competing in a service economy 20120913 v1

© 2012 IBM Corporation

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

Competing in a Service Economy

Dr. James (“Jim”) C. Spohrer, [email protected] Champion and Director IBM UPward(University Programs worldwide, accelerating regional development)

SwedBank Breakfast TalkThursday September 13, 2012

IBM SSME Centennial Icon of ProgressIBM Smarter Planet

2 © 2012 IBM CorporationIBM UPward (University Programs worldwide – accelerating regional development)

IBM Almaden Research Center, Silicon Valley/San Jose, CA


Today’s Talk Growth of Service Economy

Leading Through Connections– IBM CEO Survey 2012

Smarter Planet– Connecting with Cities & Their Universities

– Regional Economic Development & QoL

People and Change– Beyond just one perspective

– Need T-shaped people (depth, breadth)

– Pi-shaped people (deep in two areas, breadth)

– M-shaped people (deep in three areas, breadth)

– ….

– True “trans-disciplinarians” – multiple perspectives

Nano-Bio-Info-Cogno


Economic Shift in National Economies

Daryl Pereira/Sunnyvale/IBM@IBMUS,

42%6433 3 1.4Germany

37%261163 2.1Bangladesh

19%201070 1.6Nigeria

45%6728 5 2.2Japan

64%692110 2.4Russia

61%661420 3.0Brazil

34%391645 3.5Indonesia

23%7623 1 5.1U.S.

35%23176014.4India

142%29224925.7China

40yr ServiceGrowth

S%

G%

A %

Labor% WW

Nation

World’s Large Labor ForcesA = Agriculture, G = Goods, S = Service

20102010

NationMaster.com, International Labor OrganizationNote: 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 systemsthat create benefits for customers

and sustainably improve quality of life.


Growth of Service Revenue at IBM

SOFTWARE

SYSTEMS(AND FINANCING)

SERVICES

2010 Pretax Income Mix Revenue Growth by Segment

Services

Software

Systems

44%

17%

39%

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.


Sweden: Global Brands (0.1/1.25/2.2)


United States: Global Brands (4.5/26/30)

© 2012 IBM Corporation9

Regions

Communications

Distribution

Financial Services

Industrial

Public

Sectors

Outperformers

Peer Performers

Underperformers

Performance

1700+ face-to-face interviews

North America

Western Europe

Japan

Australia / New Zealand

Growth Markets


2004 2006 2008 2010 2012

Socio-economic factors7 7

8 8

7

Environmental issues8 8

7 7

8

Geopolitical factors9 9 9 9 9

Globalization6

4

6

5

4

Regulatory concerns555

4

5

4 Macro-economic factors

3

66

3 Market factors3

1 11 1

2 People skills2 2

4

2

Technology factors

6

3 3

1

2

External forces impacting the organization


Technology is driving organizational change more than ever before


Partner for innovation, disrupt, and derive revenue from new sources

Differentiate through better data access, insight and translation into actions

Organizational openness introduces new opportunities to create value through employee collaboration

CEOs create economic value by cultivating connections within and across three domains


Outperformers are twice as good at deriving value from data

54%

26%

Access to data

54%

26%

Insights from data

57%

31%

Translate into actions

108%more

108%more

84%more

Drawing insights from information

Underperformers

Outperformers


Look outside to complete the view Connect pieces into profiles Empower staff with predictive analysis

Let “big data” reveal the customer you never knew

Listen at an individual level Capture what employees see and hear Respond with relevance and speed

Listen lavishly, respond with focus

Mobile “changes everything” Blend the physical and digital Offer value that stands out

Be where your customersexpect you to be

So, how do you win the race to gather andconvert data into customer insight and action?

15 © 2012 IBM CorporationIBM UPward (University Programs worldwide – accelerating regional development)15

Example: Leading Through Connections with…Universities Collaborate with IBM Research to Design Watson for the Grand Challenge of Jeopardy !

