Future Trend: Co-Locating Teams vs. Dispersed Teams

Written in Golden Gate Park on Friday, December 13, 2012 

Thought of the day: it does take more than one person to screw in a light bulb!

Just read an article in The Atlantic Monthly, which is quickly becoming one of my favorite magazines.

It focused on how some manufacturing might be returning to the States. It touched on GE’s leaner approach in its Appliance Park Campus in Louisville, Ky. This is where they manufacturer GE Dishwashers. Historically, it had the teams, such as Marketing and Engineering, spread out across the world. It’s new approach is now to co-locate everyone working on a specific product, such as a dishwasher.

This in-sourcing approach definitely  is U-Turn for manufacturers. As the article states:

What has happened? Just five years ago, not to mention 10 or 20 years ago, the unchallenged logic of the global economy was that you couldn’t manufacture much besides a fast-food hamburger in the United States. Now the CEO of America’s leading industrial manufacturing company says it’s not Appliance Park that’s obsolete—it’s off-shoring that is.

Having the a cross-functional team working in one place creates all sorts of synergies as well as reduce the complexity and the costs of shipping parts or products from China to the United States.

In recent years/decades, companies have focused on dispersing their team to different parts of the world based on expertise and labor costs. As we  can see with the Boeing’s 787 Dreamliner numerous problems, this approach is not working too well.

Outsourcing might be outdated as a business model for Fortune 500 companies. Even Apple is experimenting with bringing some of its production back to the States.

It isn’t just manufacturing that is coming home. I recently worked with a major software company that outsourced the human part of its social media monitoring to Hungry, only to realize (two years later) that it wasn’t working because there are certain nuances of of the English language and of the Internet World that a non-native speaker might have a problem with. At Intuit, we often had discussions about why were outsourced our call centers to India even though it was impacting our overall customer satisfaction and NetPromotion scores. Although I am not a 100% sure what the company is doing today, I hope they have decided to bring some of their call center operations back home.

This is not just because of people’s negative knee jerk reactions to hearing a foreigner on the phone. From a company perspective, it is extremely valuable to place  individuals on the front line (customer service) closer to the marketers.

Wouldn’t it be nice if those two groups talked every day. : )

All of this is in line with the popular Lean concept, which my team practiced during my days at Intuit, when we focused on:

• Cross-functional representation: Get people from all different parts of the company involved early on and on a weekly basis.
• Start with one product or niche: Don’t go broad and throw a lot of stuff against the way and put a stake in the ground and focus on one or two segments, and if your product doesn’t sell well to them, try another group; the point being put a 100% of your effort on one group vs. 50% on two groups.
• Launch and learn approach: I hate the word launch because it implies a fixed moment in time, and prefer to get something into market and focus on continuous improvements.
• Betting on small incremental improvements: Similar to the previous statement, but just want to restate that you don’t have to build the Stealth Bomber day one, and instead can improve over time even if it is in small increments.
• Clear milestones (reinforced with ongoing toll-gates, where the team checks in with one another): Have weekly goals of what you want to accomplish and learn and assign owners to present them.
• Customer Involvement (yes, I invite them to my staff meetings): I often hear that we did a focus group at launch. Like my statement about a launch, I believe in continuous integration of customers into my team and business practices
• Consistent measurement: Does this need explanation other than don’t try and measure the ocean, and instead focus on the critical few — less than 10 items, probably closer to 5.

I am consulting to a small company now that has been struggling for a few years because it breaks almost all of the above rules. It doesn’t have a clear target audience and spends most of its time focusing on technological improvements.

Just remember, it does take more than one person to screw in a light bulb!

 

Zooming in on (your location)

The Map: Transformed from a Statiic to Evolving Platform

This occured to me while watching Dora, the Explorer, and her magical map.

Deloitte recently came out with a report discussing the power of combining location data with government information. While the report focuses on the influence this is having on governement services, it also brings to mind the impact on the private sector.

