Thefutureofcitiesandregions 20200724 v5

© 2011 IBM Corporation
IBM University Programs worldwide, accelerating regional development (IBM UPward)
The Future of Cities and Regions:
U-BEEs Accelerating Regional Upward Spirals
Dr. James (“Jim”) C. Spohrer
July 29, 2020
spohrer@us.ibm.com
Used with permission eVolo.us

© 2011 IBM CorporationIBM University Programs worldwide, accelerating regional development (IBM UPward)2
University-Based Entrepreneurial Ecosystems
(U-BEE’s)
http://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
University
College
K-12
Cultural &
Conference
Hotels
Hospital
Medical
Research
Worker
(professional)
Family
(household)
For-profits
Non-profits
U-BEE
Job Creators
~25-50% of start-ups are new
IT-enabled service offerings
SaaS
PaaS
IaaS
http://www.thesrii.org

3
Universities connect information flows
between city ecosystems
World as System of Systems
World (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 Market
Nations
(> $20K GDP/Capita)
Emerging Market
Nations
(< $20K GDP/Capita)
IBM UP WW: Tandem Awards: Increasing university linkages (knowledge exchange interactions)

4
University Trend: More Locally Connected Research Centers
University sub-systems
Disciplines in Schools (circles)
Innovation Centers (squares)
E.g., CMU Website (2009)
“Research Centers:
where it all happens –
to solve real-world
problems”
Disciplines in Schools
Award degrees
Single-discipline focus
Research discipline problems
Innovation Centers (ICs)
Industry/government sponsors
Multi-disciplinary teams
Research real-world systems
D
D
D
D
D
D
water & waste transportation
health
energy/grid
e-government
food &
supply chain

From I to T-shape for Smarter Planet:
IBMers with more depth and breadth
7/24/2020 © IBM 2013 IBM University Programs
worldwide accelerating regional
development (IBM UPward)
5
Many disciplines
Many sectors
Many regions/cultures
(understanding & communications)
Deepinonesector
Deepinoneregion/culture
Deepinonediscipline

Systems-Disciplines Matrix: Scope of Service Science
Systems that focus on flows of things Systems that governSystems that support people’s activities
transportation &
supply chain water &
waste
food &
products
energy
& electricity
building &
construction
healthcare
& family
retail &
hospitality banking
& finance
ICT &
cloud
education
&work
city
secure
state
scale
nation
laws
social sciences
behavioral sciences
management sciences
political sciences
learning sciences
cognitive sciences
system sciences
information sciences
organization sciences
decision sciences
run professions
transform professions
innovate professions
e.g., econ & law
e.g., marketing
e.g., operations
e.g., public policy
e.g., game theory
and strategy
e.g., psychology
e.g., industrial eng.
e.g., computer sci
e.g., knowledge mgmt
e.g., stats & design
e.g., knowledge worker
e.g., consultant
e.g., entrepreneur
stakeholders
Customer
Provider
Authority
Competitors
resources
People
Technology
Information
Organizations
change
History
(Data Analytics)
Future
(Roadmap)
value
Run
Transform
(Copy)
Innovate
(Invent)
Starting Point 1: Observing the Stakeholders (As-Is)
Starting Point 2: Observing their Resources & Access (As-Is)
Change Potential: Thinking (Has-Been & Might-Become)
Value Realization: Doing (To-Be)
disciplines
systems

© 2011 IBM CorporationIBM UP (University Programs) WW7
These slides from a Sept 29, 2011 talk Jim Spohrer gave in Spain on
Smarter Cities –
see original here: https://www.slideshare.net/spohrer/the-future-of-cities-and-regions-20110929-v4
 More Information
– Blog
• www.service-science.info
– Twitter
• @JimSpohrer
– Presentations
• www.slideshare.net/spohrer
– Email
• spohrer@us.ibm.com

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.”

Universities and Regional Development
% WW GDP and % WW Top-500-Universities
Japan
China
Germany
France
United KingdomItaly
Russia SpainBrazil
Canada
India
Mexico AustraliaSouth Korea
NetherlandsTurkey
Sweden
y = 0,7489x+ 0,3534
R² = 0,719
0
1
2
3
4
5
6
7
8
9
0 1 2 3 4 5 6 7 8 9
%globalGDP
% top 500 universities
Strong Correlation (2009 Data): National GDP and University Rankings
http://www.upload-it.fr/files/1513639149/graph.html

Outline
 Introduction: IBM & Smarter Cities
– Who I am, my team
– IBM & the Smarter Planet Initiative
 Trend: Universities & Regional
Development
– Universities have long been the key to
regional development in many ways…
– …But many are in crisis, and will re-
invent themselves as “cities within cities”
– becoming U-BEE living labs inventing
the future
 Evolution: Cities Getting Smarter
– McKinsey Study
– IBM Study
“Let’s Build a Smarter
Planet"