Assisted in the development of the Open Advancement of Question-Answering Initiative (OAQA) architecture and methodology

Pioneered an online natural language question answering system called START, which provided the ability to answer questions with high precision using information from semi-structured and structured information repositories

Worked to extend the capabilities of Watson, with a focus on extensive common sense knowledge

Focused on large-scale information extraction, parsing, and knowledge inference technologies

Worked on a visualization component to visually explain to external audiences the massively parallel analytics skills it takes for the Watson computing system to break down a question and formulate a rapid and accurate response to rival a human brain

Provided technological advancement enabling a computing system to remember the full interaction, rather than treating every question like the first one - simulating a real dialogue

Explored advanced machine learning techniques along with rich text representations based on syntactic and semantic structures for the Watson’s optimization

Worked on information retrieval and text search technologies

http://w3.ibm.com/news/w3news/top_stories/2011/02/chq_watson_wrapup.html


What does IBM do?


Most people say, “IBM makes computers”


What IBM really does is help build a Smarter Planet…Smarter = System of systems that work better togetherService = Applying knowledge to co-create value


The need and opportunity exists…

Big Four Crises– Financial

– Healthcare

– Education

– Government


Smarter Planet = Improve Quality-of-Life

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


California Human Development Report 2011:Measuring quality-of-life…. http://w

ww

.measureofam

erica.org/docs/AP

ortraitOfC

A.pdf


What improves Quality-of-Life? Service System Innovations

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

2/7/42/1/1

7/6/11/1/0

5/17/27

1/0/2

24/24/1

2/20/247/10/3

5/2/2

3/3/10/0/0

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)”

23 © 2012 IBM CorporationIBM UPward (University Programs worldwide – accelerating regional development)23

T-shaped professionalsdepth & breadth

BREADTH

DE

PT

H

(analytic thinking & problem solving)

Many culturesMany disciplines

Many systems(understanding & communications)

Deep in one d

iscip

line

Deep in one sys

tem

Deep in one cu

lture


Two Generations of Change: Past & Future

Born: 1988Graduated College: 2011

Born: 2012Enters College: 2030


2030 Transportation: Self-driving cars

Steve Mahan:Test “Driver”


2030 Water


2030 Manufacturing

Ryan Chin:Urban Mobility


2030 Energy


2030 ICT


2030 Buildings: Recycled to be stronger, safer, cleaner

China Broad Group:30 Stories in 15 Days


2030 Retail & Hospitality


2030 Finance & Business


2030 Health


2030 Education: Watch one, do one, teach one…


2030 Government

Four measures

Innovativeness

Equity– Improve

weakestlink

Sustainability

Resiliency


2030 and Beyond…. Government


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


In Conclusion: Two Books To Help Us All Prepare To Change


Thank-You! Questions?

Dr. James (“Jim”) C. SpohrerInnovation Champion & Director, IBM University Programs worldwide accelerating regional development (IBM UPward)[email protected]

“Instrumented, Interconnected, Intelligent – Let’s build a Smarter Planet.” – IBM“If we are going to build a smarter planet, let’s start by building smarter cities” – CityForward.org“Universities are major employers in cities and key to urban sustainability.” – Coalition of USU

“Cities learning from cities learning from cities.” – Fundacion Metropoli“The future is already here… It is just not evenly distributed.” – Gibson

“The best way to predict the future is to create it/invent it.” – Moliere/Kay“Real-world problems may not/refuse to respect discipline boundaries.” – Popper/Spohrer

“Today’s problems may come from yesterday’s solutions.” – Senge“History is a race between education and catastrophe.” – H.G. Wells

“The future is born in universities.” – Kurilov“Think global, act local.” – Geddes


IBM operates in 170 countries around the globe

IBM has 426,000 employees worldwide

2011 Financials Revenue - $ 106.9B Net Income - $ 15.9B EPS - $ 13.44 Net Cash - $16.6B

22% of IBM’s revenue in Growth Market countries; growing at 11% in 2011

Number 1 in patent generation for 19 consecutive years ; 6,180 US patents awarded in 2011

