads. The first road always takes one hour. The second road takes time proportional to the amount of traffic (all = 1). If everyone takes the second road, the time is one hour. All drivers take the second road, it is never worse than one hour, and maybe better.

Braess’s ParadoxTwo roads with composed of two parts. First road has constant one hour plus one hour max if congested. Second road has one hour max if congested plus one hour. Traffic splits so everyone gets from point A to point B in 90 minutes. However, by adding a zero cost interchange connecting the two midpoints, now everyone takes the two connected congested routes, and now every takes 120 minutes!

A B

C(x) = 1

C(x) = x

A law that mandates odd and even license plates take different routeson different days, if backed up with sampling and tickets/fines, could yield better results.

86



Law and Economics

Problem: Almost any business strategy or societal policy change will be viewed negatively by some stakeholder

Pareto EfficiencyCan anyone be improved,

without making someone else worse off?

Kaldor-Hicks EfficiencyCan anyone be improved,

such that anyone made worse off can be adequately compensated for their lose?


Understanding service systems

Service Science Service science is the systematic

study of service and service systems

SSME SSME is a discipline that brings

together scientific understanding, engineering principles, and management practices to design, create, and deliver service systems

Service A service is an act in which providers

and clients co-create value

Service System Value co-creation configurations of

integrated resources: people, organizations, shared information and technology

88



Service systems are dynamic value co-creation configurations of people, technology, organizations, and shared information (such as language, laws, measures) connected internally and externally by value propositions, with governance mechanisms for dispute resolution.

Service systems are designed computer systems

Service systems evolve linguistic and social systems

Service systems have scale-emergent properties

economic systems

89



Herbert A. Simon – Gets my vote as the first service scientist

http://en.wikipedia.org/wiki/Herbert_Simon “Herbert Simon (1916-2001), in the course of a long and

distinguished career in the social and behavioral sciences, made lasting contributions to many disciplines, including economics, psychology, computer science, and artificial intelligence. In 1978 he was awarded the Nobel Prize in economics for his research into the decision-making process within economic organizations. His well-known book The Sciences of the Artificial addresses the implications of the decision-making and problem-solving processes for the social sciences. “

Models of a Man : Essays in Memory of Herbert A. Simon

by Mie Augier (Editor), James G. March (Editor)

The Sciences of the Artificial by Herbert A. Simon


Engineering Service Science | Teleconference | November 6,, 2007

Service Science, Management, and Engineering (SSME): A Next Frontier in Education,Employment, Innovation, andEconomic Growth

Presented by Dr. Jim SpohrerDirector, Service ResearchIBM Almaden Research Center, San Jose, [email protected]


Global Labor Shift to Service Activities

In 2006 the service sector’s share of global employment overtook agriculture for the first time, increasing from 39.5% to 40%. Agriculture decreased from 39.7% to 38.7%. The industry sector accounted for 21.3% of total employment.

- International Labour Organization

http://www.ilo.org/public/english/region/asro/bangkok/public/releases/yr2007/pr07_02sa.htm


Growing demand for new, complex information and organization (business & societal) service systems….

Services

Material

Information& Organization

11%

9%

30%

50%

Products

-Based on Uday Karmarkar, UCLA(Apte & Karmarkar, 2006)

US Gross Domestic Product


Projected U.S. service employment growth, 2004 - 2014

US Bureau of Labor Statistics. http://www.bls.gov/opub/ooq/2005/winter/art03.pdf

“Service-providing industries are projected to account for most job growth, generating almost 19 million new jobs between 2004 and 2014.

This is due, in part, to increased demand for services and the difficulty of automating service tasks.”


Projected change in US employment, 2004 - 2014

US Bureau of Labor Statistics. http://www.bls.gov/opub/ooq/2005/winter/art03.pdf

“... accounted for more than 20 million jobs.”

“Employment in professional and business services is projected to increase by nearly 4.6 million jobs.

Growth in this sector is led by providers of administrative support services and consulting services.”


Service Education, Research, and Innovation

Services account for more than 80 percent of the U.S. gross domestic product, employ a large and growing share of the science and engineering workforce, and are the primary users of information technology. … [The] academic research enterprise has not focused on or been organized to meet the needs of service businesses. Major challenges to services industries that could be taken up by universities include: (1) the adaptation and application of systems and industrial engineering concepts, methodologies, and quality-control processes to service functions and businesses; (2) the integration of technological research and social science, management, and policy research; and the (3) the education and training of engineering and science graduates prepared to deal with management, policy, and social issues.”

National Academy of Engineering (2003). "The Impact of Academic Research on Industrial Performance"

“Our economy is increasingly dependent on services, yet our innovation processes remain oriented to products.”

Stefan Thomke from Harvard Business Review, April 2003

“Services dominate economic activity in developed economies, and yet understanding of innovation in this sector remains very limited…… At this early stage, academic research about innovation in services is not well defined.”

Henry Chesbrough from Financial Times, October 2004

“Services is an understudied field” Matthew Realff, Director, NSF SSE Program

from NY Times article April 18, 2006Academia Dissects the Service Sector, but Is It a Science? - Steve Lohr


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What students should realize…

S&E Bachelors

1/12 S&E doctoral

1/3 Prof (Bus, Law, Med)

1/3 Other non-S&E degree

1/3 Managers

1/3 Sales

1/12 K-12 Educators 1/12 Healthcare 1/12 Gov & social service

1/24 Communication/Art

1/24 Operate tech

½ more education

½ job leading to…

3/12 S&E masters

Approx. based on Regets, “What do people do after earning a science and engineering bachelor’s degree?”

98



What industry wants from the academy…(based on informal email survey of IBM colleagues *)

Depth (deep discipline knowledge and problem solving expertise)- Strong professional affiliation, conferences, publications

Breadth (multidisciplinary vocabulary & appreciation of value) Practical Experience (Internships, completed projects, patents)

- Ability to use tools of trade effectively Communications (multidisciplinary vocabulary, value propositions) Teaming (multidisciplinary vocabulary & appreciation, interpersonal) Project Management (schedules, deadlines, budgets, resources) People Management (leadership, motivation, cultural, diversity) Strategic Planning (market, competition, opportunity insights) Problem solving via informatics/computation Problem solving via social networks/open forums Flexible, adaptive, and entrepreneurial (idea to deployment) Produced on demand (custom designed to meet business need)

* Note the informal survey was of IBM Research professional 3/21/07

99



Validation of employers expressed strong preference in Teitelbaum’s “A New Science Degree to Meet Industry Needs”

Broad understanding of relevant disciplines at the graduate level and sufficient flexibility in their research interests to move smoothly from one research project to another as business opportunities emerge

Capabilities and experience in the kind of interdisciplinary teamwork that prevails in corporate R&D

Skills in computational approaches Skills in project management that maximize prospects for on-time

completion The ability to communicate the importance of research projects to

nonspecialist corporate managers The basic business skills needed to function in a large enterprise

Professional Science Master (PSM) is very much in the right direction from industry perspective

100



Systemic Problems: What we need to solve…

Lack of large scale data collection about people’s educational and professional trajectories across complete lifespan

what are the transition probabilities between different job/professional roles Ad hoc mechanisms for

tuning academy service efforts to industry needs and opportunities

transforming curricula to stay in touch with latest advances in discipline knowledge (faculty and research interests)

exploiting e-learning systems for continuous improvement

industry and project experience to complement classroom education

projecting future needs No continuous improvement mechanism to year over year decrease the

amount of time it takes to educate students on standard content Too much emphasis on preparing for a job, and too little emphasis on

preparing to be an innovator and entrepreneur

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Relationship of Service Science to Existing Academic Areas:The center balances three key factors

