IBM University Programs World Wide (IBM UP)
Regional Innovation Ecosystems & Service Science
Working Together to Build a Smarter Planet
Dr. James (“Jim”) C. Spohrer
spohrer@us.ibm.com
Innovation Champion and
Director, IBM University Programs WW
RIT Service Innovation Event,
Rochester, NY, USA, April 14th, 2011
© 2011 IBM Corporation
Outline
 Stimulus: Service Growth
–
–
The World (Rethinking Product-Service Systems)
IBM (Overview, Centennial, Watson, Smarter Planet)
 Response: Service Science Priorities
–
–
–
–
–
Cambridge University Report (2007, 2008, 2011)
UK Royal Society Report (2009)
Arizona State University Report (2010)
Handbook of Service Science (2011)
Open Services Innovation (2011)
 Evolution: Regional Innovation Ecosystems
–
–
–
–
–
2
What is a “Smarter Planet”? “Quality of Life” Improvement?
• Quality of Life: Our growing dependence on
networks of interconnected service systems
– Local optimization does not equal global optimization
– Local problems can cascade into global significance
– Global competition for talent (“vote with feet”)
How are Cities & Universities Linked? What Jobs & Skills?
How to visualize Service Science? Systems & Knowledge?
What is a Holistic Service System (HSS)? Value-CoCreation (VCC)?
Where is the “Real Science”? VCC Architectures & HSS
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© 2011 IBM Corporation
Regional Innovation Ecosystems: NY State
Top Employers (Healthy, Frugal, Wealthy, Innovative, Wealthy, Wise…)
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© 2011 IBM Corporation
Service Growth: The World
World’s Large Labor Forces
US shift to service jobs
A = Agriculture, G = Goods, S = Service
2010
2010
Nation
Labor
% WW
A
%
G
%
S
%
40yr Service
Growth
China
25.7
49
22
29
142%
India
14.4
60
17
23
35%
U.S.
5.1
1
23
76
23%
Indonesia
3.5
45
16
39
34%
Brazil
3.0
20
14
66
61%
Russia
2.4
10
21
69
64%
Japan
2.2
5
28
67
45%
Nigeria
1.6
70
10
20
19%
Bangladesh
2.1
63
11
26
37%
Germany
1.4
3
33
64
42%
(A) Agriculture:
Value from
harvesting nature
(G) Goods:
Value from
making products
(S) Service:
Value from
IT augmented workers in smarter systems
that create benefits for customers
and sustainably improve quality of life.
CIA Handbook, International Labor Organization
Note: Pakistan, Vietnam, and Mexico now larger LF than Germany
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© 2011 IBM Corporation
Factory as a Product-Service System
http://www.youtube.com/watch?v=nd5WGLWNllA
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© 2011 IBM Corporation
Rethinking “Product-Service Systems”
F
SSE
e.g., Citibank
F
F
Service
Business
Product
Business
B
B
e.g., IBM
Back-Stage Operations/Provider Focus
6
B
F
SSE
B
“Everybody is in service... Something is wrong…
The industrial world has changed faster than our taxonomies.”.
Based on Levitt, T (1972) Production-line approach to service. HBR.
Front-Stage Marketing/Customer Focus
IBM UP (University Programs) WW
F
SSE
B
F
F
SSE
Service
B
System Entity
B
F
SSE
B
F
F
SSE
B
Product-Service-System
F
SSE
F
SSE
B
B
B
F
SSE
B
F
SSE
B
© 2011 IBM Corporation
Service Growth: IBM
Revenue Growth by Segment
Revenue ($B)
100
80
Services
Software
Systems
Financing
60
40
20
19
82
19
88
19
94
19
98
20
04
20
06
20
07
20
08
20
09
0
Year
What do IBM Service Professionals Do? Run things on behalf of customers,
help Transform customers to adopt best practices, and Innovate with customers.
B2B Service Projects: IT (data center, call centers) & business process outsourcing/reengineering, systems integration, organizational change, etc.
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© 2011 IBM Corporation
IBM has 426,000
employees worldwide
21% of IBM’s revenue
in growth market
countries; growing at
13% in late 2010
2010 Financials
 Revenue - $ 99.9B
 Net Income - $ 14.8B
 EPS - $ 11.52
 Net Cash - $11.7B
IBM operates in 170
countries around the Number 1 in patent
globe
generation for 18
consecutive years ;
5,896 US patents
awarded in 2010
9 time winner of the
President’s National
Medal of Technology
& Innovation - latest
award for Blue Gene
Supercomputer
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More than 40% of
IBM’s workforce
conducts
business away
from an office
Smarter
5 Nobel
Laureates
Planet
© 2011 IBM Corporation
IBM Centennial – 100 Years of Innovation!
