Japan may 11 future of cities and universities 20120511 v3

IBM University Programs worldwide, accelerating regional development (IBM Upward)

Future of Cities & Universities:
A Service Science Perspective

Dr. James (“Jim”) C. Spohrer, spohrer@us.ibm.com
Innovation Champion and Director IBM UPward
(University Programs worldwide, accelerating regional development)

The 4th Symposium on Systems Innovation
University of Tokyo, Tokyo, Japan, Friday May 11, 2012

© 2012 IBM Corporation

What is the future? We can imagine many possibilities…

Kurzweilai.net
2 IBM UPward (University Programs worldwide – accelerating regional development) © 2012 IBM Corporation

California Human Development Report 2011:
From meaning-of-life to quality-of-life….

http://www.measureofamerica.org/docs/APortraitOfCA.pdf

Imagining quality-of-life innovations…


Innovation as Game/Sport:
Players, interactions, outcomes

 Competition

 Cooperation

 Value-cocreation


AEIOU of sciences – service science
 Abstract Entities – service systems
– Learning to apply knowledge to compete & cooperate
 Interactions – value propositions
 Outcome Universals – value-cocreation (or not)
– Increasing capabilities and quality-of-life for individuals
Cities compete & cooperate Universities compete & cooperate


Nations compete and cooperate: Universities important
% WW GDP and % WW Top-500-Universities (2009 Data)
9

Japan
8

7 y = 0,7489x + 0,3534
R² = 0,719 China
6 Germany

5
France

4 United Kingdom
Italy
%
G
D
o
b
P
a
g
l

3
Russia Brazil Spain
Canada
2 India
Mexico South Korea Australia
Turkey Netherlands
1
Sweden

0
0 1 2 3 4 5 6 7 8 9

% top 500 universities


Universities Worldwide Accelerating Regional Development

“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.”


Universities key to regions
Nation

 Three Streams State/Province
City/Metro
– Transfer knowledge For-profits U-BEE
Job Creator/Sustainer
– Create knowledge Cultural &
Conference
University
Hospital
Medical
College
Hotels Research
K-12
– Apply knowledge
to co-create value Non-profits Worker
(professional)
Family
(household)

 Nested Holistic Systems
– Flows
– Development
Third Stream is about U-BEEs =
– Governance University-Based Entrepreneurial
Ecosystems


Abstract entities (service systems): Individuals & Institutions Learning

TECHNOLOGY IMMERSION
Any Device Learning Primary
School In
div
idu
Secondary al s
PERSONAL LEARNING PATHS School Le
ar Workforce
Student-Centered Processes Higher
nin Skills
g
Education Co
nt
Continuing inu
KNOWLEDGE SKILLS Education um The
Learning Communities Educational
Intelligent Continuum
• Aligned Data u m
GLOBAL INTEGRATION • Outcomes Insight t inu
n
Services Specialization Instrumented Co Economic
in g Sustainability
• Student-centric
rn
• Integrated Assessment
L ea
ECONOMIC ALIGNMENT Interconnected io ns
• Shared Services t ut
ti
ns
Systemic View of Education • Interoperable Processes
I

http://www-935.ibm.com/services/us/gbs/bus/html/education-for-a-smarter-planet.html

10 10 IBM UPward (University Programs worldwide – accelerating regional development) © 2012 IBM Corporation

Four measures

 Innovativeness

 Equity

 Sustainability

 Resiliency


Resiliency: Capability to rebuild (and recycle) rapidly

China Broad Group:
30 Stories in 15 Days


Societal resiliency includes all levels

Matryoska dolls:
Origin Japanese


Eleven levels of systems

Level AKA ~No. People ~No. Entities Example
0. Individual Person 1 10,000,000,000 Jim
1. Family Household 10 1,000,000,000 Spohrer’s
2.Neighborhood Street 100 100,000,000 Kensington
3. Community Block 1000 10,000,000 Bird Land
4. Urban-Zone District 10,000 1,000,000 SC Unified
5. Urban-Center City 100,0000 100,000 Santa Clara
6.Metro-Region County 1,000,000 10,000 SC County
7. State Province 10,000,000 1,000 CA
8. Nation Country 100,000,000 100 USA
9. Continent Union 1,000,000,000 10 NAFTA
10. Planet World 10,000,000,000 1 UN