Technology & Information

Business& Value

People& Organizations

51

9 2527

14

28

10

26

24

8

4

1. Service Engineering

2. Service Operations

3. Service Management

4. Service Marketing

5. Social Complexity

6. Agent-based comput-ational economics

7. Computational Organization Theory

14. Computer & Information Sciences

15. Management of Innovation

16. Organization Theory

17. Operations Research

18. Systems Engineering

19. Management Science

20. Game Theory

21. Industrial Engineering

22. Marketing

23. Managerial Psychology

2367

11

12

13

1516

17

18

1920

21

22

23

1990-2004

1960-1990

1900-1960

Before 1900

8. Management of Technology

9. Experimental Economics

10. AI & Games

11. Management of Information Systems

12. Computer Supported Collab. Work (CSCW)

13. Human Capital Management

24. Business Administration (MBA)

25. Economics

26. Law

27. Sociology

28. Education


“Succeeding through Service Innovation”

Recommendations: Education (expertise for 21st Century, SSMED) Research (agenda, integration and service systems) Business (increase awareness, investment, data) Government (increase awareness, investment, data)


Current reality: disciplines tend to concentrate on particular resources categories and discipline-specific research agendas and language.

Desired reality: Integrated systems and experience design approach with shared concepts and tools.


104



Engineering Professional Organizations

1852 Civil Engineering

1880 Mechanical Engineering

1884 Electrical Engineering

1907 Agriculture & Biological Engineering

1908 Chemical Engineering

1948 Industrial Engineering

1954 Nuclear Engineering

1955 Environmental Engineering

1963 Aerospace Engineering

1968 Biomedical Engineering

1985 Genetic Technologists

1992 Financial Engineering

1993 Software Engineering

2007 Service Systems EngineeringService Science, Management, and

Engineering (SSME))

105



Michigan Tech Service Systems EngineeringUndergraduate Major (http://www.sse.mtu.edu/)

128 semesters credits: 22 University defined General Education 15 Mathematics Calculus with Technology I&II, Elementary Linear Algebra, Elementary Differential Equations, Engineering Statistics 11 Science General Chemistry, Physics I, Intro to Psychology 26 Engineering Core Computer Science I, Engineering Analysis and Problem

Solving, Modeling & Design, Statics & Strength of Materials, Circuits and Instrumentation, Thermodynamics & Fluid Mechanics, Multidisciplinary Senior Project

15 Business/Economics Accounting I,

Fnance, (this should touch on Financial Engineering) IS/IT Management Strategic Leadership, Economic Decision Analysis 29 Service Systems Engineering World of Service Systems Engineering () Service System Design Web Based Services Human Interaction in Service Systems Operations of Service Systems () Optimization and Adaptive Decision

Making Project Planning and Management Managing Risk Simulation Quality Engineering 09 Electives

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Can there really be a science of service?

“Wherever there are phenomena, there can be a science to describe and explain those phenomena. Thus, the simplest (and correct) answer to “What is botany?” is, “Botany is the study of plants.” And zoology is the study of animals, astronomy the study of stars, and so on. Phenomena breed sciences.”

- Newell, A., Perlis, A. & Simon, H. A. (1967).

Computer Science, Science, 157, 1373-1374.

107



Possible Objections… to Computer Science

Only natural phenomena breed sciences The term “computer” is not well defined Computer Science is the study of algorithms, not computers Computers are instruments, not phenomena Computer Science is a branch of another science Computers belong to engineering, not science

- Newell, Perlis, & Simon (1967)

108



Possible Objections… to Service Science

Only natural phenomena breed sciences The term “service” is not well defined Service Science is the study of work, not services Services are performances, not phenomena Service Science is a branch of another science Services belong to engineering (or management), not science

- with apologies to Newell, Perlis, & Simon (1967)

109



How will we know when we have succeeded?

A textbook that is used in service science and complex systems courses around the world

Data from variety of service systems (e.g., call center), models, analytics, action research plans and case studies of service systems

Payoff in business and societal results from systematic service innovations

Productivity, quality, compliance, innovation, and learning curves

Better measurement systems, models of business-clients-competitors, and theory of value proposition evolution between service systems, theory of investment, entrepreneurship, and institution formation

Perhaps even a Moore’s like law or investment road map for predictable service system capability growth

We’ve even had a few people starting to propose some!



What is service? Service = value co-creation outcome (via interacting service systems)

Residual (not product) Non-ownership An Act/Performance Intangible products IHIP characteristics

IntangibleHeterogeneousInseparablePerishable

Rental/Access Customer contact Customer-provider

interactions (*) Transformation Apply competence to

benefit another

What: Entities, interactions, outcomesCustomer-provider interactions that co-create value in a mutually agreed to manner(value propositions)Win-win square in prisoner’s dilemma (game theory)Governance for disputes;Reputations & contracts for safeguarding

How: Value co-creationDivision of labor & organizations(with trust, reputation, governance)Ricardo’s law of association or comparative advantage (economics)Learning or experience curvesTechnology substitution/augmentationBased on Sampson, POMS 2007


Worldview: Service systems emerging, reconfiguring, interactingto (normatively) co-create value as judged by stakeholders/roleholders

Dynamic, emerging populations ofservice systems…

New types (creation) New instances Life cycles

Reconfiguring resources and… Owned resources

Accessed resources Resources with rights

and/or as property Can be inputs (+/-IHIP) to

production processes

Interacting to (normatively) co-create value

Value propositions Relationships ISPAR descriptive model

Goal Integrate: Lovelock & Gummesson, Sampson & Froehle, Vargo & Lusch, as well as Chase, Bitner, Rust, and many other pioneers, etc. (Ricardo, Pigou&Braess, Williamson)

ISPAR descriptive (normative) model

113



Category Change DirectionEfficiency Communication and Transportation Costs = - + ?

Efficiency Transaction Costs(Trust, Coase, North, etc.)

= - + ?

Effectiveness World Model Fidelity(sense, store, compute, etc.)

= - + ?

Effectiveness Number of Services Accessible = - + ?

Effectiveness Capabilities/Skills of People(learning curves)

= - + ?

Efficiency & Effectiveness

Time Costs/Quality of Experience(waste, boredom, stress, etc.)

= - + ?

Versatility & Sustainability

Innovation Rates(versus compliance rates)

= - + ?

Versatility & Sustainability

Self Sufficiency(versus interconnectedness)

= - + ?

All Number of People(professions, salaries, ages, diversity, etc.)

= - + ?

How do service systems learn and evolve?


Quadruple Loop Learning of Service Systems

Invest

Relationships Goals Plans Actions

Development(WorldModel

Validity)Versatility

Deeper(Ecology)

Sustainability

Differentiate(Exploration)Effectiveness

Delivery(Exploitation)

Efficiency

Outcomes(Expectation)

Evaluation

Adapting to the world of shareholders, customers, competitors, and employees.

123

4

Performance,Health & Cost

Measures

Relevance& Value

Measures

Reputation& Trust

Measures

Risk& Reward Measures

Rationality& MaturityMeasures

115



Modern service systems tend to give rise to top ten lists…(a kind of shared information; intangible value = reputation/brand)

People – Fortune: Most wealthy, Fellows, etc. Families – Local Communities: Mother of the year Cities – Newsweek: Most livable cities Nations – OECD: Quality of life Universities – Business Week: Top B-Schools Businesses – Business Week: Best employers And more Hospitals, Call Centers, Data Centers, etc.