IBM Centennial Film: 100 People & 100 Years
http://www.youtube.com/watch?v=39jtNUGgmd4
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© 2011 IBM Corporation
Watson and Jeopardy!
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© 2011 IBM Corporation
Priorities: Succeeding through Service Innovation - A Framework for Progress
(http://www.ifm.eng.cam.ac.uk/ssme/)
Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008)
1. Emerging demand
2. Define the domain
3. Vision and gaps
IBM University Programs World Wide (IBM UP)
4. Bridge the gaps
5. Call for actions
The white paper offers
a starting point to -
Service
Innovation
Service
Systems
Service
Science
Stakeholder
Priorities
Growth in service
GDP and jobs
Customer-provider
interactions that
enable value
cocreation
To discover the
underlying
principles of
complex service
systems
Education
Systematically
create, scale and
improve systems
Knowledge
& Tools
Service quality
& productivity
Environmental
friendly &
sustainable
Urbanisation &
aging population
Globalisation &
technology drivers
Opportunities for
businesses,
governments and
individuals
Dynamic
configurations of
resources: people,
technologies,
organisations and
information
Increasing scale,
complexity and
connectedness of
service systems
B2B, B2C, C2C,
B2G, G2C, G2G
service networks
Foundations laid
by existing
disciplines
Progress in
academic studies
and practical tools
Skills
& Mindset
Develop programmes
& qualifications
Research
Encourage an
interdisciplinary
approach
Business
Employment
& Collaboration
Government
Policies
& Investment
Develop and improve
service innovation
roadmaps, leading to a
doubling of investment
in service education
and research by 2015
Gaps in knowledge
and skills
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
© 2011 IBM Corporation
Priorities: Research Framework
for the Science of Service
Pervasive Force: Leveraging Technology to Advance Service
Strategy
Priorities
Development
Priorities
Execution
Priorities
Fostering Service
Infusion and Growth
Stimulating
Service Innovation
Effectively Branding
and Selling Services
Improving Well-Being
through
Transformative Service
Enhancing
Service Design
Enhancing the Service
Experience through
Cocreation
Creating and Maintaining
a Service Culture
Optimizing
Service Networks
and Value Chains
Measuring and
Optimizing the Value of
Service
Source: Global Survey of Service Research Leaders (Ostrom et al 2010)
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© 2011 IBM Corporation
UK Royal Society Report: Science in Service Innovation
http://royalsociety.org/Hidden-wealth-The-contribution-of-science-to-service-sector-innovation/
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© 2011 IBM Corporation
What is Smarter Planet?
Harmonized smarter product-service systems.
INSTRUMENTED
INTERCONNECTED
INTELLIGENT
We now have the ability
to measure, sense and
see the exact condition
of practically everything.
People, systems and
objects can communicate
and interact with each
other in entirely new ways.
We can respond to changes
quickly and accurately,
and get better results
by predicting and optimizing
for future events.
IT NETWORKS
PRODUCTS
WORKFORCE
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SUPPLY CHAIN
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COMMUNICATIONS
TRANSPORTATION
BUILDINGS
© 2011 IBM Corporation
 Our planet is a complex system-of-systems
Our planet is a complex, dynamic, highly interconnected
$54 Trillion system-of-systems (OECD-based analysis)
This chart shows ‘systems‘ (not ‘industries‘)
Communication
Transportation
$ 3.96 Tn
$ 6.95 Tn
Education
$ 1.36 Tn
Water
$ 0.13 Tn
Electricity
Leisure / Recreation /
Clothing
$ 2.94 Tn
$ 7.80 Tn
Global system-of-systems
$54 Trillion
(100% of WW 2008 GDP)
Healthcare
$ 4.27 Tn
Infrastructure
Legend for system inputs
$ 12.54 Tn
Note:
1. Size of bubbles represents
systems’ economic values
2. Arrows represent the strength of
systems’ interaction
Source: IBV analysis based on OECD
15
Finance
$ 4.58 Tn
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Food
$ 4.89 Tn
Govt. & Safety
$ 5.21 Tn
1 Tn
Same Industry
Business Support
IT Systems
Energy Resources
Machinery
Materials
Trade
© 2011 IBM Corporation
 We now have the capabilities to manage a system-of-systems planet
Economists estimate, that all systems carry inefficiencies
of up to $15 Tn, of which $4 Tn could be eliminated
This chart shows ‘systems‘ (not ‘industries‘)
Analysis of inefficiencies in the
planet‘s system-of-systems
Improvement potential as
% of system inefficiency
40%
35%
Electricity
2,940
30%
Building & Transport
34%
Infrastructure Education
12,540
1,360
Financial
4,580
System-ofsystems
42%
Inefficiencies
Food & Water
4,890
25%
20%
Communication
3,960
Transportation (Goods
& Passenger)
6,950
Leisure / Recreation
/ Clothing
7,800
15%
15%
20%
25%
Improvement
potential
Government & Safety
5,210
$54 Trillion
100% of WW 2008
GDP
$15 Trillion
28% of WW 2008
GDP
$4 Trillion
7% of WW 2008 GDP
Note: Size of the bubble indicate absolute
value of the system in USD Billions
30%
35%
40%
System inefficiency as % of total
economic value
Source: IBM economists survey 2009; n= 480
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Global economic value of
Healthcare
4,270
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45%
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%).