Cities: land-population-energy-carbon

Carlo Ratti:
Senseable Cities


“Back-up” Tokyo

 Resort

 Tourism

 Business

 Backup City


City challenge: buildings and transportation

Ryan Chin:
Smart Cities


Manufacturing as a local recycling & assembly service

Ryan Chin:
Urban Mobility


Self-driving cars

Steve Mahan:
Test “Driver”


Technology has a cost

 “The burden of knowledge”

Cesar Hidalgo:
Societal Knowledge


The limits of our individual knowledge


Societal and individual knowledge

Herbert Simon: Ben Jones:
Bounded Rationality Burden of Knowledge


Specialization has benefits

Adam Smith: David Ricardo:
Division of Labor Comparative Advantage


T-shaped professionals
depth & breadth

Many cultures
Many disciplines
Many systems
(understanding & communications)

BREADTH

Deep in one discipline

Deep in one system
Deep in one culture
DEPTH

(analytic thinking & problem solving)

24

What improves Quality-of-Life? Service System Innovations
* = US Labor % in 2009.

A. Systems that focus on flow of things that humans need (~15%*) 20/10/10
1. Transportation & supply chain
2/7/4
2. Water & waste recycling/Climate & Environment2/1/1
7/6/1
3. Food & products manufacturing 1/1/0
4. Energy & electricity grid/Clean Tech
5/17/27
5. Information and Communication Technologies (ICT access)
B. Systems that focus on human activity and development (~70%*)
1/0/2
6. Buildings & construction (smart spaces) (5%*) 24/24/1
7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*)
2/20/24
7/10/3 (wealthy) (21%*)
8. Banking & finance/Business & consulting
5/2/2
9. Healthcare & family life (healthy) (10%*)
10. Education & work life/Professions & entrepreneurship (wise) (9%*)
3/3/1
C. Systems that focus on human governance - security and opportunity (~15%*) 0/0/0
11. Cities & security for families and professionals (property tax)
1/2/2
12. States/regions & commercial development opportunities/investments (sales tax)
0/19/0
13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax)
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)”


Systems-Disciplines Framework: Depth & Breadth
systems Systems that focus on flows of things Systems that support people’s activities Systems that govern
transportation & ICT & retail & healthcare
food & education city state nation
disciplines supply chain water & energy
products & electricity
cloud building & hospitality banking & family
&work secure scale laws
waste construction & finance
behavioral sciences
Customer
stakeholders

e.g., marketing

Provider management sciences
e.g., operations
Observe Stakeholders (As-Is)
political sciences
Authority
e.g., public policy
learning sciences
Competitors e.g., game theory
and strategy
cognitive sciences
People
e.g., psychology
resources

system sciences
Technology
e.g., industrial eng.
information sciences
Observe Resource Access (As-Is)
Information
e.g., computer sci
organization sciences
Organizations
e.g., knowledge mgmt

History social sciences
change

e.g., econ & law
(Data Analytics)
decision sciences
Imagine Possibilities (Has-Been & Might-Become)
Future e.g., stats & design
(Roadmap)
run professions
Run
e.g., knowledge worker
Transform
value

(Copy)
transform professions
e.g., consultant
Realize Value (To-Be)
Innovate innovate professions
(Invent)
e.g., entrepreneur


What is service science? A service system? The ABC’s?

Design/
Cognitive Science Systems
Engineering
“service science is “a service system is a
the transdisciplinary study of human-made system to improve
service systems & provider-customer interactions
value-cocreation” and value-cocreation outcomes,
by dynamically configuring resource
Marketing access via value propositions,
most often studied by many disciplines,
one piece at a time.”

The ABC’s:
The provider (A)
and a customer (B)
transform a target (C)

Computer Science/
Artificial Intelligence Economics & Law Operations

Recombination (integration) has benefits

Joseph Schumpeter: Brian Arthur:
Creative Destruction Nature of Technology



Identifies entrepreneurs developing
businesses aligning with our Smarter
Planet vision.