SSMED: Service Science, Management, Engineering & Design

Operations Research and Industrial Engineering More realistic models of people

Computer Science and Electrical Engineering, Information Systems

Software and systems that adaptively change with business strategy

Economics and Business Strategy, Service Management and Operations

Better models of scaling and innovation

Law and Political Economy Better models of social innovation – in what way is passing a law

innovation

Complex Systems and Systems Engineering Better model of robustness and fragility of service systems

(sustainability)

Service systems are dynamic value co-creation configurations of people, technology, organizations, and shared information (such as language, laws, measures, models, etc.) connected by value propositions with governance mechanism for dispute resolution.

Still feels like a foreign language to you?

This is a multidisciplinary approach in understanding, defining, designing, improving, and innovating service systems


118



Service Service is value co-creation

Value change is the motive for interaction

Co-creation is the method, not doing it alone (self service)

Motive & Method: Have someone else do something (or allow or enable something) so you don’t have to do it yourself, and be deprived of the benefit of the other – what is the value add of the other? what is the cost of the other? what are the alternatives?

Value is complexContext dependent judgment (update mental models of world)

Made by a person or group of people

Sometimes formalized into an explicit measurable quantity

119



So, service is…Invest for improved mutual performance in which client and provider coproduce value

High talent (Person Power)Knowledge-intensive business services (business performance transformation

services) (e.g., chef’s, concert musicians)

High tech (Technology Power)Environment designed to allow average performer to provide a superior

performance, including self service and eventually a utility (average cook with great cook book and kitchen; average musician with a synthesizer)

Highly organized & motivated (Value Proposition Power)Businesses, markets, government services, institutions

Networks of partner both internal and external coordinating performance

Highly coordinated (Shared Information Power)Language, laws, measures (including KPI, prices), explicit models, etc.

120



Service SystemA service system has the capability to

interact with another service system to co-create value

Some example service systems:- Person (smallest)

- Business (1 person to 1 million people)

- Nation (1 million to billions of people)

121



Service System A type of complex system that can evolve & learn

Can nucleate around a person (an entrepreneur, prime mover)

Can grow more intelligent (adapt to/transform environment)

Can disappear (become maladapted to environment)

A value coproduction configuration of- People (division of labor, multitasking)

- Technology

- Value propositions connecting internal and external service systems

- Shared information (language, laws, measures, etc.)

122



Some Sample Service Systems

Universities Hospitals Call Centers Data Centers Families Cities Nations

North, E

conomic Instit

utions

Barnard

, Coopera

tive systems

Normann, V

alue Cre

ation S

ystems

North, E

conomic Instit

utions

Barnard

, Coopera

tive systems

Normann, V

alue Cre

ation S

ystems

123



Spohrer-Engelbart Cycle of Service System Evolution(Augmentation Systems: Bootstrapping Capability Infrastructure via Coevolution of Human System and Tool System)

Population Growth (Atomic Service Systems, Self Service, Multitasking)Assume growing population of service systems in an environment

Each service system is multitasking two services based on two underlying capabilities or competences

Organization Growth (Outsource Service, Higher-Level Multitasking)Advantage of pairs forming to trade, or forming an organization

Coase’s Law and Kaldor-Hicks Efficiency enabled within organization

Thus, a growing populations of multitasking service systems gives rise to increasingly specialized service systems, professions, markets and organizations

Technology Growth (Improvement, Free Time, Rise of New Goals, Multitasking)Over time learning curves and efficiency leads to better competencies

Learning curves improve specialization and technologies used, until it is cost effective to form new service systems that provide the technology

Free time leads to new goals, competences, and more multi-tasking

As technology capability improves some service systems shift back to self service – multitasking more and using high capability technology

Infrastructure Growth (Fairness, New Environment, New Multitasking Goals)If the service and technology become universally needed, the technology may be embedded

into the environment as part of a government action to establish a new utility or national infrastructure (institution formation) to ensure fairness of access

Improved environment fosters population growth


125



The challenge – need shared vocabulary and understanding of what a service system is – a type of complex adaptive system

Operations Research and Industrial EngineeringMore realistic models of people

Computer Science and Electrical Engineering, Information SystemsSoftware and systems that adaptively/autonomously change with business strategy

Economics and Business Strategy, Service Management & OperationsBetter models of scaling and innovation to improve economic efficiency

Law and Political EconomyBetter models of social innovation – in what way is passing a law innovation

Complex Systems and Systems EngineeringBetter model of robustness and fragility of service systems (sustainability)

Service systems are dynamic value co-creation configurations of people, technology, organizations, and shared information (language, laws, measures, models, etc.) connected by value propositions, with governance mechanisms for dispute resolution

Examples: People, families, cities, businesses, nations, global economy, etc.

126



Four area model of anthropology…

PeopleOrganizations

Technology & Nature

SharedInformation

Archeology(material artifacts & configurations)

Linguistic Anthropology(language as social action)

Cultural Anthropology(link social organization, including families,

to cultural models and embodiments)Physical Anthropology

(human biology & cultural practices)

127



Complexity: So many definitions of service…

PeopleOrgan-izations

Technology& Nature

SharedInformation

External Internal

Language, laws, measures, contracts, etc

Connected byValue Propositions

Model ascomplex systems

Service = value co-creation = entities apply knowledge/competence for mutual benefit

Service System: A value dynamic value co-creation configuration of people, technology, organizations, and shared information (language, laws, measures, contracts, etc.) connected by value propositions, with governance mechanisms for dispute resolution.

128



Complexity: No unique, fundamental problems…

PeopleOrgan-izations

Technology& Nature

SharedInformation

External Internal

Language, laws, metrics,standards, culture, etc.

Connected byValue Propositions

Model ascomplex systems

What are the origins, types, and evolutionary patterns of service systems?

How are service systems similar to/different from other types of complex systems?

Are service systems the most complex type of complex system? How to invest?

How are competences transferred from one service system to another?

129



IBM Service Research Agenda

Service Design & MarketingModeling & Simulation, Complex Systems, New Value Propositions

Service Optimization & ManagementEfficiency, Risk Management & Key Performance Indicators (KPIs)

Service Delivery & OperationsProductivity & Versatility

Service Information & QualityCompliance, Effectiveness, Sustainability

Human Capability Augmentation, New Measures & Regulations Service Software Engineering

Agile & Process Automation, Industrialization of Service, Self Service Service Science, Management, and Engineering (SSME)

Service systems foundations


What makes SSME hard is that it is multidisciplinary…

A service system is a dynamic value co-creation configuration of resources (people, technology, organizations, and shared information)

Service system are designed (Artificial) and evolve (Natural) So a service system is a complex socio-technical system Innovation requires investments that impact people, technology,

organizations, and shared information resources

Science & Engineering

Business &Management

Social & CognitiveSciences

Economics & Markets

BusinessInnovation

TechnologyInnovation

SocialInnovation

DemandInnovation



SSMED – T-shaped professionals are adaptive innovators

Social Science (People)

Management(Business)

Engineering (Technology)

Core Field of Study

Interactional Expertise Across Other Fields

Tower of Babel“Biggest problem in businessis people don’t know how to talk to other people in the

language they understand.”Charles Holliday, CEO Dupont

Based on slides by Jean Paul Jacob, IBM

Across industriesAcross culturesAcross functions

Across disciplines=

More experiencedMore adaptive

More collaborative

Designed together

133



What would service scientists actually do?