© 2011 IBM Corporation
Well Being Index
 January 10, 2011
By Mark Whitehouse at
mark.whitehouse@wsj.com
 One approach is to enhance
GDP with other objective
factors such as inequality,
leisure and life expectancy. In a
paper presented Saturday at
the American Economic
Association meeting, Stanford
economists Peter Klenow and
Charles Jones found that doing
so can make a big difference.
 Making everybody work 120
hours a week could radically
boost a country's GDP per
capita, but it wouldn't make
people happier. Removing
pollution limits could boost
GDP per hour worked, but
wouldn't necessarily lead to a
world we'd want to live in.
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© 2011 IBM Corporation
What improves Quality-of-Life?
Product-Service System Innovations
A. Systems that focus on flow of things that humans need (~15%*)
* = US Labor % in 2009.
20/10/10
1. Transportation & supply chain 2/7/4
2. Water & waste recycling/Climate & Environment 2/1/1
3. Food & products manufacturing 7/6/1
4. Energy & electricity grid/Clean Tech 1/1/0
5. Information and Communication Technologies (ICT access)5/17/27
B. Systems that focus on human activity and development (~70%*)
6. Buildings & construction (smart spaces) (5%*)1/0/2
7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*) 24/24/1
8. Banking & finance/Business & consulting (wealthy) (21%*)
2/20/24
9. Healthcare & family life (healthy) (10%*)7/10/3
10. Education & work life/Professions & entrepreneurship (wise) (9%*)5/2/2
C. Systems that focus on human governance - security and opportunity (~15%*)
11. Cities & security for families and professionals (property tax)3/3/1
12. States/regions & commercial development opportunities/investments (sales tax) 0/0/0
13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax) 1/2/2
0/19/0
Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities
“61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)”
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© 2011 IBM Corporation
Regional Innovation Ecosystems
& Holistic Service Systems
http://www.service-science.info/archives/1056
Nation
 Examples: Nations, States, Cities,
Universities, Luxury Hotels, Cruise
Ships, Households
For-profits
 Subsystems: Transportation, Water,
Food, Energy, Communications,
Buildings, Retail, Finance, Health,
Education, Governance, etc.
 Definition: A service system that can
support its primary populations,
independent of all external service
systems, for some period of time,
longer than a month if necessary, and
in some cases, indefinitely
 Balance independence with
interdependence, without becoming
overly dependent
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State/Province
City/Region
Start-Ups
University
Colleges
K-12
Non-profits
Hospital
Medical
Research
Family
(household)
Luxury
Resort
Hotels
Person
(professional)