Who I am
 Director IBM Global University Programs worldwide (since 2009)
– Global team works with 5000 university world wide (http://www.ibm.com/university)
– 6 R’s: Research (Awards), Readiness (Skills), Recruiting, Revenue, Responsibility, Regions
– Transform “IBM on Campus” brand awareness (“Smarter Planet/Smarter Cities”)
– Create “Urban Service System” Research Centers & U-BEEs
 Founding Director of IBM's first Service Research group (2003-2009)
– Almaden Research Center, San Jose, CA
– 10x ROI with four IBM outstanding and eleven accomplishment awards
– Improve existing offerings, create new, portfolio synergies, partners, patents, publications
– I know/work with service research pioneers from many academic disciplines
• I advocate for Service Science, Management, Engineering, and Design (SSME+D)
– Short-term: Curriculum (T-shaped people, deep in an existing discipline)
– Long-term: New transdiscipline and profession (awaiting CAD tool)
• I advocate for SRII (“one of the founding fathers”)
• Co-editor of the “Handbook of Service Science” (Springer 2010)
 Founding CTO IBM’s Venture Capital Relations Group Silicon Valley (1999-2003)
– Headlights and win-win strategies for alignment and growth
 Other background
– Apple Computer’s (Distinguished Engineer Scientist and Technologist) award (90’s)
– Ph.D. Computer Science/Artificial Intelligence from Yale University (80’s)
– Dialog Systems/Verbex Speech Recognition Start-up (acquired by Exxon, late 70’s)
– B.S. in Physics from MIT (70’s)

Who We Are: Sampling of Regional U-BEE Leads
Region Contact Name
Africa Sean Mclean
Australia Jay Hannon
ASEAN Seow Khun Lum
Canada Stephen Peregut
China Jean Li
Egypt Hisham El-Shishiney
EMEA Diem Ho
GCG Wang Hao
India Bhooshan Kelkar
Japan Kohzoh Kitamura
Latin America Juan Duran
Middle East Andrea Emiliiani
Nordics Jyrki Koskinen
Russia Sergey Belov
Turkey Jale Akyel

IBM operates in 170
countries around the globe
~425K employees
~100 acquisitions in 10 years 2010 Financials
 Revenue - $ 99.9B
 Net Income - $ 14.8B
 EPS - $ 11.52
 Net Cash - $11.7B
21% of IBM’s revenue
in growth market
countries; growing at
13% in late 2010
Number 1 in patent
generation for 18
consecutive years ;
5,896 US patents
awarded in 2010
More than 40% of
IBM’s workforce
conducts
business away
from an office
5 Nobel
Laureates
9 time winner of the
President’s National
Medal of Technology
& Innovation - latest
award for Blue Gene
Supercomputer
“Let’s Build a Smarter
Planet"
The Smartest Machine On Earth
100 Years of Business
& Innovation

Where are the opportunities? Every city and region!
'building smarter systems isn't simply a proposal or theory, but a practical
reality, with clear steps, quantifiable benefits and best practices'
- Sam Palmisano

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

Communication
$ 3.96 Tn
Transportation
$ 6.95 Tn
Leisure / Recreation /
Clothing
$ 7.80 Tn
Healthcare
$ 4.27 Tn
Food
$ 4.89 Tn
Infrastructure
$ 12.54 Tn
Govt. & Safety
$ 5.21 Tn
Finance
$ 4.58 Tn
Electricity
$ 2.94 Tn
Education
$ 1.36 Tn
Water
$ 0.13 Tn
Global system-of-systems
$54 Trillion
(100% of WW 2008 GDP)
Same Industry
Business Support
IT Systems
Energy Resources
Machinery
Materials
Trade
Legend for system inputs
Note:
1. Size of bubbles represents
systems’ economic values
2. Arrows represent the strength of
systems’ interaction
Source: IBV analysis based on OECD
Our planet is a complex, dynamic, highly interconnected
$54 Trillion system-of-systems (OECD-based analysis)
This chart shows ‘systems‘ (not ‘industries‘)
 Our planet is a complex system-of-systems
1 Tn

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 Trillion
100% of WW 2008
GDP
Inefficiencies
$15 Trillion
28% of WW 2008
GDP
Improvement
potential
$4 Trillion
7% 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
Improvementpotentialas
%ofsysteminefficiency
Education
1,360
Building & Transport
Infrastructure
12,540
Healthcare
4,270
Government & Safety
5,210
Electricity
2,940
Financial
4,580
Food & Water
4,890
Transportation (Goods
& Passenger)
6,950
Leisure / Recreation
/ Clothing
7,800
Communication
3,960
Analysis of inefficiencies in the
planet‘s system-of-systems
Note: Size of the bubble indicate absolute
value of the system in USD Billions
42%
34%
This chart shows ‘systems‘ (not ‘industries‘)
15%
20%
25%
30%
35%
40%
15% 20% 25% 30% 35% 40% 45%

Quality-of-Life: How to measure?
A. Systems that focus on flow of things that humans need (~15%*)
1. Transportation & supply chain
2. Water & waste recycling/Climate & Environment
3. Food & products manufacturing
4. Energy & electricity grid/Clean Tech
5. Information and Communication Technologies (ICT access)
B. Systems that focus on human activity and development (~70%*)
6. Buildings & construction (smart spaces) (5%*)
7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*)
8. Banking & finance/Business & consulting (wealthy) (21%*)
9. Healthcare & family life (healthy) (10%*)
10. Education & work life/Professions & entrepreneurship (wise) (9%*)
C. Systems that focus on human governance - security and opportunity (~15%*)
11. Cities & security for families and professionals (property tax)
12. States/regions & commercial development opportunities/investments (sales tax)
13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax)
20/10/10
0/19/0
2/7/4
2/1/1
7/6/1
1/1/0
5/17/27
1/0/2
24/24/1
2/20/24
7/10/3
5/2/2
3/3/1
0/0/0
1/2/2
Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities
* = US Labor % in 2009.
“61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)”