Service scientist own the body of knowledge around service system problem solving

Service scientists identify a service system that needs improvement

Service scientists identify the stakeholders their concerns and perceived opportunities

Service scientists envision augmentations (additional new service systems) or reconfigurations (of old service systems components) that best address all problems and opportunities

Identify year-over-year improvement trajectories

Identify incentives to change (ROI, leadership, laws)

134



Example: Are there “scale laws” of service innovation – year-over-year compounding effects?

ProblemsInput: Student quality

Process: Faculty motivation

Output: Industry fit

AugmentationsA: -20% eLearning certification

B. +10% Faculty interest tuning

C. +10% On-the-job skills tuning

Year 1: 20%

Year 2: 20%

Year 3: 20%

Year N: 20%

. . . . . . . .

After a decade the course may look quite differentService systems are learning systems: productivity, quality, etc.

135



One last service system surprise… R&D service sector…

Baumol and Oulton – Progessive and symptotically stagnant sectors of economies

Circa 1960: Imagine an economy with two sectors (manufacturing and services). Technology for labor substitutions increase productivity at a steady pace in the “progressive” sector, and the “stagnant” or “asymptotically stagnant” sector absorbs the labor from the other.

Circa 2002: Now imagine that the asymptotically stagnant sector is R&D (primus inter parus). Oulton (Bank of England) suggests that R&D which produces information is not a final result, but is actually input to the progressive sector. So as long as R&D productivity gains are slightly positive, the economy as a whole does not stagnate!

Let, yi = the output of sector I, Li = the primary input quantity used by sector I, where L1 + L2 = L (constant), Pi = the price of the sector’s output, G i = the growth rate of the productivity of the primary input used directly by sector I (with 0 < G1 < G2, so that sector 1 is the relatively stagnant sector, w primary input price

Y1 = F1(L1, t), Y2 = F2(y1, L2, t)

• Surprise: Data from Fano: In US, between 1921 and 1938 industrial research personnel rose by 300%. Laboratories rose from fewer than 300 in 1920 to over 1600 in 1931, and more than 2,200 in 1938.

R&D grew most rapidly in US during the time centered around the great depression!

136



New skills are needed All national economies are shifting to services – service systems are an important type of complex

systemmajor industrialized nations are >75% services, developing nations are close behind – growth increasingly depends on

service innovation at multiple scales - person, family, city, firm, nation

credit cards are a simple example of service innovation, requiring integrated business, technology, and social-organizational change to be successful

drivers: outsourcing, globalization, internet, self-service - Wipro, IBM, EDS, eBay, Amazon, Google New workforce skills are needed - to better study, manage, and engineer service systems

study benefits from a combination of business, organization, technology skills – soft skills enhance hard skills – more organizational transparency and data sharing by industry would help greatly

new profession (like service scientist) needed, and new tool (service system ecology simulator) Educational system is slowly shifting toward services

service management, operations, marketing, and engineering courses and programs exist - study of complex systems seeks to integrate

Research universities should increase number of grant proposals focused on service systems

new multidiscipline (like SSME) needed, to integrate and break down silos – industry must hire them

National systems are slowly shifting policy towards service innovationbootstrapping investment in research and education through targeted programs

focusing attention on intellectual property protection for service innovation

new innovation policy and metrics needed (government role in creating historical data sets)




UC Merced: Minor in Service Science


MGMT 150/COGS 152: What will you read?

Fitzsimmons, J. A. & Fitzsimmons, M. J. (2005). Service management: Operations, strategy, and information technology (4th Edition), Irwin/McGraw-Hill. (Chapters 1, 2, 5, 6, 15).

Glushko, R. J. & McGrath, T. (2005). Document engineering: Analyzing and designing documents for business informatics and web services. MIT Press. (Chapters 1, 4).

Herzenberg, S., Alic, J., & Wial, H. (1998). New rules for a new economy: Employment and opportunity in postindustrial america. Cornell University Press. (Chapter 5).

Lovelock, C. & Wirtz, J. (2007). Service marketing: People, technology and strategy (6th Edition). Pearson/Prentice Hall. (Chapters 1, 2, 4, 8, 10; and Cases 4, 14, and 16).

Spangler, S. & Kreulen, J. (2007). Mining the talk: Unlocking the business value in unstructured information. IBM Press. (Chapters 1, 2).

Teboul, J. (2006). Service is front stage: Positioning services for value advantage. Insead Business Press.


MGMT 150/COGS 152: What will you learn?

You will learn about service. You will learn what service is, why it is different from other sectors and other jobs, and why it is important. You will learn about problems in service, such as measuring performance, increasing quality, and creating innovation. You will learn how some have recently begun to study service from a variety of different perspectives – including social sciences, cognitive science, management, engineering, and others – to address these problems. You will learn how interdisciplinary research might be effective in studying and understanding service. In the end, you will be able to have an informed and intelligent conversation about the nature of service, how to think about measurement in service, and how to increase innovation in service. And you will be (at least a little more) ready for the workforce you are about to enter.


SSME: Sample of University Activities 2007

SSME-influence

147 institutions

– 154 courses, programs, and degrees established (32 countries)

– 53 planning courses, programs, degrees

9 centers, seminars, or groups established


http://www.ibm.com/university/ssmehttp://www.ibm.com/university/ssme


IBM’s SSME Course Materials

http://www.almaden.ibm.com/asr/SSME/coursematerials/http://www.almaden.ibm.com/asr/SSME/coursematerials/



Service systems are dynamic value co-creation configurations of resources – people, technology, organizations, and shared information – connected internally and externally by value propositions, with governance mechanisms for resolving disputes.

Provider

Transformation Target

ClientService Relationship

OwnershipResponsibility

Service Interventions

Service system science?

Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.


Service system relationships

Service providers and clients co-produce value in and through their interactions with one another

Many services require the participation of the receiver of the service

hair stylist – client doctor – patient teacher – student IT service provider – business client

Relationships matter!“… the important distinction is that the relationship has become a resource in itself… thus the returns have now more to do with extending the scope, content and process of the relationship.”

Bryson, J. R., Daniels, P. W., & Warf, B.

(2004). Service worlds: People, organisations, and technologies. New York: Routledge/Taylor & Francis

A. Service Provider


C. Service Target: The reality to be transformed or operated on by A, for the sake of B

• People, dimensions of• Business, dimensions of• Products, goods and material systems• Information, codified knowledge

B. Service Client


Forms ofOwnership Relationship

(B on C)

Forms ofService Relationship(A & B co-create value)

Forms ofResponsibility Relationship

(A on C)

Forms ofService Interventions

(A on C, B on C)

Gadrey, J. (2002). The misuse of productivity concepts in services: Lessons from a comparison between France and the United States. In J. Gadrey & F. Gallouj (Eds). Productivity, Innovation, and Knowledge in Services: New Economic and Socio-economic Approaches. Cheltenham UK: Edward Elgar, pp. 26 – 53.


Interactions are key

Johnson, B., Manyika, J., & Yee, L. (2005). The next revolution in interactions. McKinsey Quarterly, 4, 20-33.

As more 21st century companies come to specialize in core activities and outsource the rest, they have greater need for workers who can interact with other companies, their customers, and their suppliers.

The traditional organization, where a few top managers coordinate the pyramid below them, is being upended.

Raising the productivity of employees whose jobs can’t be automated is the next great performance challenge – and the stakes are high.

Companies that get that right will build complex talent-based competitive advantages that competitors won’t be able to duplicate easily – if at all.