SaaS
~25-50% of start-ups are new PaaS
IT-enabled service offerings
IaaS
A Day Made of Glass: Corning
http://www.youtube.com/watch?v=w12B02eJpaM&feature=fvst
© 2011 IBM Corporation
Cities as Holistic Service Systems: All the systems
A. Flow of things
1. Transportation: Traffic congestion; accidents and injury
2. Water: Access to clean water; waste disposal costs
3. Food: Safety of food supply; toxins in toys, products, etc.
4. Energy: Energy shortage, pollution
5. Information: Equitable access to info and comm resources
B. Human activity & development
6. Buildings: Inefficient buildings, environmental stress (noise, etc.)
7. Retail: Access to recreational resources
8. Banking: Boom and bust business cycles, investment bubbles
9. Healthcare: Pandemic threats; cost of healthcare
10. Education: High school drop out rate; cost of education
Example: Singapore
C. Governing
11. Cities: Security and tax burden
12. States: Infrastructure maintenance and tax burden
13. Nations: Justice system overburdened and tax burden
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© 2010 IBM Corporation
Universities as Holistic Service Systems: All the systems
A. Flow of things
1. Transportation: Traffic congestion; parking shortages.
2. Water: Access costs; reduce waste
3. Food: Safety; reduce waste.
4. Energy: Access costs; reduce waste
5. Information: Cost of keeping up best practices.
B. Human activity & development
6. Buildings: Housing shortages; Inefficient buildings
7. Retail: Access and boundaries. Marketing.
8. Banking: Endowment growth; Cost controls
9. Healthcare: Pandemic threat. Operations.
10. Education: Cost of keeping up best practices..
C. Governing
11. Cities: Town & gown relationship.
12. States: Development partnerships..
13. Nations: Compliance and alignment.
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© 2011 IBM Corporation
Luxury Hotels as Holistic Service Systems: All the systems
http://www.youtube.com/watch?v=Hm7MeZlS5fo
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© 2011 IBM Corporation
University & Regional Innovation Ecosystems (Why?)
School of
Urban
Planning
Incubator
Government Service to
& Start-Ups
Individuals & Institutions
Cities & Public Safety
School of
Public Policy
School of
Hospitality
$
School of
Engineering
ICT (Computing &
Communications)
IBM UP (University Programs) WW
Finance
School of
Business
Mngmnt
Energy
Education
Food & Products
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Transportation
University:
University:
The
Heart of
of
The Heart
Regional
Regional Innovation
Innovation
Ecosystems
Ecosystems
Retail & Hospitality
School of
Education
School of
Science &
Arts
School of
Information
Building
Health
School of
Architecture
School of
Medicine
© 2011 IBM Corporation
Universities & Regional Innovation Ecosystems (Data)
% GDP and % Top-500-Universities
9
Japan
8
y = 0,7489x + 0,3534
R² = 0,719
7
China
Germany
% global GDP
6
5
France
4
United Kingdom
Italy
3
Russia
2
Spain
Canada
India
Mexico
Turkey
1
Brazil
South Korea
Australia
Netherlands
Sweden
0
0
1
2
3
4
5
6
7
8
9
% top 500 universities
Strong Correlation (2009 Data): National GDP and University Rankings
http://www.upload-it.fr/files/1513639149/graph.html
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© 2011 IBM Corporation
Accelerating Regional Innovation:
Universities as “Living Labs” for Host Cities
UNIVERSITIES:
Research Centers & Real-World Systems
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CITIES/METRO REGIONS:
Universities Key to Long-Term Economic Development
© 2011 IBM Corporation
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.”
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© 2011 IBM Corporation
Growing Importance of HPC to Universities
 HPC = High Performance Computing (2006 NSF Data)
With HPC
Without HPC
$120
$80
Average NSF
funding:
$30,354,000
$60
$40
$100
Funding in Millions of Dollars
Funding in Millions of Dollars
$100
$120
$80
$60
Average NSF
funding:
$7,781,000
$40
$20
$20
$0
$0
95 of Top NSF-funded Universities with HPC 98 of Top NSF-funded Universities w/out HPC
Journal of Information Technology, Volume 10, Issue 2 (accepted) www.jiti.net
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© 2011 IBM Corporation
Urban-Age.Net
Currently, the world’s top
30 cities generate 80% of
the world’s wealth.
The Urban Age
For the first time in history
more than 50% the earth’s
population live in cities - by
2050 it will be 75%
The Endless City
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© 2011 IBM Corporation
Population growth per hour in major cities
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© 2011 IBM Corporation
Example: San Jose, California (USA)
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© 2010 IBM Corporation
University Trend: “Sister Campuses” (People Flows)
University sub-systems
Disciplines in Schools (circles)
Innovation Centers (squares)
D
transportation
water & waste
D
D
D
health
food &
supply chain
E.g., CMU Website (2009)
“Research Centers:
where it all happens –
to solve real-world
problems”
energy/grid
Disciplines in Schools
e-government
Award degrees
Single-discipline focus
Research discipline problems
Innovation Centers (ICs)
Industry/government sponsors
Multi-disciplinary teams
Research real-world systems
D
D
31
City Trend: “Sister Cities” (People Flows)
World as System of Systems
World (light blue - largest)
Nations (green - large)
Regions (dark blue - medium)
Cities (yellow - small)
Universities (red - smallest)
Developed Market
Nations
(> $20K GDP/Capita)
Emerging Market
Nations
(< $20K GDP/Capita)
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)
IBM UP WW: Tandem Awards: Increasing university linkages (knowledge exchange interactions)
32
What is a Service System? What is Service Science?