SmartCamp finalists raised more than
$50m and received significant press in
Exclusive Networking and Wall Street Journal, Forbes and
Bloomberg
Mentoring event
-

Healthcare SmartCamp kickstart - Miami - May 15, 2012
Apply by April 27th

SmarterCities SmartCamp kickstart - New York - May 24, 2012
Apply by May 3rd

North America Regional SmartCamp - Boston - June 20 & 21, 2012
Apply by May 25th

apply now at www.ibm.com/isv/startup/smartcamp
29

North America SmartCamp lead: Eric Apse, eapse@us.ibm.com
University Programs lead: Dawn Tew, dawn2@us.ibm.com

US National Academy of Engineering Grand Challenges
A. Systems that focus on flow of things humans need
1. Transportation & Supply Chain
Restore and enhance urban infrastructure
2. Water & Waste/Climate & Green tech
Provide access to clear water
3. Food & Products
Manager nitrogen cycle
4. Energy & Electricity
Make solar energy economical
Provide energy from fusion
Develop carbon sequestration methods
5. Information & Communication Technology
Enhance virtual reality
Secure cyberspace
Reverse engineer the brain

B. Systems that focus on human activity & development
6. Buildings & Construction (smart spaces)
Restore and enhance urban infrastructure
7. Retail & Hospitality/Media & Entertainment (tourism)
Enhance virtual reality
8. Banking & Finance/Business & Consulting
9. Healthcare & Family Life
Advance health informatics
Engineer better medicines
Reverse engineer the brain
10. Education & Work Life/Jobs & Entrepreneurship
Advance personalized learning
Engineer the tools of scientific discovery

C. Systems that focus on human governance
11. City & Security
Restore and improve urban infrastructure
Secure cyberspace
Prevent nuclear terror
12. State/Region & Development
13. Nation & Rights


Students for a Smarter Planet

 YouTube - animated!!
– http://www.youtube.com/watch?v
=P7bEyPrtFHM

 and another
– http://www.youtube.com/watch?v=WklJujtIip4

 Tweet comments to…
– @wendywolfie

 Continuously Improving Product-Service
Systems = Smarter Systems
– Simplify the message
– Provide advanced organizers


IBM’s Leadership Changes

IBM has 426,000
employees worldwide
2011 Financials
22% of IBM’s revenue
 Revenue - $ 106.9B
in Growth Market
 Net Income - $ 15.9B
countries; growing at
11% in 2011  EPS - $ 13.44
 Net Cash - $16.6B More than 40% of IBM’s
workforce conducts business
away from an office

55% of IBM’s Workforce
IBM operates in 170 is New to the company in
countries around the globe the last 5 years
Number 1 in patent
generation for 19
100 Years of Business consecutive years ;
& Innovation in 2011 6,180 US patents
awarded in 2011 The Smartest Machine On Earth
9 time winner of the 5 Nobel
President’s National Laureates
Medal of Technology
& Innovation - latest “Let’s Build a Smarter
award for Blue Gene Planet"
Supercomputer


Up-Skill = New Venture = Graduates with
Smarter Planet skills
= High-Growth
Cycle = Acquisition = IBMer moving from
Acquisition/
New IBM BU
mature BU to acquisition
(Growing)
= IBMer moving into
IBMer on Campus role
(help create graduates = High-Productivity/
University-Region1 with Smarter-Planet skills, Mature IBM BU
help create Smarter Planet
oriented new ventures; (Shrinking)
Refresh skills

University-Region2
IBM


Regional Competitiveness and U-BEEs:
Where imagined possible worlds become observable real worlds
http://www.service-science.info/archives/1056

Innovations Nation
Universities/ “The future is already
State/Province here (at universities),
Regions City/Region
Calculus (Cambridge/UK)
For-profits
it is just not evenly
Physics (Cambridge/UK) U-BEE
Computer Science (Columbia/NY) distributed.”
Microsoft (Harvard/WA) Job Creator/Sustainer
Yahoo (Stanford/CA) Hospital
Cultural & University
Google (Stanford/CA) Medical
Conference College
Facebook (Harvard/CA) Research
Hotels K-12
“The best way to
Non-profits Worker
(professional)
Family
(household)
predict the future
is to (inspire the next
generation of students
to) build it better.”

