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IBM University Programs worldwide, accelerating regional development (IBM UPward)
The Future of Cities and Regions:U-BEEs Accelerating Regional Upward Spirals
Dr. James (“Jim”) C. SpohrerInnovation Champion and Director IBM UPwardIBM University Programs Worldwide, accelerating regional developmentFor Foundation Roundtable on “Future of Cities and Regions”Sept 29th, 2011, Madrid, [email protected]
– I know/work with service research pioneers from many academic disciplines• I advocate for Service Science, Management, Engineering, and Design (SSME+D)
– Short-term: Curriculum (T-shaped people, deep in an existing discipline)– Long-term: New transdiscipline and profession (awaiting CAD tool)
• I advocate for SRII (“one of the founding fathers”)• Co-editor of the “Handbook of Service Science” (Springer 2010)
Founding CTO IBM’s Venture Capital Relations Group Silicon Valley (1999-2003)– Headlights and win-win strategies for alignment and growth
Other background– Apple Computer’s (Distinguished Engineer Scientist and Technologist) award (90’s)
– Ph.D. Computer Science/Artificial Intelligence from Yale University (80’s)
– Dialog Systems/Verbex Speech Recognition Start-up (acquired by Exxon, late 70’s)
Economists estimate, that all systems carry inefficiencies of up to $15 Tn, of which $4 Tn could be eliminated
Global economic value of
System-of-systems
$54 Trillion100% of WW 2008 GDP
Inefficiencies$15 Trillion28% of WW 2008 GDP
Improvement potential
$4 Trillion7% of WW 2008 GDP
How to read the chart:
For example, the Healthcare system‘s value is $4,270B. It carries an estimated inefficiency of 42%. From that level of 42% inefficiency, economists estimate that ~34% can be eliminated (= 34% x 42%).
We now have the capabilities to manage a system-of-systems planet
Source: IBM economists survey 2009; n= 480
System inefficiency as % of total economic value
Impr
ovem
ent
pote
ntia
l as
% o
f sy
stem
inef
ficie
ncy
Education1,360
Building & Transport Infrastructure
12,540
Healthcare4,270
Government & Safety5,210
Electricity2,940
Financial4,580
Food & Water4,890
Transportation (Goods & Passenger)
6,950
Leisure / Recreation /
Clothing7,800
Communication3,960
Analysis of inefficiencies in the planet‘s system-of-systems
Note: Size of the bubble indicate absolute value of the system in USD Billions
Our 21st Century World: System of SystemsRegional Nested, Networked Holistic Product-Service Systemshttp://www.service-science.info/archives/1056 Holistic Product-Service Systems provide
access to “Whole Service” to people inside, including Transportation, Water, Food, Energy, Communications, Buildings, Retail, Finance, Health, Education, Governance, etc.
Examples: Nations, States, Cities, Universities, Hotels, Hospitals, Homes
Definition: An holistic product-service system is a type of complex value-cocreation system that can provide “whole service” to its primary population of people, independent of all external systems, for an extended period of time, balancing independence with interdependence (outsourcing limits, re-cycle to sustain, etc.)
University-Based Entrepreneurial Ecosystems (U-BEE’s): Universities are usually in the “top five” job creators of regions, when they have associated incubators & science-technology parks, super-computing data centers, hospitals, cultural & conference hotels, K-12 schools, etc.
Nation
State/Province
City/Region
UniversityCollege
K-12
Cultural &ConferenceHotels
HospitalMedical
Research
Worker(professional)
Family(household)
For-profits
Non-profits
U-BEEJob Creators
~25-50% of start-ups are newIT-enabled service offerings
Edu-Impact.Com: Growing Importance of Universities with Large, Growing Endowments
“When we combined the impact of Harvard’s direct spending on payroll, purchasing and construction – the indirect impact of University spending – and the direct and indirect impact of off-campus spending by Harvard students – we can estimate that Harvard directly and indirectly accounted for nearly $4.8 billion in economic activity in the Boston area in fiscal year 2008, and more than 44,000 jobs.”
Pegasus Global Holdings $200M Smart City Living Lab
7 September 2011
The Center for Innovation, Testing and Evaluation will cover 20 square miles in New Mexico, and will resemble a mid-sized American city, including urban canyons, suburban neighborhoods, rural communities and distant localities.