…customers just name <your favorite provider>
…researchers just name <your favorite discipline>
Design/
Cognitive Science
“service science is
the interdisciplinary study of
service systems &
value-cocreation”
Marketing
“a service system is a human-made system
to improve customer-provider interactions,
or value-cocreation”
Computer Science/
Artificial Intelligence
33
Systems
Engineering
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Economics & Law
Operations
© 2010 IBM Corporation
How to visualize service science? The Systems-Disciplines Matrix
systems
disciplines
Customer
Systems that focus on flows of things
transportation &
ICT &
food &
energy
supply chain water &
cloud
products & electricity
waste
Systems that support people’s activities
Systems that govern
retail &
healthcare
education city
state nation
building & hospitality banking & family
secure scale laws
&work
construction
& finance
behavioral sciences
stakeholders
e.g., marketing
Provider
management sciences
e.g., operations
Authority
Competitors
People
Starting Point 1: The Stakeholders (As-Is)
political sciences
e.g., public policy
learning sciences
e.g., game theory
and strategy
cognitive sciences
e.g., psychology
resources
Technology
system sciences
e.g., industrial eng.
information sciences
Starting Point 2: Their Resources (As-Is)
Information
e.g., computer sci
organization sciences
Organizations
change
History
(Data Analytics)
Future
(Roadmap)
Run
value
Transform
(Copy)
Innovate
(Invent)
e.g., knowledge mgmt
social sciences
e.g., econ & law
decision sciences
e.g., stats & design
Change Potential: Thinking (Has-Been & Might-Become)
run professions
e.g., knowledge worker
transform professions
e.g., consultant
Value Realization: Doing (To-Be)
innovate professions
e.g., entrepreneur
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© 2011 IBM Corporation
What is the skills goal? T-Shaped professionals, ready for T-eamwork!
Many team-oriented service projects completed
(resume: outcomes, accomplishments & awards)
Many disciplines
Many systems
(understanding & communications)
(understanding & communications)
Deep in one system
(analytic thinking & problem solving)
Deep in one discipline
(analytic thinking & problem solving)
SSME+D = Service Science, Management, Engineering + Design
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© 2011 IBM Corporation
Jobs: Expert Thinking & Complex Communications
Increasing usage of job descriptive terms
15
10
Expert Thinking
(deep)
5
Complex Communication
(broad)
0
Routine Manual
Non-routine Manual
-5
Routine Cognitive
-10
1969 1974 1979 1984 1989 1994 1999
Based on U.S. Department of Labor’ Dictionary of Occupational Titles (DOT)
Levy, F, & Murnane, R. J. (2004). The New Division of Labor:
How Computers Are Creating the Next Job Market. Princeton University Press.
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© 2011 IBM Corporation
Job Roles: IBM Building Smarter Enterprises & A Smarter Planet
https://jobs3.netmedia1.com/cp/find.ibm.jobs/location/
IBM Employees
1.
2.
3.
4.
5.
6.
~10% Consultant
~10% Sales
~5% Architect
~5% Project Manager
~45% Specialists
~25% Enterprise Operations
~10%
1. Consultant
- a signed contract that
defines work, outcomes, solution,
rewards and risks
for all parties
~25%
6. Enterprise Operations
Administrative Services, Other,
Marketing & Communications
Finance, Supply Chain, Manufacturing,
Human Resources, Legal,
General Executive Management
37
B2B – Business to Business
B2G – Business to Government
(trusted advisor to customer)
- a value proposition to address
problems or opportunities and
enhance value co-creation
relationships
~5%
3. Architect
~10%
2. Sales
Project Mix
From 90-10 to 80-20:
(systems engineer, IT & enterprise architect)
-An elegant solution design that satisfies
functional and non-functional
constraints across the
system life-cycle
(often with co-PM from customer side)
a detailed project plan that
balances time, costs, skills availability,
and other resources, as well as
adaptive realization of plan
~5%
4. Project Manager
~45%
5. Specialists
(systems engineer, Research, engineer,
Industry specialist, application, technician,
data, analyst, professional, agent)
-a compelling working system
(leading-edge prototype systems
from Research)
IBM UP (University Programs) WW
© 2011 IBM Corporation
Teaching SSME+D
 Fitzsimmons & Fitzsimmons
–
–
Graduate Students
Schools of Engineering & Businesses
Service Management:
Operations, Strategy,
and Information
Technology
By Fitzsimmons and
Fitzsimmons, UTexas
 Teboul
–
–
–
Undergraduates
Schools of Business & Social Sciences
Busy execs (4 hour read)
 Ricketts
–
–
Practitioners
Manufacturers In Transition
 And 200 other books…
–

URL:
Zeithaml, Bitner, Gremler; Gronross, Chase, Jacobs,
Aquilano; Davis, Heineke; Heskett, Sasser,
Schlesingher; Sampson; Lovelock, Wirtz, Chew; Alter;
Baldwin, Clark; Beinhocker; Berry; Bryson, Daniels,
Warf; Checkland, Holwell; Cooper,Edgett; Hopp,
Spearman; Womack, Jones; Johnston; Heizer, Render;
Milgrom, Roberts; Norman; Pine, Gilmore; Sterman;
Weinberg; Woods, Degramo; Wooldridge; Wright; etc.