U-BEEs = University-Based Entrepreneurial Ecosystems, City Within City

Sustainability/Resilience & Innovation: Local-p global-i supply chains
World as System of Systems
World (light blue - largest)
Nations (green - large)
States (dark blue - medium)
Cities (yellow - small)
Universities (red - smallest)

Cities as System of Systems
Developed Market -Transportation & Supply Chain
Nations -Water & Waste Recycling
(> $20K GDP/Capita) -Food & Products ((Nano)
-Energy & Electricity
-Information/ICT & Cloud (Info)
-Buildings & Construction
Emerging Market -Retail & Hospitality/Media & Entertainment
Nations -Banking & Finance
(< $20K GDP/Capita) -Healthcare & Family (Bio)
-Education & Professions (Cogno)
-Government (City, State, Nation)

Nations: Innovation Opportunities
- GDP/Capita (level and growth rate)
- Energy/Capita (fossil and renewable)


~250 years of infrastructure transformations
Installation Crash Deployment
Irruption Frenzy Synergy Maturity
• Formation of Mfg. industry
1 The I ndust r i al 1771
Panic • Repeal of Corn Laws 1829
Revol ut i on 1797
opening trade

• Standards on gauge, time
A ge of St eam Panic
2 and Rai l ways
1829
1847
• Catalog sales companies 1873
• Economies of scale

A ge of St eel , Depressio • Urban development
3 El ect r i ci t y 1875
n • Support for interventionism
1920
1893
and Heavy
Engi neer i ng • Build-out of Interstate
A ge of Oi l , Crash
4 A ut omobi l es
1908
1929 highways 1974
• IMF, World Bank, BIS
and Mass Pr oduct i on
Coming period of
A ge of I nf or mat i on Credit Crisis
5 and
1971 2008 Institutional Adjustment
and Production Capital
Tel ecommuni cat i ons
Source: Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages; (Edward Elar Publishers, 2003).


~100 years of US job transformations

Source: US Bureau of Economic Analysis; McKinsey Global Institute Analysis

We need better frameworks, theories, and models of…
 Four I’s
Cultural Information
– Infrastructure
(Quality-of-Life Measures)
– Individuals
– Institutions
– Information
Individuals Institutions
 Four Measures (Skills) (Rules, Jobs)
– Innovativeness
– Equity
– Sustainability Societal Infrastructure
– Resiliency (Technologies & Environment)

Service systems entities learn to apply knowledge

Learning
To Apply Knowledge

Do It Invent It
Exploitation Exploration

Run Transform Innovate

Operations L Internal Incremental

Maintenance
Copy It External Radical

Insurance Interaction Super-Radical

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.


14B Where is the “Real Science” - wonders to appreciate? 10K
Big Bang In the many sciences that study the natural and human-made worlds… Cities
(Natural Unraveling the mystery of evolving hierarchical-complexity in new populations… (Human-Made
Time
World) To discover the world’s architectures and mechanisms for computing non-zero-sum
Entity Architectures (ЄN) of nested, networked Holistic-Product-Service-Systems (HPSS)
World)

writing
(symbols and scribes,
stored memory
and knowledge)

written laws

ECOLOGY
(governance and
stored control)

sun (energy) money
earth (governed
(molecules & transportable value
stored energy) stored value,
“economic energy”)
bacteria
(single-cell life)

bees (social
sponges transistor
division-of-labor)
(multi-cell life) (routine
cognitive work) universities
(knowledge workers
clams (neurons) printing press (books
trilobites (brains) 200M 60 steam engine (work)

What is the role of the university?

Donald Clark:
Pedagogic Change


A Framework for Global Civil Society

 Daniel Patrick Moynihan said nearly 50 years ago: "If you want to
build a world class city, build a great university and wait 200
years." His insight is true today – except yesterday's 200 years
has become twenty. More than ever, universities will generate and
sustain the world’s idea capitals and, as vital creators,
incubators, connectors, and channels of thought and
understanding, they will provide a framework for global civil
society.
– John Sexton, President NYU


Service Science: Conceptual Framework
Ecology
(Populations & Diversity)

Entities Interactions Outcomes
(Service Systems, both (Service Networks, (Value Changes, both
Individuals & Institutions) link, nest, merge, divide) beneficial and non-beneficial)

Identity Value Proposition Governance Mechanism Reputation
(Aspirations & Lifecycle/ (Offers & Reconfigurations/ (Rules & Constraints/ (Opportunities & Variety/
History) Incentives, Penalties & Risks) Incentives, Penalties & Risks) History)

Access Rights Measures
(Relationships of Entities) (Rankings of Entities)
lose-win win-win prefer sustainable
lose-lose win-lose non-zero-sum
Resources Stakeholders outcomes,
(Competences, Roles in Processes, (Processes of Valuing, i.e., win-win
Specialized, Integrated/Holistic) Perspectives, Engagement)

 Resources: People, Organizations, Technology, Shared Information
 Resources: Individuals, Institutions, Infrastructure, Information
 Stakeholders: Customers, Providers, Authorities, Competitors
 Measures: Quality, Productivity, Compliance, Sustainable Innovation
 Access Rights: Own, Lease, Shared, Privileged
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.