Potentially be able to house up to 35,000 people and will operate as if people are actually living there
The facility will allow technology companies, university and urban planners to test the "positive and negative impacts emerging technologies - Smart Grid, intelligent traffic systems, cyber security and more
estimated cost $200 million to build/launch (or ~$6K per person for infrastructure)– Economy Hotel Projects ~$30K per person to build/launch
– Highest Priced Luxury Resort Hotels ~$600K per person to build/launch
CityOne Game to Learn “CityInvesting”Serious Game to teach problem solving for real issues in key industries, helping companies to learn how to work smarter. Energy, Water, Banking, Retail
Daniel Patrick Moynihan said nearly 50 years ago: "If you want to build a world class city, build a great university and wait 200 years." His insight is true today – except yesterday's 200 years has become twenty. More than ever, universities will generate and sustain the world’s idea capitals and, as vital creators, incubators, connectors, and channels of thought and understanding, they will provide a framework for global civil society.
Dr. James (“Jim”) C. SpohrerDirector, IBM University Programs worldwide, accellerating regional development (IBM Upward)[email protected]
“Instrumented, Interconnected, Intelligent – Let’s build a Smarter Planet.” – IBM“If we are going to build a smarter planet, let’s start by building smarter cities” – CityForward.org“Universities are major employers in cities and key to urban sustainability.” – Coalition of USU
“Cities learning from cities learning from cities.” – Fundacion Metropoli“The future is already here… It is just not evenly distributed.” – Gibson
“The best way to predict the future is to create it/invent it.” – Moliere/Kay“Real-world problems may not/refuse to respect discipline boundaries.” – Popper/Spohrer
“Today’s problems may come from yesterday’s solutions.” – Senge“History is a race between education and catastrophe.” – H.G. Wells
“The future is born in universities.” – Kurilov“Think global, act local.” – Geddes
NPR: Out of Economic Chaos, A New Order May Be Rising
HAWLEY: The grand total of U.S. automotive fatalities from 1975 to the present, about one and a half million people. Now, the grand total of U.S. fatalities from 1775 to the present in every military conflict we've had is 1.3 million. So in other words, in the last roughly 35 years we've killed more people with cars than we have in more than 300 years of warfare.
I think if you step back and look at cars from a sort of 35,000 foot level, you've got to wonder why we're doing this to ourselves. And there's a tremendous amount of industry and employment built up around it. But suppose it all changed.
One way it could change is if human weren't allowed to drive cars anymore. Or let me put it differently. If cars were much more appealing because they drove themselves and did it safely.
And this isn't just Jetson stuff. There's a brilliant computer scientist, artificial intelligence researcher at Stanford, named Sebastian Thrun. He's invented a car that drives itself. You can hop in the car and you never touch the wheel or the pedals. It navigates through all the traffic snarls. It won't run over little old ladies in Pasadena. It won't even run over a squirrel.
If you could eliminate the seven million accidents per year, the 2.9 million injuries, the 40,000 fatalities, that would be enormous boon. But if you think about what would happen in the short term. Let's suppose in the next five or ten years this idea comes to fruition.
Think about all the disruption that could cause. You might not have to own a car. Well, that might be good. You'd have a garage that you could use to start up a company instead of storing a couple of rusting hulks of metal in it. You'd never have to call Tom and Ray Magliozzi again, because you wouldn't have to fix your car.
There wouldn't be a parking problem, because you'd push a little button on your iPhone, a smart car would zip up, pick you up, drop you off where you need to go. That means no more valets, no more taxi drivers, no more meter maids, no more traffic cops. You'd never hear a car horn, because why would a robot car honk at another robot car. Makes no sense.
But that's an example of the sort of change that in the short term can cause immense of amounts of anxiety and upheaval.
A major societal transformation is underway…“If we’re number one in technology, why do I have to call India for tech support?” – Jay Leno“Ideas are the new currency in a global knowledge economy.” – Ben Wildavsky, Senior Fellow, Kauffman Foundation“No country can lead in today’s world unless it leads in science.” – Speaker Nancy Pelosi“A history of modernization is in essence a history of scientific and technological progress… I firmly believe science is the ultimate revolution.” – Wen Jiabao, Premier, People’s Republic of China
Driven by “The Death of Distance” & “Algorithmic Revolution”- Cairncross, Economist (1997)
- Zysman, CACM (2006)
Manifesting in new forms of “Global Competition”– Friedman, The World is Flat (2005)
Characterized as a “Gathering Storm” by Americans– US National Academies (2005, 2007, 2011)
The Gathering Storm Report“The committee concluded that the United States appears to be on a course that will lead to declining, not growing, standard of living for our children and grandchildren.” – Gathering Storm“Gentlemen, we have run out of money. It is time to start thinking.” – Rutherford
“The Gathering Storm report is focused upon the ability of Americans to compete for employment in a job market that increasingly knows no geographic boundaries.”