http://www.cob.sjsu.edu/ssme/refmenu.asp
Service Is Front Stage:
Positioning services for
value advantage
By James Teboul, INSEAD
Reaching the Goal:
How Managers Improve
a Services Business
Using Goldratt’s
Theory of Constraints
By John Ricketts, IBM
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World Population & Product-Service System Scaling
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Product-Service Systems as Learning Systems
“Try to
operate
inside
the
comfort
zone”
Learning Systems
(“Life = Choices”)
Exploitation
(James March)
Exploration
(James March)
Run/Practice&Reduce
(IBM)
Transform/Follow
(IBM)
L
Operations Costs
Maintenance Costs
“Double
monetize,
internal win
and ‘sell’ to
external”
“To be
the best,
learn from
the rest”
Incidence Planning &
Response Costs (Insure)
Innovate/Lead
(IBM)
Internal
Incremental
External
Radical
Interactions
Super-Radical
Linda Sanford, IBM “Let Go To Grow”
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How entities (service systems) learn and change over time
History and future of Run-Transform-Innovate investment choices
•
Diverse Types
– Persons (Individuals)
• Families
– Regional Entities
•
•
•
•
•
Universities
Hospitals
Cities
States/Provinces
Nations
– Other Enterprises
• Businesses
• Non-profits
•
Invest in each
type of change
Learning & Change
exploit explore
– Run = use existing
knowledge or standard
practices (use)
– Transform = adopt a new
best practice (copy)
– Innovate = create a new
best practice (invent)
March, J.G. (1991) Exploration and exploitation in organizational learning. Organizational Science. 2(1).71-87.
Innovate
41
Smarter = Sustainable Innovation (reduce waste, expand capabilities)
Service Systems: Stakeholders & Resources
Computational System
Building Smarter Technologies
Requires investment roadmap
42
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1. People
2. Technology
3. Shared Information
4. Organizations
connected by win-win value propositions
Building Smarter Universities & Cities
Requires investment roadmap
© 2011 IBM Corporation
What happens when you take some of
the nicotine out of cigarettes?
43
How do you create more
lasting solutions?
44
Corning: A Day Made of Glass
http://www.youtube.com/watch?v=6Cf7IL_eZ38
45
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14B
Big Bang
Where is the “Real Science”?
In the interdisciplinary sciences that study the natural and human-made worlds…
Unraveling the mystery of evolving hierarchical-complexity in new populations…
To discover the world’s structures and mechanisms for computing non-zero-sum
Value-CoCreation (VCC) Architectures & Holistic Service Systems (HSS)
(Natural
World)
Time
10K
Cities
(Human-Made
World)
writing
(symbols and scribes)
written laws
ECOLOGY
money
(coins)
Sun
Earth
bacteria
(uni-cell life)
bees (social
division-of-labor)
sponges
(multi-cell life)
transistor
universities
46
clams (neurons)
trilobites (brains)
200M
60
printing press (books
steam engine
Thank-You! Questions?
“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
Dr. James (“Jim”) C. Spohrer
Director, IBM University Programs (IBM UP) WW
spohrer@us.ibm.com
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Service System Ecology: Conceptual Framework
Ecology
(Populations & Diversity)
Entities
(Service Systems)
Interactions
(Service Networks)
Identity
(Aspirations/Lifecycle)
Value Proposition
Governance Mechanism
(Offers/Reconfig/Risks/Incentives)
(Rules/Constraints/Penalties)
Access Rights
(Relationships)




48
Outcomes
(Value Changes)
Reputation
(Opportunities/Variety)
Measures
(Rankings of Entities)
Resources
Stakeholders
(Roles in Processes, Specialization)
(Valuation Perspectives)
lose-win
win-win
lose-lose
win-lose
prefer sustainable
non-zero-sum
outcomes
Resources: People, Technology, Information, Organizations
Stakeholders: Customers, Providers, Authorities, Competitors
Measures: Quality, Productivity, Compliance, Sustainable Innovation
Access Rights: Own, Lease, Shared, Privileged
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Service-dominant logic

Service is the application of
competences for the benefit of
another entity

Service is exchanged for
service

Value is always co-created
(“Firm”)

Goods are appliances for delivery

All economies are service
economies

All businesses are service
businesses
49
Resource
Integrator/
Beneficiary
Vargo, S. L. & Lusch, R. F. (2004). Evolving to a new
dominant logic for marketing. Journal of Marketing, 68, 1 – 17.