Visit IBM Almaden Research Center, San Jose, CA

 Upcoming Conferences
– July 2012
• ISSS San Jose
• HSSE San Francisco

 More Information
– Blog
• www.service-science.info
– Twitter
• @JimSpohrer
– Presentations
• www.slideshare.net/spohrer
– Email
• spohrer@us.ibm.com


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
Innovation Champion &
Director, IBM University Programs & open worldwide entrepreneurship research (IBM UPower) WW
spohrer@us.ibm.com


'building smarter systems isn't simply a proposal or theory, but a practical
reality, with clear steps, quantifiable benefits and best practices'
- Sam Palmisano

Where are the opportunities? Every city and region!

IBM Centennial: Icon of Progress


NPR: Out of Economic Chaos, A New Order May Be Rising
 HAWLEY: The grand total of U.S. automotive fatalities from 1975 to the present, about one and a
half million people. Now, the grand total of U.S. fatalities from 1775 to the present in every military
conflict we've had is 1.3 million. So in other words, in the last roughly 35 years we've killed more
people with cars than we have in more than 300 years of warfare.
 I think if you step back and look at cars from a sort of 35,000 foot level, you've got to wonder why
we're doing this to ourselves. And there's a tremendous amount of industry and employment built
up around it. But suppose it all changed.
 One way it could change is if human weren't allowed to drive cars anymore. Or let me put it
differently. If cars were much more appealing because they drove themselves and did it safely.
 And this isn't just Jetson stuff. There's a brilliant computer scientist, artificial intelligence
researcher at Stanford, named Sebastian Thrun. He's invented a car that drives itself. You can hop
in the car and you never touch the wheel or the pedals. It navigates through all the traffic snarls. It
won't run over little old ladies in Pasadena. It won't even run over a squirrel.
 If you could eliminate the seven million accidents per year, the 2.9 million injuries, the 40,000
fatalities, that would be enormous boon. But if you think about what would happen in the short
term. Let's suppose in the next five or ten years this idea comes to fruition.
 Think about all the disruption that could cause. You might not have to own a car. Well, that might
be good. You'd have a garage that you could use to start up a company instead of storing a couple
of rusting hulks of metal in it. You'd never have to call Tom and Ray Magliozzi again, because you
wouldn't have to fix your car.
 There wouldn't be a parking problem, because you'd push a little button on your iPhone, a smart
car would zip up, pick you up, drop you off where you need to go. That means no more valets, no
more taxi drivers, no more meter maids, no more traffic cops. You'd never hear a car horn,
because why would a robot car honk at another robot car. Makes no sense.
 But that's an example of the sort of change that in the short term can cause immense of amounts
of anxiety and upheaval.

http://www.npr.org/2011/09/24/140766796/out-of-economic-chaos-a-new-order-may-be-rising


What are the benefits of more education? Of higher skills?

…But it can be costly, American student loan debt is over $900M


~30 years of skill transformations: depth & breadth

15

10 Expert Thinking

5 Complex Communication

0 Routine Manual

Non-routine Manual
-5

Routine Cognitive
-10
1969 1974 1979 1984 1989 1994 1999

Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How
Computers Are Creating the Next Job Market. Princeton University Press.