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

Recent McKinsey Study and IBM Study

Success breeds a crisis in higher education…
…But it can be costly, American student loan debt is over $900M

UNIVERSITIES:
Research Centers & Real-World Systems
CITIES/METRO REGIONS:
Universities Key to Long-Term Economic Development
Accelerating Regional Innovation:
Universities as “Living Labs” for Host Cities

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
http://www.ibm.com/cityone

Systems-Disciplines Framework
 Systems Focus
– Flows
– Human Development
– Governance
 Disciplines Focus
– Stakeholders
– Resources
– Change
– Value
Stakeholders
Resources
Change
Value
Flows
HumanDevelopment
GovernanceGovernance
Systems
Disciplines

The Goal: Adaptive Innovators, so called T-shaped professionals
Ready for Life-Long-Learning
Ready for T-eamwork
Ready to build a Smarter Planet
SSME+D = Service Science, Management, Engineering + Design
Many disciplines
Many systems
Deepinonediscipline
(analyticthinking&problemsolving)
Deepinonesystem
(analyticthinking&problemsolving)
Many multi-cultural-team service projects completed
(resume: outcomes, accomplishments & awards)
BREADTH
DEPTH

What’s the best way to predict the future?
 The best way to predict the future is….
– To create it. (Moliere)
– To invent it. (Kay)
– To inspire and enable the next generation to build it better (IBM UPward)

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

Thank-You! Questions?
Dr. James (“Jim”) C. Spohrer
Director, IBM University Programs worldwide, accellerating regional development (IBM Upward)
spohrer@us.ibm.com
“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

Frameworks, Theories, and Models that connect…
 The 4 I’s
– Infrastructure
– Individuals
– Institutions
– Information
 Remember
– Questions
– Connections
– Book
– Speed!
Societal Infrastructure
(Technologies & Environment)
Individuals
(Skills)
Institutions
(Jobs)
Cultural Information
(Quality-of-Life Measures)

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

California Human Development Report 2011
http://www.measureofamerica.org/docs/APortraitOfCA.pdf

What are the characteristics of highly innovative regions?
 Frequent Alignment Meetings (monthly, quarterly, annual)
– City’s Innovation Roadmap (Mayor’s Office)
– University’s Innovation Roadmap (President of University)
– Incubator’s Innovation Roadmap (Head of University-based Incubator)
– Smart Specialization (LNU Vaxjo Wood, UA Tuscon Border Security, etc.)
 Local Role Model(s) – Investment in Risk-Taking
– Local success stories and role models
– Ideally, a billionaire local entrepreneur & Foundation
– At least $10M annual investment in entrepreneurship programs & local incubator
 Local Culture – “Just Say Yes to Entrepreneurs”
– University as a first customer, City as a second customer
– Sometimes “born global” on the cloud
– Smarter local risk-taking, smarter global scale-out planning
 Early Identification and Alignment with Scale-Up Partner
– Which firms/organizations already have many customers that will need the innovation
– Finding ways to establish win-win growth strategies as early as possible

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)
 Regional innovation = “Entities learning”
– “Run-Transform-Innovate Learning Framework”
– “T-Shaped Professionals & the Systems-Disciplines Framework”
– University-Based Entrepreneurial Ecosystems (U-BEEs)

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…

Complex Buildings: Economy to Luxury Hotels & Resorts
http://www.youtube.com/watch?v=Hm7MeZlS5fo

Installation Deployment
Irruption
The Industrial
Revolution
Age of Steam
andRailways
Age of Steel, Electricity
andHeavyEngineering
Age of Oil, Automobiles
andMass Production
Age of Information and
Telecommunications
Frenzy Synergy Maturity
Panic
1797
Depression
1893
Crash
1929
Credit Crisis
2008
Coming period of
Institutional Adjustment
and Production Capital
1
2
3
4
5
Panic
1847
1771
1829
1875
1908
1971
1873
1920
1974
1829
Crash
• Formation of Mfg.
industry
• Repeal of Corn Laws
opening trade
• Standards on gauge, time
• Catalog sales companies
• Economies of scale
• Urban development
• Support for interventionism
• Build-out of Interstate
highways
• IMF, World Bank, BIS
Source: Carlota Perez, Technological Revolutions and Financial Capital: The Dynamics of Bubbles and Golden Ages; (Edward Elar Publishers, 2003).
Five waves of infrastructure transformation

~Up-Skilling Adjustment Period: A Decade-Level Phenomenon
Source: US Bureau of Economic Analysis; McKinsey Global Institute Analysis

Understanding the Human-Made World
See Paul Romer’s Charter Cities Video: http://www.ted.com/talks/paul_romer.html
Also see:
Symbolic Species, Deacon
Company of Strangers, Seabright
Sciences of the Artificial, Simon

Cities
 “Cities are the defining
artifacts of civilisation. All
the achievements and
failings of humanity are
here… We shape the city,
and then it shapes us.
Today, almost half the
global population lives in
cities.”
– John Reader, author of Cities
 IBM Releases ``IBM and the
Future of our Cities'' Podcast
– IBM Press Release 2005