“The United States takes deserved pride in the vitality of its economy, which forms the foundation of our high quality of life, our national security, and out hope that our children and grandchildren will inherit every greater opportunities.”
“The possession of quality jobs is the foundation of a high quality life for the nations citizenry.”
“While only four percent of the nations workforce is composed of scientists and engineers, this group disproportionately creates jobs for the other 96 percent.”
“Further, the pace of creation of new knowledge appears by almost all measures to be accelerating.”
“While this progress by other nations is to be both encouraged and welcomed, so too is the notion that Americans wish to continue to be among those people who do prosper.”
“The Gathering Storm committee contends that it is strongly in America’s interest for all nations to prosper. Aside from its humanistic merit this outcome should produce a safer world for everyone…”
The Gathering Storm Recommendations“It would be impossible not to recognize the great difficulty of carrying out Gathering Storm recommendations, such as doubling the research budget, in today’s fiscal environment… However… One seemingly relevant analogy is that a non-solution to make an over-weight aircraft flight-worthy is to remove an engine.” – Gathering Storm Revisited
“The fate of empires depends on how they educate their children.” – Aristotle“The best way to predict the future is to inspire & enable the next generation to build it better.” –IBM UPward
I. Improve inputs to universities– Fix “broken” K-12 system (invest in K-12)
III. Improve outputs from universities– Fix “broken” University system (invest in Higher Education)
II. Improve transitions from university to first job– Fix “broken” Employment system (increase R&D funding)
IV. Improve speed of regional innovation– Fix “broken” Governance system (align visa, tax, etc. regulations)
The Gathering Storm, Revisited for All Regions“There is nothing as practical as a good theory.” – Kurt Lewin“History is a race between education and catastrophe.” – H.G. Wells
Regions are entities that must learn to learn better– Regions = Nations, States, Cities, etc…
– Learning = Improving the global competitiveness performance of a region
Regional entities = “Holistic product-service systems”– that provision access to high-quality “whole service” to the people in them
– that also provision access to high quality products & services globally
– to contribute to a higher quality-of-life, both inside and outside their region
– service science studies product-service systems & customer-provider interactions (value-cocreation mechanisms, including the servitization of products and productization of service by the algorithmic revolution and other means)
Societal Transformation: Changing Rules of Competition“The purpose of business is to create new customers.” – Peter Drucker
From Value-Creation Worldview: Compete Against Others - Zero-Sum Mindset– During different time intervals some regions begin to pull ahead, and some fall behind…
eventually the people in lagging regions immigrate to leading regions, some lagging regions “collapse” and are absorbed into other regions or remain dysfunctional… not only is human capital squandered in lagging and collapsed regions, but human suffering grows over time in these regions…. disenfranchised populations create a security threat for all….
To Value-CoCreation Worldview: Compete With/For Others - Non-Zero-Sum Mindset– The gains of innovators are “taxed” based on geography of their customers as well as home
location of provider (providers cannot succeed without customers)… as innovators seek to expand their markets into other regions successfully the “governments” of both provider and customer regions see tax revenues increase… accelerating both “transform” and “innovate” capabilities… accelerating entities learning and regional innovation.
– Innovator regions benefit the most, but the incentive is not to pull so far ahead that other regions lag too far behind or collapse; the incentive is to also create wealthier more capable customers over time, and regions compete in cycles of progress that move everyone forward…
Simple Examples of Value-CoCreation Model: – Toyota locating manufacturing plants in the US
– “The Huppenthal Method” Style of Learning Competition• Students compete, but “winning” is defined as everyone completing the work as fast as
possible, to beat their individual and collective previous best time• Leaders help those lagging behind catch-up, peer-mentoring and win-win NZS mindset• Demonstrated accelerated learning times and elevated student engagement levels
In Sum…“College is more valuable to the future economy than petroleum.” – Greg Easterbrook, Author“You can always depend on the Americans to do the right thing, after exhausting all other possibilities.” – Churchill
Gathering Storm reflects a major societal transformation underway– Driven by “The Death of Distance” and “Algorithmic Revolution”
– Manifesting in new, challenging forms of “Global Competition”
The nature of regional competition is being transformed (accelerating)…– From Value-Creation Worldview: “Compete Against” - Zero-Sum Mindset
– To Value-CoCreation Worldview: “Compete With/For” - Non-Zero-Sum Mindset
The transformation depends on increasing “trust” … a hard thing to do– However, increasing interconnectedness suggests there is no other viable alternative
– Cascade failures in globally interconnected economies are a real threat to stability