Paul Maglio’s approach to service (system) science

Study coordination among individuals, groups, and technology

communication, information, action, and interaction

Understand impact of individuals, groups, and technology

connect business impact with action

Innovate to support coordination and impact

technologies, learning, organizations, other structures

other4%

gui21%

instant messenger

16%

phone36%

web3%

command line11%

email4%

face to face5%

What do System Administrators Do?

Tools don’t address their real activities

Barrett, R., Haber, E., Kandogan, E., Maglio, P. P., Prabaker, M., & Takayama, L. A. (2004). Field studies of computer system administrators: Analysis of system management tools and practices. In Proceedings of the Conference on Computer-Supported Collaborative Work (CSCW 2004).



Field Studies of IT Service Delivery

Web Hosting, Data Management, Operating System, Security, and Storage

14 Visits, 5 sites

Surveys (~ 100 people)

Observations (~ 50 days)

Video (~ 300 hours)

Interviews (~ 30 people)

Diary (~ 10 months)

Qualitative and quantitative analysis

Data Management Poughkeepsie

3 Days

Web Hosting Boulder

3 Days + 1 Eve

Web Hosting Southbury

1 Week

Web Hosting Southbury

1 Week

Data ManagementCharlotte3 Days

Web Hosting Boulder1 Week

Storage Boulder3 Days

Security Urbana1 Week

Operating system Boulder3 Days

Security Urbana3 Days



The Microstructure of Service Work

Aral, S., Brynjolfsson, E. & Van Alstyne, M. (2006). Information, Technology, and Information Worker Productivity: Task Level Evidence. In Proceedings of the Twenty-seventh International Conference on Information Systems, Milwaukee, WI.

Aral, S., Brynjolfsson, E. & Van Alstyne, M. (2006). Information, Technology, and Information Worker Productivity: Task Level Evidence. In Proceedings of the Twenty-seventh International Conference on Information Systems, Milwaukee, WI.

Study of work practices and info technology use of individuals

– at a large “head hunting” firm over 5 years

Findings

– info technology use correlated with increased revenue

– info technology use correlated with decreased project completion time

– asynchronous info activities (email, DB use) increased multitasking

– synchronous info activities (meetings, phone) decreased multitasking

– structure of individual’s communication network correlates with performance



“Succeeding through Service Innovation”

Four resource clusters: business and organizations (schools of management) technology (schools of science and engineering) people (schools of social science and humanities) information (schools of information)


Current reality: disciplines tend to concentrate on particular resources and discipline-specific research agendas

Desired reality: service is a system of integrated parts and requires and integrated approach for understanding


Approaches to bridging knowledge and skills gaps


“Focus is to teach individuals to apply scientific, engineering, and management disciplines that integrate [multiple disciplinary] elements to encourage innovation…”

‘Super’ multi-disciplinary: embraces all appropriate, but as yet not agreed, disciplines and functions.

Multi-disciplinary: embraces elements of the major disciplines and functions.

Inter-disciplinary: activity that attempts to unite various areas based on trans-disciplinary (or cross-disciplinary) collaboration.

With the notion of accepting existing barriers to integration—overcoming through acceptance instead of removal of radical change


SSME for the 21st century

20th CenturyFactoryTradeProblem SolverScience, Technology, Engineering, Math (STEM)


21st CenturyService SystemValue PropositionAdaptive IntegratorService Science, Management, & Engineering (SSME)


Service Science: Discipline Classification System, v 0.3

A. General1. Service Sciences Education2. Research in Service Sciences3. Service Sciences Policy4. History of Services5. Miscellaneous

B. Service Foundations1. Service Theory2. Service Philosophy3. Economics of Services4. Theoretical Models of Services5. Mathematical Models of Services6. Service Complexity Theory 7. Service Innovation Theory8. Service Foundations Education

C. Service Engineering1. Service Engineering Theory2. Service Operations 3. Service Standards4. Service Optimization 5. Service Systems Engineering 6. Service Supply Chains7. Service Engineering Management8. Service Systems Performance 9. Assetization of Services10. New Services Engineering11. Service Engineering Education

D. Services Computing1. Services Computing Theory2. Services Computing Standards3. Service Information Systems4. Service-Oriented Architecture5. Web-services6. Business Processes Modeling7. Quality of Services8. Services Computing Education

E. Service Business1. Service Marketing2. Service Operations 3. Service Management 4. Service Lifecycle 5. Service Innovation Management6. Service Quality7. Human Resources Management 8. Customer Relationship Management 9. Services Sourcing10. Services Law11. Globalization of Services12. Service Business Education

F. Human Aspects of Services1. Service Systems Evolution2. Behavioral Models of Services3. Decision Making in Services4. People in Service Systems5. Organizational Change in Services6. Measurement and Incentive in Services7. Social Aspects of Services8. Customer Psychology9. Education in Human Aspects of Services

G. Service Design1. Service Design Theory 2. Service Design Methodology 3. Service Representation 4. Aesthetics of Services5. Design Services6. Service Design Education

H. Service Arts 1. Service Arts Theory 2. Traditional Service Arts3. Contemporary Service Arts4. Service Crafts5. History of Service Arts6. Service Arts Education

I. Service Industries*1. The Service Industry2. Wholesale Trade3. Retail Trade4. Transportation and Warehousing5. Information Services6. Finance and Insurance7. Real Estate and Rental8. Professional and Technical Services9. Management Services10. Administrative and Support Services11. Educational Services12. Health Care and Social Assistance13. Arts, Entertainment, and Recreation14. Accommodation and Food Services15. Public Administration Services16. Spiritual and Civic Services17. Other Service Industries

* service industries based on NAICS 07Claudio Pinhanez ([email protected]), IBM Service Research



Some Fundamental Service Questions

What are the concepts, typologies and methodologies that might serve to bring some order to the diversity of services particularly with a view of measuring and evaluating results and performance?

What are the role and social organization of knowledge and intelligence in the production, innovation, consumption and trading of services?

What are the role of ICTs in the development of services and the rationalization of the processes whereby they are produced, as well as in innovation in services?

– Gadrey & Gallouj (2002). Productivity, innovation, and knowledge in services. Cheltenham, UK: Edward Elgar.



Grand Challenge: Moore’s Law of Service?

Moore’s Law: Computational power doubles at a predictable rate.

Are there capability-doubling laws in service?

Consider Amazon’s book recommendations– Quality of recommendations depends on accurate statistics – the more purchases made,

the better the statistics for recommendations.

Consider call centers– Speed and quality of call center responses can be improved given accurate statistics

about the kinds and number of queries that are likely to be received. In both, traces of activity are used to improve productivity and quality.

Imagine three improvement “laws” for service – The more an activity is performed (time period doubling, demand doubling), the more

opportunities to improve.

– The better an activity can be measured (sensor deployment doubling, sensor precision doubling) and modeled, the more opportunities to improve.

– The more activities that depend on a common sub-step or process (doubling potential demand points), the more likely investment can be raised to improve the sub-step.



Service Science, SSME – What are we talking about?

Service Science, Management, and Engineering (SSME) is a term introduced by IBM to describe Service Science, an interdisciplinary approach to the study, design, and implementation of services systems – complex systems in which specific arrangements of people and technologies take actions that provide value for others. More precisely, SSME has been defined as the application of science, management, and engineering disciplines to tasks that one organization beneficially performs for and with another.