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

Overview: Elements of Interest
Infrastructure & Environment
(Technologies Deployed)
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
Information, Quality-of-Life & Demographics
(Careers)
Policies & Investments
Run-Transform-Innovate
Governance
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
Information, Quality-of-Life Demographics
(Careers)
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
(Careers)
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
(Careers)
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
(Careers)
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
(Careers)
Infrastructure
Individuals &
Certified
Competences
(Skills)
Institutions &
Roles
(Jobs)
(Careers)
City Ecosystem 1 City Ecosystem 2
FuturePresentHistory
Governance
Governance
Governance
Governance
Frameworks
Theories
Models

World Population & Holistic Product-Service System Scaling

Data: Why and how technology is changing jobs
-10
-5
0
5
10
15
1969 1974 1979 1984 1989 1994 1999
Levy, F, & Murnane, R. J. (2004). The New Division of Labor: How
Computers Are Creating the Next Job Market. Princeton University Press.
Expert Thinking
Complex Communication
Routine Manual
Non-routine Manual
Routine Cognitive
Why: Technology replaces many routine
human activities (provider economics)

Our ambition is to reach K-12 students with Service Science & STEM:
Smarter Planet: “The systems we live in, and the systems we are…”
“Imagine smarter systems, explain why better (service systems & STEM language)”
STEM = Science, Technology, Engineering, and 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
 Challenge-based Project to Design Improved Service Systems
– K - Transportation & Supply Chain
– 1 - Water & Waste Recycling
– 2 - Food & Products (Nano)
– 3 - Energy & Electric Grid
– 4 – Information/ICT & Cloud (Info)
– 5 - Buildings & Construction
– 6 – Retail & Hospitality/Media & Entertainment (tourism)
– 7 – Banking & Finance/Business & Consulting
– 8 – Healthcare & Family Life/Home (Bio)
– 9 – Education /Campus & Work Life/Jobs & Entrepreneurship (Cogno)
– 10 – City (Government)
– 11 – State/Region (Government)
– 12 – Nation (Government)
– Higher Ed – T-shaped depth added, cross-disciplinary project teams
– Professional Life – Adaptive T-shaped life-long-learning & projects
Systems
that focus on
Governing
Systems
that focus on
Human Activities and
Development
Systems
that focus on
Flow of things

Smarter = Sustainable Innovation (reduce waste, expand capabilities)
Computational System
Building Smarter Technologies
Requires investment roadmap
Service Systems: Stakeholders & Resources
1. People/Individuals
2. Technology & Environment/Infrastructure
3. Shared Information
4. Organizations/Institutions
connected by win-win value propositions
Building Smarter Universities & Cities
Requires investment roadmap

A major societal transformation is underway…
 Driven by “The Death of Distance”
- Cairncross, Economist (1997)
 Manifesting in new forms of “Global Competition”
– Friedman, The World is Flat (2005)
 Characterized as a “Gathering Storm” by Americans
– US National Academies (2005, 2007, 2011)
 Characterized as the “Knowledge/Innovation/Interaction Age”
– The accelerating creation and application of knowledge and competences to create
value for and/or co-create value with other entities
– Value from innovations
– Value from interactions
 Characterized as the “Decade of Smart/Smarter Planet” by IBM
– Instrumented, Interconnected, and Intelligent

52
Time
ECOLOGY
14B
Big Bang
(Natural
World)
10K
Cities
(Human-Made
World)
sun (energy)
writing
(symbols and scribes,
stored memory
and knowledge)
earth
(molecules &
stored energy)
written laws
(governance and
stored control)
bacteria
(single-cell life)
sponges
(multi-cell life)
money
(governed
transportable value
stored value,
“economic energy”)
universities
(knowledge workers
clams (neurons)
trilobites (brains)
printing press (books
steam engine (work)200M
bees (social
division-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)

A Game of Life: Essentials
 Game = board with squares & rules
– Infrastructure both Environmental and Technological
• PS (Physical Systems - Environment)
– Natural Endowment (hidden & observable information)
• PSS (Physical Symbol Systems – Environment & Technology)
– Biological PSS (observable information – DNA, RNA, proteins, etc.)
– Technological PSS (observable information – states of system, bits, etc.)
 Life = multiple generations of entities
– Entities = SSE (Service System Entities)
• Individuals with Competencies & Life-Spans
– Competencies (vary with age)
– Life-Spans (vary with stage)
• Institutions with Roles & Rules
– Roles (Competency-Levels and Pay-Levels)
– Rules (Compliance-Levels and Tax-Levels)
Physical
Not-Physical
Rights No-Rights
2. Technology/
Environmental
Infrastructure
4. Shared
Information
1. People/
Individuals
3. Organizations/
Institutions
1. Dynamically configure resources (4 I’s)