From Work Done By the Institute for the Future (IFTF.org)

Transdisciplinary = T-Shaped People (Breadth & Depth)

A major societal transformation is underway…
 Driven by “The Death of Distance”
- Cairncross, Economist (1997)

 Manifesting in new forms of “Global Competition”
– Friedman, The World is Flat (2005)

 Characterized as a “Gathering Storm” by Americans
– US National Academies (2005, 2007, 2011)


The Gathering Storm Report

 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 R&D job
– Fix “broken” Employment system (increase R&D funding)

 IV. Improve speed of regional innovation
– Fix “broken” Governance system (align visa, tax, etc. regulations)


Rising Above The Gathering Storm, Revisited for All Regions

 Regions are entities that must learn to learn better
– Regions = Nations, States, Cities, etc…
– Learning = Improving global competitiveness
– “History is a race between education and catastrophe” – H.G. Wells

 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)

 Regional innovation = “Entities learning”


Societal Transformation Changes How Regions Compete

 From Value-Creation Model: …Against Each Other (Zero-Sum Mindset)
– During different time intervals some regions pull far ahead, and some fall far behind…
eventually the people in lagging regions migrate to leading regions, eventually lagging regions
“collapse” and are absorbed into other regions… human capital is wasted in lagging regions,
and human suffering grows in lagging regions as they fall further behind everyone else….
disenfranchised populations create a security threat for all….

 To Value-CoCreation Model: …With/For Each Other (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 collapse, but to improve the quality of customers over time as well, wealthier
customers buy more, and regions compete in cycles of progress that move everyone
forward…

 A Simple Example: “The Huppenthal Method” Style of Competition
– Students compete, but “winning” is for everyone to complete the work, and beat their 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….

 Gathering Storm reflects a major societal transformation underway
– Driven by “The Death of Distance” and manifesting in new forms of “Global Competition”

 The very nature of regional competition is being transformed …
– From Value Creation Model: “Competition Against” Worldview, Zero-Sum Mindset
– To Value CoCreation Model: “Competition With/For” Worldview: 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

 Increasing trust can only be earned by performance against a shared innovation
roadmap, or 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…
– ”You can always depend on the Americans to do the right thing, after exhausting all other
possibilities.” – Sir Winston Churchill


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


What We Do: The “6 R’s” (not to be confused with 3 R’s)

1. Research
Research awards focus on grand challenge problems and big bets
https://www.ibm.com/developerworks/university/research

2. Readiness
Access to IBM tools, methods, and course materials to develop skills
https://www.ibm.com/developerworks/university/academicinitiative

3. Recruiting
Internships and full-time positions working to build a smarter planet
http://www.ibm.com/jobs

4. Revenue
Improve performance, the university as a complex enterprise (city within city)
http://www.ibm.com/services/us/gbs/bus/html/bcs_education.html

5. Responsibility
Community service provides access to IBMers expertise/resources
http://www.ibm.com/ibm/ibmgives/

6. Regions
Regional innovation ecosystems – incubators, entrepreneurship, jobs
http://www.ibm.com/ibm/governmentalprograms/innovissue.html


Human Activities: Sociotechnical System Evolution
Estimated world (pre-1800) and then U.S. Labor Percentages by Sector
120

100
Services (Info)
80
Services (Other)
60 Industry (Goods)
Agriculture
40
Hunter-Gatherer
20

0
A

A
A

A

50

00

50
00

00

50
Y

Y
Y

Y

18

18

19

19
0

20

20
0

0

00
00

00

00

20
00

10
20
20

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

The Company of The Pursuit of
Strangers : A Natural Organizational
History of Economic Intelligence,
Life by James G. March
by Paul Seabright Exploitation vs exploration

Human Population: Sociotechnical System Evolution
Information Technologies, etc.

Scientific Method, Industrialization
Colonial Expansion & Economics,

Rise of the modern managerial firm
& Politics, Education, Healthcare &

Effects of Agriculture,

Shadows in the Sun, The Visible Hand: The
by Wade Davis Managerial Revolution in
“Ethnosphere. sum total of all
the thoughts, beliefs, myths, and American Business
institutions brought into being by the by Alfred Dupont Chandler
human imagination”


Evolution: SSME+D (for Design) for a Smarter Planet
What is Smarter Planet? Harmonized smarter systems.