Wikipedia says…

Today, SSME is an urgent call to action for academia, industry, and governments to focus on becoming more systematic about innovation in the service sector, which is the largest sector of the economy in most industrialized nations, and is fast becoming the largest sector in developing nations as well. SSME is also a proposed academic discipline and research area that would complement – rather than replace – the many disciplines that contribute to knowledge about service.


Wikipedia says…

The key to service science is interdisciplinarity, focusing not merely on one aspect of service but rather on service as a system of interacting parts that include people, technology, and business. As such, service science draws on ideas from a number of existing disciplines – including computer science, cognitive science, economics, organizational behavior, human resources management, marketing, operations research, and others – and aims to integrate them into a coherent whole.

IBM relabeled its initiative in this area Service Science, Management, and Engineering to highlight the interdisciplinary nature of the effort. HP has created the Centre for Systems and Services Sciences for the same reason. Oracle Corp. working with IBM, joined in creating an industry consortium called the Service Research and Innovation Initiative focused on establishing what it calls "service science" as both a key area for investment by companies and governments and as a full-blown academic discipline.

Science & Engineering

Business &Management

Social & CognitiveSciences

Economics & Markets

BusinessInnovation

TechnologyInnovation

SocialInnovation

DemandInnovation


Wikipedia says…

Definitions of 'service science' can be misleading. An analogy can be made with Computer Science. The success of CS is not in the definition of a basic science (as in physics or chemistry for example) but more in its ability to bring together diverse disciplines, such as mathematics, electronics and psychology to solve problems that require they all be there and talk a language that demonstrates common purpose.

Service Science may be the same thing - just bigger - as an interdisciplinary umbrella that enables economists, social scientists, mathematicians, computer scientists and legislators (to name a small subset of the necessary disciplines) to cooperate in order to achieve a larger goal - analysis, construction, management and evolution of the most complex systems we have ever attempted to construct.


What are (business) services?

One company performs one or more business functions for another

Traditional consulting Transportation Technical support IT implementation, outsourcing Benefits management, back-office

processes

Objective is to improve efficiency through automation, aggregation of risk, economies of scale, or reduction of capital assets or other fixed costs

Typically contracted for and consumed by separate organizations within an enterprise

Limited information-based support and few analytic tools for services planning and management processes

In contrast to manufacturing and financial services

ERP and CRM support only a portion of business services processes

Analytic tools developed for manufacturing and supply chain may not directly apply

Brenda Dietrich, IBM Researchhttp://www.rhsmith.umd.edu/ces/frontiers/presentations2007/Dietrich.pdf

BUSINESSVALUE Global Technology Services

(Strategic Outsourcing)

Global Technology Services (Integrated Technology Services / Maintenance)

Global Business Services

IT Service Management Process Integration IT Resource

Optimization User Platform Business Intelligence

Strategy & Change Customer Relationship

Management Supply Chain Management Financial Management

Human Capital Application Integration Application Management

Custom & LegacyPackagedApplication Effectiveness

Information Lifecycle Management

Business Continuity Security Maintenance Network and Connectivity

Services

WHAT SHOULD I DO ?

HELP ME DO ITMANAGE IT

FOR ME

Data Centre Outsourcing Services

E-business Hosting Services Network Outsourcing

Services Application Management

Services Network Station Management

Services Managed Storage Services Disaster Recovery Services Security Services

IBM Global Services


Key characteristics of (business) services

Services are not inventoried in conventional ways; production and consumption of the service take place simultaneously

Quality control in a real-time delivery Resource deployment in real-time

Delivering a service requires the use of assets, capital assets, eg IT infrastructure, consumable assets, eg service parts, materials, labor assets, eg skilled employees intangible assets, eg proprietary data/processes

Business service are typically sold as contracts, specifying entitlement, service levels, and payment structure

The set of tasks associated with an offering (e.g., consulting engagement) may have significant variability depending of the specific features of the transaction.

Difficult to translate demand into requirements

To deliver a service, need to decompose entitlement (what was sold) into tasks (what is delivered at any point in time) and map tasks to assets

Many assets can’t do each task Different assets have different efficiency Performance of an asset may vary over time

Teboul, J. (2006). Service is front stage: Positioning services for value advantage. Insead Business Press.Brenda Dietrich, IBM Researchhttp://www.rhsmith.umd.edu/ces/frontiers/presentations2007/Dietrich.pdf


© 2007 IBM Corporation167

Corporate Strategy

New Landscape April 2007

A Globally Integrated Enterprise addresses key globalization questions with a suite of six capabilities

How do we deliver unique value in an open,

collaborative ecosystem?

How do we tap the power

of globalization?

How do we forge a strategy

for specialization?Leverage

GlobalAssets

Serve Distinct Global

Markets

Build a Specialized Enterprise

Enable Collaboration

Manage Value in an

Ecosystem of Increasingly Specialized

Entities

Address Shared Risk and Control

Globally Integrated Enterprise

© 2007 IBM Corporation168

Corporate Strategy

New Landscape April 2007

SOA is at the core of Business Process Management. SOA improves how you design, manage, and optimize your business processes by enabling:

Solution building efficiencyReuse of existing assetsFlexibility in change

SOA allows you to create a set of related and integrated “services” – i.e. repeatable business tasks – that support a business process.

Service-Oriented Architecture Enables Critical Business Restructuring


Henry Chesbrough at Berkeley sent some of us a paper…

Henry suggested IBM “help to do it again;

you need it, others do too”academics and governmentto establish Service Science

The biggest costs were in changing the organization. One way to think about these changes is to treat the Organizational costs as an investment in a new asset.

Firms make investments over time in developing anew

process, rebuilding their staff or designing a neworganizational structure, and the benefits from theseInvestments are realized over a long period of time.”Eric Brynjolfsson, “Beyond the Productivity Paradox”


Timeline (a mere fraction of the details)….

12/02 ASR formed * 3/03 IBM-Berkeley Day * 9/03 Coevolution Symposium 4/04 Work in 21st Century 5/04 A New Discipline? 6/04 Analysts Briefing 9/04 Financial Times 11/04 Service Innovation *** 11/04 IBM GIO 12/04 Tennenbaum Inst./GTech 12/04 SSME Faculty Awards *** 1/05 CITRIS SSME/Berkeley 2/05 HBR Breakthrough Ideas 4/05 US Workshops 5/05 Global Workshops

On the road with “call to action”

5/05 UK 9/05 China 9/05 Japan 1/06 China 2006-2011 5 YR Plan 3/06 Norway & Finland 5/06 Germany 6/06 CACM on Service Science 10/06 IBM Palisades Event 11/06 SIGs INFORMS, IEEE, etc. 12/06 SIGs NESSI, etc. 1/07 IEEE Service Systems 1/07 Dozens of workshops globally 5/07 SRII *** 6/07 India (www.ssme.in) 7/07 Cambridge Symposium

Consensus foundation?