Increased trust can only be earned by performance against a shared innovation roadmap, or a shared vision for a better future for all…
– For example, climate change and sustainable environment
– For example, increased global security and financial stability
It is time to get our priorities straight and focus on what matters most…
“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
Universities connect information flows between city ecosystems
World as System of SystemsWorld (light blue - largest)Nations (green - large)Regions (dark blue - medium)Cities (yellow - small)Universities (red - smallest)
Cities as System of Systems-Transportation & Supply Chain-Water & Waste Recycling-Food & Products ((Nano)-Energy & Electricity-Information/ICT & Cloud (Info)-Buildings & Construction-Retail & Hospitality/Media & Entertainment-Banking & Finance-Healthcare & Family (Bio)-Education & Professions (Cogno)-Government (City, State, Nation)
Nations: Innovation Opportunities- GDP/Capita (level and growth rate)- Energy/Capita (fossil and renewable)
Developed MarketNations
(> $20K GDP/Capita)
Emerging MarketNations
(< $20K GDP/Capita)
IBM UP WW: Tandem Awards: Increasing university linkages (knowledge exchange interactions)
44
University Trend: More Locally Connected Research Centers
University sub-systemsDisciplines in Schools (circles)Innovation Centers (squares)
E.g., CMU Website (2009)“Research Centers:where it all happens – to solve real-world problems”
Disciplines in SchoolsAward degreesSingle-discipline focusResearch discipline problems
Innovation Centers (ICs)Industry/government sponsorsMulti-disciplinary teamsResearch real-world systems
Driven by “The Death of Distance”- Cairncross, Economist (1997)
Manifesting in new forms of “Global Competition”– Friedman, The World is Flat (2005)
Characterized as a “Gathering Storm” by Americans– US National Academies (2005, 2007, 2011)
Characterized as the “Knowledge/Innovation/Interaction Age” – The accelerating creation and application of knowledge and competences to create
value for and/or co-create value with other entities
– Value from innovations
– Value from interactions
Characterized as the “Decade of Smart/Smarter Planet” by IBM– Instrumented, Interconnected, and Intelligent
51
Time
ECOLOGY
14BBig Bang
(NaturalWorld)
10KCities
(Human-MadeWorld)
sun (energy)
writing(symbols and scribes,
stored memoryand knowledge)
earth(molecules &
stored energy)
written laws(governance and
stored control)
bacteria(single-cell life)
sponges(multi-cell life)
money(governed
transportable valuestored value,
“economic energy”)
universities(knowledge workers)
clams (neurons)trilobites (brains)
printing press (books)steam engine (work)200M
bees (socialdivision-of-labor)
60
transistor(routine
cognitive work)
Where is the “Real Science” - mysteries to explain?In the many sciences that study the natural and human-made worlds…
Unraveling the mystery of evolving hierarchical-complexity in new populations…To discover the world’s architectures and mechanisms for computing non-zero-sum
Entity Architectures (ЄN) of nested, networked Holistic-Product-Service-Systems (HPSS)
• PSS (Physical Symbol Systems – Environment & Technology)– Biological PSS (observable information – DNA, RNA, proteins, etc.)– Technological PSS (observable information – states of system, bits, etc.)
Life = multiple generations of entities– Entities = SSE (Service System Entities)
• Individuals with Competencies & Life-Spans– Competencies (vary with age)– Life-Spans (vary with stage)
• Institutions with Roles & Rules– Roles (Competency-Levels and Pay-Levels)– Rules (Compliance-Levels and Tax-Levels)
Life = Multiple Generations of Entities (200 years = 10 generations x 20 years)Pedagogy: Ten Social-Technological-Economic-Environmental-Political (STEEP) StagesThought Experiment: Binary-Board-Space (Rule: Toggles Each Generation)
The Game Board: A configuration of PS (Physical Systems), with interspersed PSS (Physical Symbol Systems) and SSE (Service System Entities).
– The SSE are PSS are PS
– The infrastructure is PS + PSS
• The PS have hidden information (state)• The PSS have observable information (state and read-write)
– The SSE use information to co-create value
• World model – information about the world (The Game Board)• Self model – information about self (SSE)• The SSE have a beginning and an end (life-cycle)• The SSE judge quality-of-life across their life-cycle
– The game is each generation of SSE try to improve quality-of-life, by improving the capabilities of the infrastructure (less waste, more support for SSE activities) and the capabilities of the SSE to co-create value (an SSE activity)
– The starting game board consists of PS with a few PSS, and the goal is to see how quickly and with how little energy and with how few types and tokens of PS, the PSS can become SSE and reconstruct a high level infrastructure and high quality of life and continuously improve at a sustainable pace.
physical dimensions of• Information or Knowledge, symbolic dimensions
B. Service Customer
• Individual• Institution• Public or Private
B. Service Customer
• Individual• Institution• Public or Private
Forms ofOwnership Relationship
(B on C)
Forms ofService Relationship(A & B co-create value)
Forms ofResponsibility Relationship
(A on C)
Forms ofService Interventions
(A on C, B on C)
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a science of service systems. Computer, 40, 71-77.From… Gadrey (2002), Pine & Gilmore (1998), Hill (1977)
Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
“Service is the application ofcompetence for the benefitof another entity.”