Resource
Integrator/
Beneficiary
(“Customer”)
© 2010 IBM Corporation
© 2005 IBM Corporation
What is value?
Value depends on the capabilities a system
has to survive and create beneficial change
in its environment.
Taking advantage of the service another
system offers means incorporating improved
capabilities.
Value can be defined as system
improvement in an environment.
All ways that systems work together to
improve or enhance one another’s
capabilities can be seen as being value
creating.
50
Vargo, S. L., Maglio, P. P., and Akaka, M. A. (2008). On value and value co-creation: A service
systems and service logic perspective. European Management Journal, 26(3), 145-152.
© 2010 IBM Corporation
© 2005 IBM Corporation
What is a service system?
Forms of
Service Relationship
(A & B co-create value)
A. Service Provider
Service involves at
least two entities
applying competences
and making use of
individual and shared
resources for mutual
benefit.
We call such
interacting entities
service systems.
B. Service Client
• Individual
• Organization
• Public or Private
• Individual
• Organization
• Public or Private
Forms of
Service Interventions
(A on C, B on C)
Forms of
Responsibility Relationship
(A on C)
Forms of
Ownership Relationship
(B on C)
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
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.
51
Spohrer, J., Maglio, P. P., Bailey, J. & Gruhl, D. (2007). Steps toward a
science of service systems. Computer, 40, 71-77.
© 2010 IBM Corporation
© 2005 IBM Corporation
Resources are the building blocks of service systems
First foundational premise
of service science
Physical
Rights
No-Rights
1. People
2. Technology
3. Organizations
4.. Shared
Information
Service system entities
dynamically configure
four types of resources
Not-Physical
The named resource is
Physical
or
Not-Physical
(physicists resolve disputes)
The named resource has
Rights
or
No-Rights
(judges resolve disputes
within their jurisdictions)
52
Formal service systems can contract
Informal service systems can promise/commit
Trends & Countertrends (Evolve and Balance):
Informal <> Formal
Social <> Economic
Political <> Legal
Routine Cognitive Labor <> Computation
Routine Physical Labor <> Technology
Transportation (Atoms) <> Communication (Bits)
Qualitative (Tacit) <> Quantitative (Explicit)
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In
Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley.
Hoboken, NJ..
© 2010 IBM Corporation
© 2005 IBM Corporation
Value propositions are the building blocks of service system networks
Second foundational premise
of service science
Service system entities
calculate value from multiple
stakeholder perspectives
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
53
Value propositions coordinate & motivate resource access
Stakeholder
Perspective
(the players)
Measure
Impacted
Pricing
Decision
Basic
Questions
Value
Proposition
Reasoning
1.Customer
Quality
(Revenue)
Value
Based
Should we?
(offer it)
Model of customer: Do
customers want it? Is
there a market? How
large? Growth rate?
2.Provider
Productivity
(Profit)
Cost
Plus
Can we?
(deliver it)
Model of self: Does it play
to our strengths? Can we
deliver it profitably to
customers? Can we
continue to improve?
3.Authority
Compliance
(Taxes and
Fines)
Regulated
May we?
(offer and
deliver it)
Model of authority: Is it
legal? Does it compromise
our integrity in any way?
Does it create a moral
hazard?
4.Competitor
(Substitute)
Sustainable
Innovation
(Market
share)
Strategic
Will we?
(invest to
make it so)
Model of competitor: Does
it put us ahead? Can we
stay ahead? Does it
differentiate us from the
competition?
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In
Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley.
Hoboken, NJ..
© 2010 IBM Corporation
© 2005 IBM Corporation
Access rights are the building blocks of service system ecology
(culture and shared information)
Third foundational premise Competitor
of service science
S
Service system entities
reconfigure access rights to
resources by mutually agreed to
value propositions
(substitute)
Provider
Customer
Authority
P
C
A
OO
LC
OO
LC
SA
PA
SA
PA
value-proposition
change-experience
dynamic-configurations
54

Access to resources that are owned
outright (i.e., property)

Access to resource that are
leased/contracted for (i.e., rental car,
home ownership via mortgage,
insurance policies, etc.)

Shared access (i.e., roads, web
information, air, etc.)

Privileged access (i.e., personal
thoughts, inalienable kinship
relationships, etc.)
time
 Access rights
service = value-cocreation
provider resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
B2B
B2C
B2G
G2C
G2B
G2G
C2C
C2B
C2G
***
customer resources
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In
Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley.