Quadruple Loop Learning of Service Systems

Invest

Relationships Goals Plans Actions

Development(WorldModel

Validity)Versatility

Deeper(Ecology)

Sustainability

Differentiate(Exploration)Effectiveness

Delivery(Exploitation)

Efficiency

Outcomes(Expectation)

Evaluation

Adapting to the world of populations of interacting service systems.(1. employees, 2. competitors, 3. customers, 4. shareholders & self)

123

4

Performance,Health & Cost

Measures

Relevance& Value

Measures

Reputation& Trust

Measures

Risk& Reward Measures

Rationality& MaturityMeasures

Invest to maintain, operate, and changeInvest to maintain, operate, and change

http://www.financialdashboard.comhttp://www.financialdashboard.com




Getting beyond processes to interactions

Manufacturing processes Provider-centric

Service processes Customer-centric

Service system interactions Provider is co-creator Customer is co-creator Value co-creation centric Sustainability & versatility

Claudio Pinhanez ([email protected]), IBM Service Research

inputs outputs

manufacturer

customer

capital labor knowledge facilities

criticalaudience

customer

outputsinputs

service provider

labor capital

knowledge facilities

material inputs critical audience

use

r in

pu

t in

ten

sity


But we’re already doing service science…

Niche research and practice is being performed to understand, define, create and deliver service science

Computer Science and Electrical Engineering, Information SystemsSoftware and systems that adaptively change with business strategy

Law and Political EconomyBetter models of social innovation – in what way is passing a law innovation

Complex Systems and Systems EngineeringBetter model of robustness and fragility of service systems (sustainability)

Operations Research and Industrial EngineeringMore realistic models of people

Economics and Business Strategy, Service Management and OperationsBetter models of scaling and innovation


“The discipline of computing is the systematic study of algorithmic processes that describe and transform information: their theory, analysis, design, efficiency, implementation, and application. The fundamental question underlying all of computing is, ‘What can be (efficiently) automated?’”

Computer science?

Denning, P. J. (2005). Is computer science science?. Communications of the ACM 48, 27-31.



When people ask where is the science? First, ask them, “What does science mean to you?”

– Have laws – service systems have people, so complex contingencies (intentions matter)

– physical laws, logic-mathematical laws, human laws (compliance, rationality)

– Have data, models, hypothesis – data on productivity, quality, compliance

– comparison of mechanisms (from technology up to, and including, governance)

– customer perception of value and the experience

– competitive advantage

– governance

– Have fundamental questions – understand life-cycles, how to invest to “improve”

– how well can world be modeled as interacting service systems (formal & informal)

– for the purpose of improving productivity, quality, regulatory compliance, learning

– Have discipline and special tools that create a body of knowledge and cumulative progress - today a mix, IE/OR, CS, Econ, Psych, etc. (but evolving)

– need CAD for service systems and simulators



Towards a Science of Service Systems &The Service System is the Basic Abstraction of Service Science

First article introduces service systems (examining universities and business outsourcing examples). Second article develops the abstraction further. The worldview is populations of service systems (people, businesses, government agencies) interacting. To the mutual benefit of the interacting service systems, value propositions -- proposed, agreed, realized – co-create value.

Vargo&Lusch’s Service-Dominant (S-D) Logic defines service as “the application of resources for the benefit of another entity.” In contrast, the producer-consumer roles of Goods-Dominant (G-D) Logic lead to a worldview of producers-of-value and consumers-of-value. The notion of one entity being the creator of value and the other being destroyer is inconsistent with S-D Logic; even “prosumer” is G-D Logic. Thus, another, abstraction of the entity is required - “service system.”

Not all service system interactions qualify as service. Our Interact-Serve-Propose-Agree-Realize (ISPAR) model is one possible descriptive model with ten possible outcomes (R), (K), (W), (J), and (-P), (-A), (-D), (-K), (-C), (-J); normative path ISPAR:

Definitions– Service science studies application of resources for mutual benefit of

systems (value co-creation via resource application).

– Normative service science studies how one system can and should apply resources for mutual benefit.

– Service Science, Management, and Engineering (SSME) applies normative service science to problems of business and society.

References: IEEEComputer Jan2007, Spohrer, Maglio, Bailey, Gruhl; HICSS 2007 submission, Vargo, Spohrer, Caswell, MaglioReferences: IEEEComputer Jan2007, Spohrer, Maglio, Bailey, Gruhl; HICSS 2007 submission, Vargo, Spohrer, Caswell, Maglio

ISPAR model of service system interaction episodesISPAR model of service system interaction episodes



Six Things to Know about Service Systems (DRAFT)

1. Service system = value co-creation system, based on both tangible and intangible value– Differentiation: Economics looks primarily at the pricing system and hence value in monetary terms is the focus

2. System of systems: Type of complex adaptive social system (sociotechnical, socioeconomic)– Differentiation: Social science does not focus on value co-creation (win-win changes as judged by people)

3. Example Service Systems: Business, Hospital, Global Economy (Largest), Person (Smallest)

4. Dynamics: Origins, Behavior, Learning/Evolution, Growth/Decline, Death/Extinction– Lens on key behaviors: design win-win value proposition, agree (contract), realize value, resolve disputes (learn)

5. Integrates Key Components: People, Organizations, Shared Information, Technology

– People: How many people? What do they think about, talk about, do?• Division of labor, multitasking, adaptation; hazards from bounded rationality, opportunism and human condition (health, death, emotions)• People possess mental models of the world and capabilities& needs of other service systems; Judgments of tangible and intangible value• People are physical entities with legal rights & responsibilities

– Organizations: What is being valued? What division of labor, risk, safeguarding, etc.?• In general, other service systems (organizations and economic institutions with win-win value co-creation as their purpose)• System of systems connected by value propositions, associated coordination and governance mechanisms to deal with risks & hazards• Organizations are mental/social-constructed (not physical) entities with legal rights & responsibilities (virtual person)

– Shared Information: What is everyone expected to know? Have access to?• Language, Laws, and Measures• Promises (informal) and Contracts (formal); Incomplete contracting in its entirety• Shared information is mental/social-constructed (not physical) entity that can be property (owned by a person or organization)

– Technology: What types of technology? What processes supported?• Augmentation (capability expansion) & automation (labor substitution); Application of new knowledge to create new capabilities• Engineered systems (control built environment and network infrastructures) and Managed systems (incentive alignment & hazards)• Technologies are physical entities that can be property (owned by a person or organization)

6. Research & Practice Goals: Understand, Design, Continuous Improvement, Scaling Up & Down


181


““Is SSME Is SSME old wine in a new bottle?”old wine in a new bottle?”

Old VinesOld Vines(Disciplines)(Disciplines)

New WineNew Wine(Service (Service SystemSystem

IntegratesIntegratesDisciplines)Disciplines)

New BottleNew Bottle(Innovation(Innovation

Focus)Focus)

Slide by Stephen Kwan, SJSU


SSME: Some additional pointers

1, Prize & Book: Richard Normann prize for research on the service economy & business innovation and see Richard Normann's book "Reframing Business“, a must read for students of service and budding service scientists(http://www.richardnormannprize.org.uk/)

5. Economic Policy: Rework economic statistics:(http://www.stat.fi/voorburg2005/b_nielsen.pdf)

7. UK Efforts: http://www.ssmenetuk.org/index.asp

8. Blog: http://forums.thesrii.org/blog?blog.id=spohrer

Prize, Book, Conference, Community, Education, Policy, Templates, Efforts, and Blog…


Food for thought: Impact that matters

Business Impact Technical innovation &

invention Internal relationships Revenue/Profit

Personal Development Continued education Relationship building Community involvement

Scientific Achievement Publishing Scientific or technical

innovation External relationships

Team AchievementCommunicationCo-productionInnovationCommunity

Individual AchievementTechnical knowledgeExperiential knowledgeRelationship building


Why service science now? Time to integrate

Need for professionals – in numbers!Rigor and relevanceIntegrative leaders

–Leadership as consensus building across organizational functional silos and academic discipline silos (new knowledge domains)

Systems thinkers–Problem solving as continuous adaptation,optimizing resources of provide and customerto maximize value co-creation

Adaptive innovators (Entrepreneurs)–Must understand innovation from business, technology, social-organizational perspectives, and speak academic specialists languages

Step 1: SSME-bit set (T-Shaped) Step 2: Integrated theories & new tools Step 3: New professional – new mindset

Service TrendsProduct ServitizationGlobal Sourcing & ComplexitySelf Service Technology

Service DisciplinesService MarketingService Operations & SourcesService HR MgmtService ComputingService DesignService EngineeringService Management

Service EconomicsService MeasurementService GovernanceInvestment & Innovation


What is service?