Life = Multiple Generations of Entities (200 years = 10 generations x 20 years)
Pedagogy: Ten Social-Technological-Economic-Environmental-Political (STEEP) Stages
Thought Experiment: Binary-Board-Space (Rule: Toggles Each Generation)
1. Hunter-Gatherer Knowledge-Value Economy 1
- 2K population (20 people/sq mile * 100 sq miles)
2. Transition Hunter-Gatherer Knowledge-Value Economy 2
3. Agricultural Knowledge-Value Economy 1
4. Transition Agricultural Knowledge-Value Economy 2
5. Manufacturing Knowledge-Value Economy 1
6. Transition Manufacturing Knowledge-Value Economy 2
7. Service-Information Knowledge-Value Economy 1
- 128K population (1,280 people/sq mile * 100 sq miles)
8. Transition Service-Information Knowledge-Value Economy 2
9. Sustainable-Innovation Knowledge-Value Economy 1
10.Transition Sustainable-Innovation Knowledge-Value Economy 2
11.And beyond!
10 miles
In Use
Recycle
Rule:
Toggles
Each
Generation

Game = Board with Squares & Rules
Example: Possible STEEP Stages 9 & 10 (infrastructure, sustainable-innovation cities)
 Imagine nested holistic product-service-systems entities…
– 10 Continents/planet
– 10 Nations/continent
– 10 States/nation
– 10 Cities/state
– 4 Sectors/city (interconnect to others)
– 11 Systems/sector
 Rules: Board-space toggles each generation
– 20 years/generation
– New infrastructure/generation
 World: Further Pedagogical Purposes
– “World Simulator” benchmarking
– Search to accelerate learning
• 10,000 city experiments/generation
• Low skill/raw materials > Hi-talent/tech
– Each generation new outcomes
• Talents (skills & jobs)
• Technologies (recycle & rebuild)
• Investments (script & performance)
Occupied
(In Use)
Recycling
(De-construction &
Re-construction)
water
food/products
energy
ICT
R&H/M&E/C&S
finance
health
education
governance
transportation
buildings/family
Sector 1
city
interconnect
11 Systems
Sector 2
state
interconnect
Sector 3
nation
interconnect
Sector 4
continent
interconnect
Toggleeachgeneration–20yearcycle

Entities = Life-Cycle Script
Example: Possible STEEP Stages 9 & 10 (individuals, multiple generations of entities)
 Children – Age 0-20
– (Local & Global) Grow, Learn, & Have Fun
 Parents – Age 20-40 (offspring 2)
– (Next Local) Reproduce, Raise Children, & Build New “City” SET Stage
 Grand-Parents – Age 40-60 (offspring 4)
– (Local) Run the “City” You Built & Connect with Family
 Great-Grand-Parents – Age 60-80 (offspring 8)
– (Global) Travel the World, Enjoy Experiences, & Share Ideas
 Great-Great-Grand-Parents – Age 80-100 (offspring 16)
– (Local) Return, Reconnect, and Document History & Future Plans
 Great-Great-Great-Grand-Parents – Age 100-120 (offspring 32)
– (Local & Global) Celebrate, Tell Stories, Depart & Explore Further Realms

The Game of Life: Service Science Framework
 The Game Board: A configuration of PS (Physical Systems), with interspersed
PSS (Physical Symbol Systems) and SSE (Service System Entities).
– The SSE are PSS are PS
– The infrastructure is PS + PSS
• The PS have hidden information (state)
• The PSS have observable information (state and read-write)
– The SSE use information to co-create value
• World model – information about the world (The Game Board)
• Self model – information about self (SSE)
• The SSE have a beginning and an end (life-cycle)
• The SSE judge quality-of-life across their life-cycle
– The game is each generation of SSE try to improve quality-of-life, by improving the capabilities
of the infrastructure (less waste, more support for SSE activities) and the capabilities of the
SSE to co-create value (an SSE activity)
– The starting game board consists of PS with a few PSS, and the goal is to see how quickly and
with how little energy and with how few types and tokens of PS, the PSS can become SSE and
reconstruct a high level infrastructure and high quality of life and continuously improve at a
sustainable pace.
• Processes of valuing are based on the above

Quality-of-Life measures continuously improve
Quality-of-Life = Quality-of-Service + Quality-of-Jobs + Quality-of Investments-Returns
A. Systems that focus on flow of things that humans need (~15%*)
1. Transportation & supply chain
2. Water & waste recycling/Climate & Environment
3. Food & products manufacturing
4. Energy & electricity grid/Clean Tech
5. Information and Communication Technologies (ICT access)
B. Systems that focus on human activity and development (~70%*)
6. Buildings & construction (smart spaces) (5%*)
7. Retail & hospitality/Media & entertainment/Tourism & sports (23%*)
8. Banking & finance/Business & consulting (wealthy) (21%*)
9. Healthcare & family life (healthy) (10%*)
10. Education & work life/Professions & entrepreneurship (wise) (9%*)
C. Systems that focus on human governance - security and opportunity (~15%*)
11. Cities & security for families and professionals (property tax)
12. States/regions & commercial development opportunities/investments (sales tax)
13. Nations/NGOs & citizens rights/rules/incentives/policies/laws (income tax)
20/10/10
0/19/0
2/7/4
2/1/1
7/6/1
1/1/0
5/17/27
1/0/2
24/24/1
2/20/24
7/10/3
5/2/2
3/3/1
0/0/0
1/2/2
Quality of Life = Quality of Service + Quality of Jobs + Quality of Investment-Opportunities
* = US Labor % in 2009.
“61 Service Design 2010 (Japan) / 75 Service Marketing 2010 (Portugal)/78 Service-Oriented Computing 2010 (US)”

