Future industrial service research and business 201205289 v4

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

Future Avenues In
Industrial Service Research and Business

Jim Spohrer, Director IBM
IBM Almaden Research Center
San Jose, CA
For: BestServ Forum, Helsinki, Finland
Service Day Tuesday May 29, 2012

© 2012 IBM Corporation

Outline: Learning to learn - faster

 Growth of service offerings from product firms
– KPIs and value propositions
– Engineering culture and customer constraints

 Some Finnish businesses in Forbes 2000 list

 Future Avenues
– Europe 2020: Service Innovation
– Outcome-based & Life-Cycle (Irene Ng)
– Sector analysis (IBM CBM)
– Acquisitions & Universities (Ecosystems)
– New Directions - Accelerated Co-Learning
• Learning to invest (“doing more with less”)
• Learning to balance new measures (“new competitive framework”)

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

Growth of service offerings from product firms

 Kowalkowski, C. (2011), “The service function as a holistic management concept”,
Journal of Business & Industrial Marketing, Vol. 26 No. 7,
 Over the past decade, a growing amount of attention has been paid to service
offerings in manufacturing, information technology, and other non-service sectors
around the world. This phenomenon is often described as a goods-services transition,
in which firms such as Caterpillar, Ericsson, Huawei, Siemens, and Tata have
increased their provision of services. The phenomenon is often ascribed to industry
commoditization, which is characterized by increasing homogeneity of products,
higher price sensitivity among customers, and lower switching costs (Reimann et al.,
2010); it is also ascribed to opportunities to achieve competitive advantage through
closer customer relationships and higher profit margins (e.g., Gebauer and Friedli,
2005; Jacob and Ulaga, 2008; Matthyssens and Vandenbempt, 2008; Raddats and
Easingwood, 2010). The increasing strategic importance of service offerings to
market-leading industrial firms has made the ability to manage the service business in
a manufacturing context ever more vital (Kowalkowski et al., 2011a; 2011b).
Furthermore, the differences between an industrial, goods-dominant business logic
and a coproduction/ creation, service-dominant business logic (Kingman-Brundage et
al., 1995; Normann, 2001; Ramírez, 1999; Vargo and Lusch, 2008) have made it
particularly interesting to investigate the management of firms that produce goods as
well as services.


KPIs and Value Propositions (see book “Value Merchants”)

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..


Some Finland Businesses on Forbes Global 2000


Europe 2020

 aging population

 welfare services
under pressure

 climate change and
sustainable growth.


Learning to invest

Learning
To Invest

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.


New competitive
framework to
balance measures

 Innovativeness

 Equity

 Sustainability

 Resiliency


Industrial and Business Services - BestServ

 Juha Hulkkonen – Welcome and why service?
– (1985) Service level economic cycles; Long-term relationships; profitable;
growth; new job opportunities; closer to clients; smarter business
 Jarmo Hyvonen – Toward a service mindset – custom solutions
– (1981) Fastems; Automation solutions; Machine tools; 8760 annual
production hours; 1500 robot application & flexible manufacturing
systems; Customized tools co-created with customers;
 Risto Gylden – Rapid prototyping – listening to co-create value
– Engineering company; Power and productivity for a sustainable world;
Deal with infrastructure; Stage-gate model; Service product development
is based on listening and communications; Measuring service value;


Panel: History and future from BestServ experience

 Petri Kalliokoski
– Feasibility study; Report; Results
 Hannu Tuominen
– Beverage company; Visala;
 Juha Hulkkonen
– Strategy, development, execution; tough period survival; culture change
and people skills
 Iiro Salkari
– Multidisciplinary


Future industrial service research and business 201205289 v4

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Future industrial service research and business 201205289 v4

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