INSTRUMENTED INTERCONNECTED INTELLIGENT
We now have the ability People, systems and We can respond to changes
to measure, sense and objects can communicate quickly and accurately,
see the exact condition and interact with each and get better results
of practically everything. other in entirely new by predicting and optimizing
PRODUCTS ways.
IT NETWORKS COMMUNICATIONS
for future events.
WORKFORCE SUPPLY CHAIN TRANSPORTATION BUILDINGS


Growth of Service in National Economies
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 (A) Agriculture:
Value from
China 25.7 49 22 29 142%
harvesting nature

India 14.4 60 17 23 35%
(G) Goods:
U.S. 5.1 1 23 76 23% Value from
making products
Indonesia 3.5 45 16 39 34%
(S) Service:
Brazil 3.0 20 14 Daryl Pereira/Sunnyvale/IBM@IBMUS,
66 61% Value from
IT augmented workers in smarter systems
Russia 2.4 10 21 69 64% that create benefits for customers
and sustainably improve quality of life.
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%

NationMaster.com, International Labor Organization
Note: Pakistan, Vietnam, and Mexico now larger LF than Germany


Growth of Service Revenue at IBM
2010 Pretax Income Mix Revenue Growth by Segment
SYSTEMS
(AND FINANCING)

SOFTWARE

17% Services
44%

Software
39% Systems

SERVICES

IBM Annual Reports
What do IBM Service Professionals Do? Run IT & enterprise systems for customers,
help Transform customer processes to best practices, and Innovate with customers.

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)

IBM University Programs worldwide, accelerating regional development (IBM Upward)
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions

Service Service Service Stakeholder The white paper offers
a starting point to -
Innovation Systems Science Priorities
Growth in service Customer-provider To discover the Education
GDP and jobs interactions that underlying
enable value principles of Skills Develop programmes
Service quality cocreation complex service & Mindset & qualifications
& productivity systems
Dynamic Research
Environmental configurations of Systematically Encourage an
Knowledge
friendly & resources: people, create, scale and interdisciplinary
& Tools approach
sustainable technologies, improve systems
organisations and
Urbanisation & information Foundations laid Business
aging population by existing Employment
Increasing scale, disciplines Develop and improve
& Collaboration
Globalisation & complexity and service innovation
technology drivers connectedness of Progress in
Government roadmaps, leading to a
service systems academic studies doubling of investment
Opportunities for and practical tools Policies in service education
businesses, B2B, B2C, C2C, & Investment and research by 2015
governments and B2G, G2C, G2G Gaps in knowledge
individuals service networks and skills

Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
© 2012 IBM Corporation

Priorities: Research Framework
for the Science of Service
Pervasive Force: Leveraging Technology to Advance Service

Strategy Development Execution
Priorities Priorities Priorities

Fostering Service Stimulating Effectively Branding
Infusion and Growth Service Innovation and Selling Services

Improving Well-Being Enhancing the Service
Enhancing
through Experience through
Service Design
Transformative Service Cocreation

Optimizing Measuring and
Creating and Maintaining
Service Networks Optimizing the Value of
a Service Culture
and Value Chains Service

Source: Global Survey of Service Research Leaders (Ostrom et al 2010)

Service Science: Conceptual Framework
Ecology
(Populations & Diversity)

Entities Interactions Outcomes
(Service Systems, both (Service Networks, (Value Changes, both
Individuals & Institutions) link, nest, merge, divide) beneficial and non-beneficial)

Identity Value Proposition Governance Mechanism Reputation
(Aspirations & Lifecycle/ (Offers & Reconfigurations/ (Rules & Constraints/ (Opportunities & Variety/
History) Incentives, Penalties & Risks) Incentives, Penalties & Risks) History)

Access Rights Measures
(Relationships of Entities) (Rankings of Entities)
lose-win win-win prefer sustainable
lose-lose win-lose non-zero-sum
Resources Stakeholders outcomes,
(Competences, Roles in Processes, (Processes of Valuing, i.e., win-win
Specialized, Integrated/Holistic) Perspectives, Engagement)

 Resources: Individuals, Institutions, Infrastructure, Information
 Resources: People, Organizations, Technology, Information
 Stakeholders: Customers, Providers, Authorities, Competitors
 Measures: Quality, Productivity, Compliance, Sustainable Innovation
 Access Rights: Own, Lease, Shared, Privileged
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
Rights No-Rights