© 2010 IBM CorporationIBM University Programs Worldwide (IBM UP)59
What is service science? A service system? The ABC’s?
Economics & Law
Design/
Cognitive Science Systems
Engineering
Operations
Computer Science/
Artificial Intelligence
Marketing
“a service system is
a human-made system to improve
provider-customer interactions
and value-cocreation outcomes,
studied by many disciplines,
one piece at a time.”
“service science is
thetransdisciplinary study of
service systems &
value-cocreation”
The ABC’s:
The provider (A)
and a customer (B)
transform a target (C)

Service Systems Thinking: ABC’s
A. Service Provider
• Individual
• Institution
• Public or Private
C. Service Target: The reality to be
transformed or operated on by A,
for the sake of B
• Individuals or people, dimensions of
• Institutions or business and societal organizations,
organizational (role configuration) dimensions of
• Infrastructure/Product/Technology/Environment,
physical dimensions of
• Information or Knowledge, symbolic dimensions
B. Service Customer
• Individual
• Institution
• Public or Private
Forms of
Ownership Relationship
(B on C)
Forms of
Service Relationship
(A & B co-create value)
Forms of
Responsibility Relationship
(A on C)
Forms of
Service 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 of
competence for the benefit
of another entity.”
Example Provider: College (A)
Example Target: Student (C)
Discuss: Who is the Customer (B)?
- Student? They benefit…
- Parents? They often pay…
- Future Employers? They benefit…
- Professional Associations?
- Government, Society?
A B
C

Service Science: Conceptual Framework
 Resources: Individuals, Institutions, Infrastructure, Information
 Stakeholders: Customers, Providers, Authorities, Competitors
 Measures: Quality, Productivity, Compliance, Sustainable Innovation
 Access Rights: Own, Lease, Shared, Privileged
Ecology
(Populations & Diversity)
Entities
(Service Systems, both
Individuals & Institutions)
Interactions
(Service Networks,
link, nest, merge, divide)
Outcomes
(Value Changes, both
beneficial and non-beneficial)
Value Proposition
(Offers & Reconfigurations/
Incentives, Penalties & Risks)
Governance Mechanism
(Rules & Constraints/
Incentives, Penalties & Risks)
Access Rights
(Relationships of Entities)
Measures
(Rankings of Entities)
Resources
(Competences, Roles in Processes,
Specialized, Integrated/Holistic)
Stakeholders
(Processes of Valuing,
Perspectives, Engagement)
Identity
(Aspirations & Lifecycle/
History)
Reputation
(Opportunities & Variety/
History)
prefer sustainable
non-zero-sum
outcomes,
i.e., win-win
win-win
lose-lose win-lose
lose-win 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 configure
four 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/
Environment
Infrastructure
4. Shared
Information/
Symbolic
Knowledge
1. People/
Individuals
3. Organizations/
Institutions
Formal service systems can contract to configure resources/apply competence
Informal service systems can promise to configure resources/apply competence
Trends & Countertrends (Balance Chaos & Order):
(Promise) Informal <> Formal (Contract)
(Relationships & Attention) Social <> Economic (Money & Capacity)
(Power) Political <> Legal (Rules)
(Evolved) Natural <> Artificial (Designed)
(Creativity) Cognitive Labor <> Information Technology (Routine)
(Dance) Physical Labor <> Mechanical Technology (Routine)
(Relationships) Social Labor <> Transaction Processing (Routine)
(Atoms) Transportation <> Communication (Bits)
(Tacit) Qualitative <> Quantitative (Explicit)
(Secret) Private <> Public (Shared)
(Anxiety-Risk) Challenge <> Routine (Boredom-Certainty)
(Mystery) Unknown <> Known (Justified True Belief)

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 to
make it so)
StrategicSustainable
Innovation
(Market
share)
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 and
deliver it)
RegulatedCompliance
(Taxes and
Fines, Quality
of Life)
3.Authority
Model of self: Does it play
to our strengths? Can we
deliver it profitably to
customers? Can we
continue to improve?
Can we?
(deliver it)
Cost
Plus
Productivity
(Profit,
Mission,
Continuous
Improvement,
Sustainability)
2.Provider
Model of customer: Do
customers want it? Is there
a market? How large?
Growth rate?
Should we?
(offer it)
Value
Based
Quality
(Revenue)
1.Customer
Value
Proposition
Reasoning
Basic
Questions
Pricing
Decision
Measure
Impacted
Stakeholder
Perspective
(the players)
Value propositions coordinate & motivate resource access

Service system entities reconfigure access rights to resources by
mutually agreed to value propositions
 Third foundational premise of service
science
– Service system entities reconfigure
access rights to resources by mutually
agreed to value propositions
– Access rights are the building blocks of
the service ecology (culture and
information)
 Access rights
– Access to resources that are
owned outright (i.e., property)
– Access to resource that are
leased/contracted for (i.e., rental
car, home ownership via
mortgage, insurance policies, etc.)
– Shared access (i.e., roads, web
information, air, etc.)
– Privileged access (i.e., personal
thoughts, inalienable kinship
relationships, etc.)
service = value-cocreation
B2B
B2C
B2G
G2C
G2B
G2G
C2C
C2B
C2G
***
provider resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
customer resources
Owned Outright
Leased/Contract
Shared Access
Privileged Access
OO
SA
PA
LC
OO
LC
SA
PA
S AP C
Competitor Provider Customer Authority
value-proposition
change-experience
dynamic-configurations
(substitute)
time
Spohrer, J & Maglio, P. P. (2009)
Service Science: Toward a Smarter Planet.
In Introduction to Service Engineering.
Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..