1. Residual 2. Non-ownership 3. Act/Performance 4. Intangible products 5. IHIP characteristics 6. Rental/Access 7. Customer contact 8. Customer-supplier

9. Service systems

Entities, interactions, outcomes

Value co-creation interactions (exist)Via applying knowledge

–Competences, resourcesFor mutually judged benefit (Ricardo)Uncoerced and purposeful interactions

Value co-creation interactions (persist)Provider, customer, authority, competitorCustomers, employees, partnersCompetitors, entrepreneurs, criminals

From Sampson, POMS 2007(history of service paradigms)

Populations of interactingservice systemsco-creating value


187

SSME: Education, Employment, Innovation, and Economic Growth


Global Services: Opportunities & Challenges

OpportunitiesGlobalization (Developed & Developing)

ICT (R)evolution (eServices & Semantics)

Business Performance Transformation Services (BPTS)

Service Entrepreneurship (SME)

ChallengesEducation (Talent & Tools: High Value Jobs)

Innovation (Investment & Protection: High Value Exports)

Science (Formalization of Service Systems & Systematic Methods: Sustainable Growth)

188



What is SSME?(Services Sciences, Management, and Engineering)

An urgent “call to action”To become more systematic about innovation in services

Complements product and process innovation methods

To develop “a science of services”

A proposed academic disciplineDraws on many existing disciplines

Aims to integrate them into a new specialty

A proposed research areaService systems are designed (computer systems)

Service systems evolve (linguistic and social systems)

Service systems have scale-emergent properties (economic systems)

189



What is SSME?(Services Sciences, Management, and Engineering)

The application of scientific, management, and engineering disciplines to tasks that one organization beneficially performs for and with another (‘services’)

Understand the evolution and design of service systems

Make productivity, quality, compliance, sustainability, and innovation rates more predictable

Services are anything of economic value that cannot be dropped on your foot

Services are value coproduction performances and promises between clients and providers

Science is a way to create knowledge

Engineering is a way to apply knowledge and create new value

Management improves the process of creating and capturing value

190



Why is SSME so important?

Governments need to make service innovation a priority GDP growth of nations increasingly depends on it

Businesses need to make service innovation a priorityRevenue and profit growth increasingly depend on it

Academics need to make service innovation a priorityStudents’ futures depend on it

Improved education productivity and quality depends on it

New frontier of research with business and societal impact

191



What can you do to get involved? [government]

Does your agency fund innovation? Does your agency influence innovation policy? Does your agency establish standards? Does your agency deal with intellectual property? Does your agency deal with economic statistics?

192



What can you do to get involved? [industry]

Does your business develop, sell, and/or deliver service offerings? Does your business have a service innovation process? Does your business use services to complement and add value to

manufactured products? Does your business invest in internal R&D? Does your business fund university or other external R&D? Does your business create case studies, success stories, white papers, or

point-of-view documents about service offerings? Does your business recruit service professionals? Service researchers? Does your business provide feedback to schools (survey recent graduates

hired) on what skills are desired to be most effective in your business? Does your business procure services? eSource of services? Outsource

services? Does your company patent or otherwise protect intellectual property related

to service innovation?

193



What can you do to get involved? [academics] Do you teach courses that include or could include complex business to

business service case studies? Do you have responsibility for revising or creating new curriculum? Do you perform research that could be published in the Journal of Service

Research or other relevant journals or conferences? Do you have students who could intern with business service or service

research organizations? Compete for PhD fellowships in services? Are you interested in industry-academic rotations? Are you interested in developing tools that could enable SSME? Are you interested in creating business proposals or grant proposals related

to SSME and service innovation? Competing for university research awards? Are you interested in participating/speaking in SSME events? Hosting one at

your university? Does your school already have services related courses, degrees, centers, or

institutes? Are you a service innovation pioneer? Are you interested in competing for a

faculty award?

194



What is IBM doing to support others? Publicizing a “call to action” around SSME and the need for systematic approaches to

service innovation (identify IBM relationship/ambassadors) Hosting and cosponsoring SSME and service innovation related events with

government, industry, and academics around the world IBM Faculty Awards to select service innovation pioneers IBM PhD Fellowships to select services-related PhD students IBM University Research (SUR) awards to select academic institutions proposing

leading edge service innovation and SSME related work Providing best paper awards for leading service research related journals and

conferences Working with government funding agencies to increase focus and establish new

programs related to service innovation Inviting people to contribute to an SSME blog, and share information about their SSME

related efforts (http://www.research.ibm.com/ssme) Working with some academic institutions to provide access to service data Hiring recent graduates into IBM Global Services and IBM Research Supporting curriculum development and research efforts, and much more…



NCSU SSME Curriculum for MBA

http://www.mgt.ncsu.edu/news/2006/mba_ssme.php



Michigan Technological University: Service Systems Engineering

NSF funding to develop new undergraduate curriculum

– aimed at satisfying the engineering needs of the service economy

Eight new courses

– World of Service Systems Engineering

– Service System Design and Dynamics

– Analysis and Design of Web-based Services

– Human Influences on Service Systems

– Service System Operations

– Optimization and Adaptive Decision Making

– Project Planning and Management for Engineers

– Managing Risk



Some Other University Courses and Curricula

Tsinghua University and Peking University– Service Science courses offered Spring 2006

UC Santa Cruz – Technology and Innovation Management program started Fall 2005

EPFL - Switzerland– Computer Science Master’s for SSME in Fall 2006

Carnegie Mellon University– Master’s course “Managing Service Organizations”, eSourcing

RPI– Service Engineering Masters offered (for 5-10 years)

Penn State– IE undergraduate degree adding services focus (past 3 years)



Information Systems, Soft Systems, & Service Systems

“A consequence of the nature of the process, in which intentions are formed and purposeful action is undertaken by people who are supported by information, is that ‘information system’ has to be seen as a service system: one which serves those taking the action. Hence its form and content will have to be dictated by how the action supported is conceptualized. This means that ‘information systems development’ must start by carefully defining the action to be served, in its specific context, and using that definition to decide what information is needed and how technology can help provide it. (This reverses what often happens today in organizations – with poor results – which then lead to spectacular headlines about ‘another IT failure’.)” (Pp. 219-220)

Information, Systems, andInformation Systems:

making sense of the field

Peter ChecklandSue Howell


Information Systems, Work Systems, & Service Systems

“I wrote this book because I believe that many applications of IT would be more successful if business and IT professionals had an organized but non-technical approach for communicating about how current work systems operate and how they can be improved with or without changing technology.” (P. v)

“A work system is a system in which human participants and/or machines perform work using information, technology, and other resources to produce products and/or services for internal or external customers. Businesses operate through work systems.” (P. 12)

The Work System Method: Connecting People, Processes,

and IT for Business Results

Steven Alter


Engineering Service Science | Teleconference | November 6,, 2007

Thanks for yourquestions and comments!

ContactJim Spohrer ( [email protected] )Paul Maglio ( [email protected] )Wendy Murphy ( [email protected] )

Ssmed india 20080128

Education

service revolution

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