Example Provider: College (A)Example Target: Student (C)Discuss: Who is the Customer (B)?- Student? They benefit…- Parents? They often pay…- Future Employers? They benefit…- Professional Associations?- Government, Society?
Entities(Service Systems, both Individuals & Institutions)
Interactions(Service Networks,
link, nest, merge, divide)
Outcomes(Value Changes, both
beneficial and non-beneficial)
Value Proposition (Offers & Reconfigurations/
Incentives, Penalties & Risks)
Governance Mechanism (Rules & Constraints/
Incentives, Penalties & Risks)
Access Rights(Relationships of Entities)
Measures(Rankings of Entities)
Resources(Competences, Roles in Processes,
Specialized, Integrated/Holistic)
Stakeholders(Processes of Valuing,
Perspectives, Engagement)
Identity(Aspirations & Lifecycle/
History)
Reputation(Opportunities & Variety/
History)
prefer sustainable non-zero-sum
outcomes,i.e., win-win
win-win
lose-lose win-lose
lose-win
Spohrer, JC (2011) On looking into Vargo and Lusch's concept of generic actors in markets, or“It's all B2B …and beyond!” Industrial Marketing Management, 40(2), 199–201.
Service system entities configure four types of resources
First foundational premise of service science:
– Service system entities dynamically configurefour types of resources
– Resources are the building blocks of entity architectures
Named resources are:– Physical or – Not-Physical– Physicist resolve disputes
Named resources have:– Rights or– No Rights– Judges resolve disputes
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
Physical
Not-Physical
Rights No-Rights
2. Technology/EnvironmentInfrastructure
4. SharedInformation/
SymbolicKnowledge
1. People/Individuals
3. Organizations/Institutions
Formal service systems can contract to configure resources/apply competenceInformal service systems can promise to configure resources/apply competence
Service system entities calculate value from multiple stakeholder perspectives
Second foundational premise of service science
– Service system entities calculate value from multiple stakeholder perspectives
– Value propositions are the building blocks of service networks
A value propositions can be viewed as a request from one service system to another to run an algorithm (the value proposition) from the perspectives of multiple stakeholders according to culturally determined value principles.
The four primary stakeholder perspectives are: customer, provider, authority, and competitor
– Citizens: special customers– Entrepreneurs: special providers– Parents: special authority– Criminals: special competitors
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. .
Model of competitor: Does it put us ahead? Can we stay ahead? Does it differentiate us from the competition?
Will we?(invest tomake it so)
StrategicSustainable Innovation(Marketshare)
4.Competitor(Substitute)
Model of authority: Is it legal? Does it compromise our integrity in any way? Does it create a moral hazard?
May we?(offer anddeliver it)
RegulatedCompliance(Taxes andFines, Quality of Life)
3.Authority
Model of self: Does it play to our strengths? Can we deliver it profitably to customers? Can we continue to improve?
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
Maglio PP, SL Vargo, N Caswell, J Spohrer: (2009) The service system is the basic abstraction of service science. Inf. Syst. E-Business Management 7(4): 395-406 (2009)
Service system entities learn to systematically exploit technology:Technology can perform routine manual, cognitive, transactional work
L
Learning Systems(“Choice & Change”)
Exploitation(James March)
Exploration(James March)
Run/Practice-Reduce(IBM)
Transform/Follow(IBM)
Innovate/Lead(IBM)
Operations Costs
Maintenance Costs
Incidence Planning & Response Costs (Insure)
Incremental
Radical
Super-Radical
Internal
External
Interactions
“To bethe best,
learn fromthe rest”
“Doublemonetize,
internal winand ‘sell’ to
external”
“Try tooperateinside
thecomfortzone”
March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.Sanford, L.S. (2006) Let go to grow: Escaping the commodity trap. Prentice Hall. New York, NY.
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ. .
After a decade the course may look quite differentService systems are learning systems: productivity, quality, compliance, sustainable innovation
Maglio, P., Srinivasan, S., Kreulen, J.T., Spohrer, J. (2006), Service systems, service scientists, SSME, and innovation. Communications of the ACM, 49(7), 81-85.