Service system entities interact to create ten types of outcomes
 Four possible outcomes
from a two player game
 ISPAR generalizes to ten
possible outcomes
– win-win: 1,2,3
– lose-lose: 5,6, 7, maybe 4,8,10
– lose-win: 9, maybe 8, 10
– win-lose: maybe 4
lose-win
(coercion)
win-win
(value-cocreation)
lose-lose
(co-destruction)
win-lose
(loss-lead)
WinLose
Provider
Lose Win
Customer
ISPAR descriptive model
Maglio PP, SL Vargo, N Caswell, J Spohrer: (2009) The service system is the basic abstraction of service science. Inf. Syst. E-Business Management 7(4): 395-406 (2009)

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 be
the best,
learn from
the rest”
“Double
monetize,
internal win
and ‘sell’ to
external”
“Try to
operate
inside
the
comfort
zone”
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.

Service system entities are physical-symbol systems
 Service is value
cocreation.
 Service system entities
reason about value.
 Value cocreation is a
kind of joint activity.
 Joint activity depends
on communication and
grounding.
 Reasoning about value
and communication are
(often) effective
symbolic processes.
Newell, A (1980) Physical symbol systems, Cognitive Science, 4, 135-183.
Newell, A & HA Simon(1976). Computer science as empirical inquiry: symbols and search. Communications of the ACM, 19, 113-126.

Summary
Spohrer, J & Maglio, P. P. (2009) Service Science: Toward a Smarter Planet. In Introduction to Service Engineering. Editors Karwowski & Salvendy. Wiley. Hoboken, NJ..
Physical
Not-Physical
Rights No-Rights
2. Technology/
Environmental
Infrastructure
4. Shared
Information
1. People/
Individuals
3. Organizations/
Institutions
1. Dynamically configure resources (4 I’s)
Model of competitor:
Does it put us ahead?
Will we?StrategicSustainable
Innovation
4.Competitor/
Substitutes
Model of authority: Is
it legal?
May we?RegulatedCompliance3.Authority
Model of self: Does it
play to our strengths?
Can we?Cost
Plus
Productivity2.Provider
Model of customer:
Do customers want
it?
Should we?Value
Based
Quality1.Customer
ReasoningQuestionsPricingMeasure
Impacted
Stakeholder
Perspective
2. Value from stakeholder perspectives
S AP C
3. Reconfigure access rights
4. Ten types of outcomes (ISPAR)
5. Exploit information & technology
6. Physical-Symbol Systems

Proposed Guidelines
 Please send feedback to
Wendy Murphy
– wendym@us.ibm.com
 Help us devise better
ways to visualize scope
of service science
 For use with:
– Students
– Faculty
– Practitioners
– Policy-makers
– Scientists & Engineers
– Government officials

Students for a Smarter Planet
 YouTube - animated!!
– http://www.youtube.com/watch?v=P7bEyPrtF
HM
 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

Service System Dynamics: Four Key Drivers of Change
 Provider: Technology (Tech) & Sustainable Value-Cocreation Models
– New technology to boost productivity & capacity (innovate)
– Use technology to perform routine manual, cognitive, and transactional work
– New relationship networks: Business models and new ventures (for-profit & non-profits)
 Customer: Self Service
– New self-service options to lower costs & expand choice (educate)
 Authority: Rules
– New rules to fix problems & achieve policy goals (regulate)
– Institutional diversity and governance of resource commons (Ostrom et. al.)
 Competitors: Rankings
– New rankings to guide decision-making & gain “valued” customers (differentiate)
– Hint: You want to be at the top of an independently ranked list of what customers are looking for…
– Especially for “valued” customers - calculating customer lifetime value (Rust et. al.)

Example Service System Re-Design: A College Course
 Problem: What if a college course had…
– Input: Student quality lower
– Process: Faculty motivation lower
– Output: Industry fit lower
 Solution: Tech + Self-Service
– E: -20% E-learning enrollment
pre-certification
– F. +10% Faculty interest tuning
– J. +10% on-the-Job skills tuning
After a decade the course may look quite different
Service systems are learning systems: productivity, quality, compliance, sustainable innovation
Maglio, P., Srinivasan, S., Kreulen, J.T., Spohrer, J. (2006), Service systems, service scientists, SSME, and innovation. Communications of the ACM, 49(7), 81-85.
Year 1: 20%
Year 2: 20%
Year 3: 20%
Year N: 20%
. . . . . . . .
E F J

42%643331.4Germany
37%2611632.1Bangladesh
19%2010701.6Nigeria
45%672852.2Japan
64%6921102.4Russia
61%6614203.0Brazil
34%3916453.5Indonesia
23%762315.1U.S.
35%23176014.4India
142%29224925.7China
40yr Service
Growth
S
%
G
%
A
%
Labor
% WW
Nation
World’s Large Labor Forces
A = Agriculture, G = Goods, S = Service
2010
2010
CIA Handbook, International Labor Organization
Note: Pakistan, Vietnam, and Mexico now larger LF than Germany
US shift to service jobs
(A) Agriculture:
Value from
harvesting nature
(G) Goods:
Value from
making products
(S) Service:
Value from
IT augmented workers in smarter systems
that create benefits for customers
and sustainably improve quality of life.
Data: Why the study of service systems matters (to nations)