 First foundational premise of 2. Technology/
• People/
service science: Physical Environment
Individuals
–
Infrastructure
Service system entities
dynamically configure
four types of resources
4. Shared
– Resources are the building Not-Physical 3. Organizations/ Information/
blocks of entity Institutions Symbolic
architectures
Knowledge
 Named resources are:
– Physical or Formal service systems can contract to configure resources/apply competence
– Not-Physical Informal service systems can promise to configure resources/apply competence
– Physicist resolve disputes
Trends & Countertrends (Balance Chaos & Order):
 Named resources have: (Promise) Informal <> Formal (Contract)
– Rights or
(Relationships & Attention) Social <> Economic (Money & Capacity)
– No Rights
(Power) Political <> Legal (Rules)
– Judges resolve disputes (Evolved) Natural <> Artificial (Designed)
(Creativity) Cognitive Labor <> Information Technology (Routine)
(Dance) Physical Labor <> Mechanical Technology (Routine)
Spohrer, J & Maglio, P. P. (2009) (Relationships) Social Labor <> Transaction Processing (Routine)
Service Science: Toward a Smarter Planet. (Atoms) Transportation <> Communication (Bits)
In Introduction to Service Engineering. (Tacit) Qualitative <> Quantitative (Explicit)
Editors Karwowski & Salvendy. Wiley. Hoboken, NJ.. (Secret) Private <> Public (Shared)
(Anxiety-Risk) Challenge <> Routine (Boredom-Certainty)
(Mystery) Unknown <> Known (Justified True Belief)

Service system entities calculate value from multiple stakeholder
perspectives
Value propositions coordinate & motivate resource access
 Second foundational premise of
service science Stakeholder Measure Pricing Basic Value
Perspective Impacted Decision Questions Proposition
– Service system entities calculate (the players) Reasoning
value from multiple stakeholder
perspectives

– Value propositions are the building 1.Customer Quality Value Should we? Model of customer: Do
blocks of service networks (Revenue) Based (offer it) customers want it? Is there a
market? How large? Growth
rate?
 A value propositions can be viewed as
a request from one service system to
another to run an algorithm (the value Productivity Cost Model of self: Does it play to
2.Provider Can we?
proposition) from the perspectives of (Profit, Mission, Plus our strengths? Can we deliver
(deliver it)
multiple stakeholders according to Continuous it profitably to customers?
culturally determined value principles. Improvement, Can we continue to improve?
Sustainability)
 The four primary stakeholder
perspectives are: customer, provider, 3.Authority Compliance Regulated May we? Model of authority: Is it legal?
authority, and competitor (Taxes and (offer and Does it compromise our
Fines, Quality integrity in any way? Does it
– Citizens: special customers deliver it)
of Life) create a moral hazard?
– Entrepreneurs: special providers
– Parents: special authority
– 4.Competitor Sustainable Strategic Will we? Model of competitor: Does it
Criminals: special competitors
Innovation (invest to put us ahead? Can we stay
(Substitute)
(Market make it so) ahead? Does it differentiate
share) 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..


Service system entities reconfigure access rights to resources by
mutually agreed to value propositions

 Third foundational premise of service
Competitor Provider Customer Authority
science
S P C A
– Service system entities reconfigure
access rights to resources by mutually
agreed to value propositions (substitute)
OO OO
– Access rights are the building blocks of LC LC
the service ecology (culture and
information) SA SA
 Access rights PA PA
value-proposition
– Access to resources that are
change-experience
owned outright (i.e., property)
dynamic-configurations
– Access to resource that are

time
leased/contracted for (i.e., rental
car, home ownership via
mortgage, insurance policies, etc.)
– Shared access (i.e., roads, web
service = value-cocreation
information, air, etc.) B2B
B2C
– Privileged access (i.e., personal
thoughts, inalienable kinship B2G
relationships, etc.) G2C
provider resources G2B customer resources
Owned Outright G2G Owned Outright
C2C
Leased/Contract C2B Leased/Contract
Spohrer, J & Maglio, P. P. (2009)
Service Science: Toward a Smarter Planet. Shared Access C2G Shared Access
In Introduction to Service Engineering. Privileged Access *** Privileged Access
Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..


Service system entities interact to create ten types of outcomes
ISPAR descriptive model

 Four possible outcomes
from a two player game

lose-win win-win
Win

(coercion) (value-cocreation)
Provider

lose-lose win-lose
Lose

(co-destruction) (loss-lead)

Lose Win
Customer
 ISPAR generalizes to ten
possible outcomes
– win-win: 1,2,3
– lose-lose: 5,6, 7, maybe 4,8,10
– lose-win: 9, maybe 8, 10
– win-lose: maybe 4

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)


Japan may 11 future of cities and universities 20120511 v3

Japan may 11 future of cities and universities 20120511 v3

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