Hoboken, NJ..
Owned Outright
Leased/Contract
Shared Access
Privileged Access
© 2010 IBM Corporation
© 2005 IBM Corporation
Premises of service science: What service systems do
Rights
1. People
2. Technology
3. Organizations
4.. Shared
Information
Physical
Not-Physical
No-Rights
Stakeholder
Perspective
Measure
Impacted
Pricing
Questions
Reasoning
1.Customer
Quality
Value
Based
Should we?
Model of customer:
Do customers want
it?
2.Provider
Productivity
Cost
Plus
Can we?
Model of self: Does
it play to our
strengths?
3.Authority
Compliance
Regulated
May we?
Model of authority:
Is it legal?
4.Competitor
Sustainable
Innovation
Strategic
Will we?
Model of
competitor: Does it
put us ahead?
S
55
P
C
A
Service system entities
dynamically configure (transform)
four types of resources
Service system entities
calculate value from multiple
stakeholder perspectives
Service system entities
reconfigure access rights
to resources by mutually agreed
to value propositions
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In
Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley.
Hoboken, NJ..
© 2010 IBM Corporation
© 2005 IBM Corporation
Also see:
Understanding the Human-Made World
Symbolic Species, Deacon
Company of Strangers, Seabright
Sciences of the Artificial, Simon
See Paul Romer’s Charter Cities Video: http://www.ted.com/talks/paul_romer.html
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Why 13 types of service systems? K-12 STEM and the human-made world

Challenge-based Project to Design Improved Service Systems
– K - Transportation & Supply Chain
Systems
–
1 - Water & Waste Recycling
–
2 - Food & Products (Nano)
–
3 - Energy & Electric Grid
–
4 – Information/ICT & Cloud (Info)
–
5 - Buildings & Construction
–
6 – Retail & Hospitality/Media &
–
7 – Banking & Finance/Business & Consulting
–
8 – Healthcare & Family Life (Bio)
–
9 - Education & Work Life/Jobs & Entrepreneurship (Cogno)
–
10 – City (Government)
–
11 – State/Region (Government)
–
12 – Nation (Government)
–
Higher Ed – T-shaped teamwork, deep & broad education
–
Professional Life – T-shaped teamwork, series of projects
that focus on
Flow of things
Systems
that focus on
Human
Activities and
Entertainment
(tourism)
Development
Systems
that focus on
Governing
“Imagine a better service system, and use STEM language to explain why it is better”
STEM = Science, Technology, Engineering, and Mathematics
See NAE K-12 engineering report: http://www.nap.edu/catalog.php?record_id=12635
See Challenge-Based Learning: http://www.nmc.org/news/nmc/nmc-study-confirms-effectiveness-challenge-based-learning
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Where are the opportunities? Everywhere!
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Vision for the Educational Continuum: Individuals & Institutions Learning
TECHNOLOGY IMMERSION
Primary
School
Any Device Learning
Secondary
School
PERSONAL LEARNING PATHS
Student-Centered Processes
Higher
Education
Continuing
Education
KNOWLEDGE SKILLS
Learning Communities
Intelligent
Services Specialization
Instrumented
• Student-centric
• Integrated Assessment
Systemic View of Education
The
Educational
Continuum
• Aligned Data
• Outcomes Insight
GLOBAL INTEGRATION
ECONOMIC ALIGNMENT
Workforce
Skills
Economic
Sustainability
Interconnected
• Shared Services
• Interoperable Processes
http://www-935.ibm.com/services/us/gbs/bus/html/education-for-a-smarter-planet.html
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Fun: CityOne Game to Learn “CityInvesting”
Serious Game to teach problem solving for real issues in key industries, helping companies
to learn how to work smarter. Energy, Water, Banking, Retail
http://www.ibm.com/cityone
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Priority 1: Urban Sustainability & Service Innovation Centers
A. Research: Holistic Modeling & Analytics of Service Systems
Modeling and simulating cities will push state-of-the-art capabilities for planning interventions in
complex system of service systems
Includes maturity models of cities, their analytics capabilities, and city-university interactions
Provides an interdisciplinary integration point for many other university research centers that study
one specialized type of system
Real-world data and advanced analytic tools are increasingly available
B. Education: STEM (Science Tech Engineering Math) Pipeline & LLL
City simulation and intervention planning tools can engage high school students and build STEM
skills of the human-made world (service systems)
Role-playing games can prepare students for real-world projects
LLL = Life Long Learning
C. Entrepreneurship: Job Creation
City modeling and intervention planning tools can engage university
students and build entrepreneurial skills
Grand challenge competitions can lead to new enterprises
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