Data: Why the study of service systems matters (to businesses)
SOFTWARE
SYSTEMS
(AND FINANCING)
SERVICES
2010 Pretax Income Mix Revenue Growth by Segment
0
20
40
60
80
100
1982
1988
1994
1998
2004
2006
2007
2008
2009
2010
Year
Revenue($B)
Services
Software
Systems
44%
17%
39%
IBM Annual Reports

Stakeholder
Priorities
Education
Research
Business
Government
Service
Systems
Customer-provider
interactions that
enable value
cocreation
Dynamic
configurations of
resources: people,
technologies,
organisations and
information
Increasing scale,
complexity and
connectedness of
service systems
B2B, B2C, C2C,
B2G, G2C, G2G
service networks
Service
Science
To discover the
underlying
principles of
complex service
systems
Systematically
create, scale and
improve systems
Foundations laid
by existing
disciplines
Progress in
academic studies
and practical tools
Gaps in knowledge
and skills
Develop programmes
& qualifications
Service
Innovation
Growth in service
GDP and jobs
Service quality
& productivity
Environmental
friendly &
sustainable
Urbanisation &
aging population
Globalisation &
technology drivers
Opportunities for
businesses,
governments and
individuals
Skills
& Mindset
Knowledge
& Tools
Employment
& Collaboration
Policies
& Investment
Develop and improve
service innovation
roadmaps, leading to a
doubling of investment
in service education
and research by 2015
Encourage an
interdisciplinary
approach
The white paper offers
a starting point to -
The Birth of Service Science: A Framework for Progress
(http://www.ifm.eng.cam.ac.uk/ssme/)
Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008)
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions

Stakeholder
Priorities
Education
Research
Business
Government
Service
Systems
Customer-provider
interactions that
enable value
cocreation
Dynamic
configurations of
resources: people,
technologies,
organisations and
information
Increasing scale,
complexity and
connectedness of
service systems
B2B, B2C, C2C,
B2G, G2C, G2G
service networks
Service
Science
To discover the
underlying
principles of
complex service
systems
Systematically
create, scale and
improve systems
Foundations laid
by existing
disciplines
Progress in
academic studies
and practical tools
Gaps in knowledge
and skills
Develop programmes
& qualifications
Service
Innovation
Growth in service
GDP and jobs
Service quality
& productivity
Environmental
friendly &
sustainable
Urbanisation &
aging population
Globalisation &
technology drivers
Opportunities for
businesses,
governments and
individuals
Skills
& Mindset
Knowledge
& Tools
Employment
& Collaboration
Policies
& Investment
Develop and improve
service innovation
roadmaps, leading to a
doubling of investment
in service education
and research by 2015
Encourage an
interdisciplinary
approach
The white paper offers
a starting point to -
The Birth of Service Science: IBM Centennial Icon of Progress
(http://www.ifm.eng.cam.ac.uk/ssme/)
Source: Workshop and Global Survey of Service Research Leaders (IfM & IBM 2008)
Glossary of definitions, history and outlook of service research, global trends, and ongoing debate
1. Emerging demand 2. Define the domain 3. Vision and gaps 4. Bridge the gaps 5. Call for actions

What about advanced manufacturing?
http://www.youtube.com/watch?v=nd5WGLWNllA

Rethinking “Product-Service Systems”
F
B
Service
System Entity
Product-Service-System
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
SSE
B
F
F F
B B
Service
Business
Product
Business
Front-Stage Marketing/Customer Focus
Back-Stage Operations/Provider Focus
BasedonLevitt,T(1972)Production-lineapproachtoservice.HBR.
e.g., IBM
e.g., Citibank
“Everybodyisinservice...Somethingiswrong…
Theindustrialworldhaschangedfasterthanourtaxonomies.”.

Learning More
About Service Systems…
 Fitzsimmons & Fitzsimmons
– Graduate Students
– Schools of Engineering & Businesses
 Teboul
– Undergraduates
– Schools of Business & Social Sciences
– Busy execs (4 hour read)
 Ricketts
– Practitioners
– Manufacturers In Transition
 And 200 other books…
– Zeithaml, Bitner, Gremler; Gronross, Chase, Jacobs,
Aquilano; Davis, Heineke; Heskett, Sasser,
Schlesingher; Sampson; Lovelock, Wirtz, Chew; Alter;
Baldwin, Clark; Beinhocker; Berry; Bryson, Daniels,
Warf; Checkland, Holwell; Cooper,Edgett; Hopp,
Spearman; Womack, Jones; Johnston; Heizer, Render;
Milgrom, Roberts; Norman; Pine, Gilmore; Sterman;
Weinberg; Woods, Degramo; Wooldridge; Wright; etc.
 URL: http://www.cob.sjsu.edu/ssme/refmenu.asp
Reaching the Goal:
How Managers Improve
a Services Business
Using Goldratt’s
Theory of Constraints
By John Ricketts, IBM
Service Management:
Operations, Strategy,
and Information
Technology
By Fitzsimmons and
Fitzsimmons, UTexas
Service Is Front Stage:
Positioning services for
value advantage
By James Teboul, INSEAD

Thefutureofcitiesandregions 20200724 v5

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