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 in 2011

IBM’s Leadership Changes

55% of IBM’s Workforce is New to the company in the last 5 years


The New Normal: Smarter Systems

Computational System

Smarter TechnologyRequires investment roadmap

Service Systems: Stakeholders & Resources

1. People 2. Technology3. Shared Information4. Organizations

connected by win-win value propositions

Smarter Buildings, Universities, CitiesRequires investment roadmap


University: Four Missions

Knowledge– 1. Transfer (Teaching)

– 2. Creation (Research)

– 3. Application (Benefits)

• Commerce/Entrepreneurship• Governance/Policymaking

– 4. Re-Integration (Challenge)

• Innovativeness, Equity• Sustainability, Resilience

Nested, Networked Holistic Service Systems– Flows

– Development

– Governance

Nation

State/Province

City/Metro

UniversityCollege

K-12

Cultural &ConferenceHotels

HospitalMedical

Research

Worker(professional)

Family(household)

For-profits

Non-profits

U-BEEJob Creator/Sustainer

Third Mission (Apply to Create Value) is about U-BEEs = University-Based

Entrepreneurial Ecosystems


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

Nation

State/Province

City/Region

UniversityCollege

K-12

Cultural &ConferenceHotels

HospitalMedical

Research

Worker(professional)

Family(household)

For-profits

Non-profits

U-BEEJob Creator/Sustainer

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

“The future is already here (at universities),it is just not evenlydistributed.”

“The best way topredict the futureis to (inspire the nextgeneration of studentsto) build it better.”

InnovationsUniversities/RegionsCalculus (Cambridge/UK)Physics (Cambridge/UK)Computer Science (Columbia/NY)Microsoft (Harvard/WA)Yahoo (Stanford/CA)Google (Stanford/CA)Facebook (Harvard/CA)


Cities: land-population-energy-carbon

Carlo Ratti:Senseable Cities


Measuring Impact

SSME: IBM Icon of Progress & IBM Research Outstanding Accomplishment– Internal 10x return: CBM, IDG, SDM Pricing & Costing, BIW COBRA, SIMPLE, IoFT, Fringe, VCR

• Key was tools to model customers & IBM better• Also tools to shift routine physical, mental, interactional & identify synergistic new ventures• Alignment with Smarter Planet & Analytics (instrumented, interconnected, intelligent)• Alignment with Smarter Cities, Smarter Campus, Smarter Buildings (Holistic Service Systems)

– External: More than $1B in national investments in Service Innovation activities

– External: Increase conferences, journals, and publications

– External: Service Science SIGs in Professional Associations

– External: Course & Program Guidelines for T-shaped Professionals, 500+ institutions

– External: National Service Science Institutions, Books & Case Studies (Open Services Innovation)

Service Research, a Portfolio Approach– 1. Improve existing offerings (value propositions that can move the needle on KPI’s)

– 2. Create new offerings (for old and new customers)

– 3. Improve outcomes insourcing, outsourcing, acquisitions, divestitures (interconnect-fission-fusion)

– 4. For all three of the above, improve customer/partner capabilities (ratchet each other up)

– 5. For all four of the above, increase patents and service IP assets (some donated to open forums)

– 6. For all five of the above, increase publications and body-of-knowledge (professional associations)


Who I am

Director IBM Global University Programs since 2009– Global team works with 5000 university world wide (http://www.ibm.com/university)

– Research (Awards), Readiness (Skills), Recruiting, Revenue, Responsibility

– 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 from 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)

Other background (late 90’s and before)– Founding CTO of IBM’s Venture Capital Relations group in Silicon Valley

– Apple Computer’s (Distinguished Engineer Scientist and Technologist) award (90’s)

– Ph.D. Computer Science/Artificial Intelligence from Yale University (80’s)

– B.S. in Physics from MIT (70’s)


What is the future? We can imagine many possibilities…

Kurzweilai.net

competing in a service economy 20120913 v1

Education

ibm corporation

ibm service professionals

connections ibm ceo

ibm almaden research

year ibm annual reportswhat

growth of service revenue

s service

growth of service economy