Our ability to compare places is becoming (more) multi-dimensional. We are moving from the traditional approach of looking at location based on

• Demographics: Age, gender, income
• Infrastructure: Transit, land use
• Geography: Natural resources, threats
• Public assets: Government facilities, resources
• Administration: Regulations, tax cod

Location Takes on New Meaning

The report highlights many opportunities for companies to leverage more detailed location data. They can:

• Look at the uniqueness of a certain place: Information on neighborhoods goes beyond census data and other numbers and focus on tribal behavior, such as what kind of services people are accessing, where they tend to congregate (sorry if this sounds big brother) and how they share different experiences.
• Bring to life the interaction between Tribes: Following up on the above, we can see how different neighborhoods or tribes interact with each other. As Human 1.0’s research shows, people belong to multiple tribes and can change tribes over time.
• Tailor products and services for different tribes which could be based on location or context (note: that tribes don’t have to be based on location).
• Share data: Data is easy to share with different stakeholders, such as government agencies, divisions within a company, etc.

Note: This enables (and maybe requires) organizations to interact and respond to local Tribes on a daily basis. This is accomplished with the help of Geospatial tools that:

• Harness place as a comparative tool
• Drive accountability
• Move from prescription to prediction
• Rethink boundaries

Sharing of Experiences

Location services reinforce the power of community and sharing experiences at a local level. When location is coupled with other information, it opens enormous opportunities to servce customers better. As Deloitte points out, it

Allows us to quickly visualize and find meaning in billions of transactions,  tweets, check-ins and geotagged photos. When combined  with existing government data and expertise, this  intelligence can, in turn, help us redefine the way we see  and understand the world, creating digital pictures of the ebb and flow of our societies.

A ‘place’ becomes a living and evolving platform of information. It enables organizations to:

• The host (the government’s or company’s app) becomes a device to gather people together based on their location
• The crowd has power in numbers to influence outcomes or to partner with other lcoations (shared experiences)
• It becomes more apparent where to allocate resources.

All of this adds a new dimension to ‘Service Delivery and Design,’ a topic that I have discussed earlier. Companies now have a new challenge (and opportunity) in managing customer touch points. As Deloitte points out, there is definitely an ‘arms race’ among Google, Apple, Facebook, Amazon and others to offer services based on location. These tend to be silo’d offerings though, not taking into account the different nuances (and the sometimes overlapping behavior) of each Tribe. In the case of Facebook, it is unclear of how comfortable people in sharing certain information.

Wish for the Day: You say you want to be a Media Company

As the Beatles said:

You say you want a revolution
Well, you know
We all want to change the world
You tell me that it’s evolution

And many companies say the want to be a media company:

Many companies say they are different because they are a media company on the internet or they want to be a media company. But what does that really mean? From a content perspective, here are some suggestions:

• Understand that we are in a 2+ screen world, where people are watching their TV or a Netflix video, while texting with their iphone (and in some cases, even working with their lap-top)
• Relinquish control which means join your fans on other social networks and platforms (this sounds obvious, but most people still want to bring their fans home to their site)
• Identify your relevant fans and tribes — Where they spend their time? How they speak about your products and your competitors’ products? Who are the leaders? How do they help each other out?
• Know that your work is never done, meaning that once you post something it is part of an ongoing story (you can add more later on)
• Go beyond text and incorporate video, photos, and more
• Wear multiple hats: Curator, Editor, Organizer (inviting guests to participate) and Host (invite your users to contribute to your site and find out what they need for their own site)
• Establish brand, tone, etc. consistency across multiple channels (iPad, Web, etc.)
• Interact face-to-face, such as in Google Hangout’s NFL Fantasy Football forum!
• Turn each commenter into editor by encouraging them to contribute to the discussion.
• Concentrate editorial content on “people” — their stories, their lives, etc.

Paid Content came out with a list of the most successful media companies that included Twitter, Amazon, Gawker, BuzzFeed and the Guardian, but here are some questions I have:

• Is Amazon creating any of its own content or successfully curating third party content (Yet)? I know they are working on this.
• Is Twitter doing real “content programming” or generating real ad revenue?
• Is the Guardian turning a profit? (This would be important for a successful company : )

Finally, companies need to have the kind of organization that:

• Makes quick decisions and does not get bogged down in office politics or in over analyzing the right approach (I always liked it when my former boss said, if you are 65% sure something is the right decision, then go for it and implement it)
• Scores their decisions and determine how well they make them, how fast they make them and what’s entailed (What resources are involved?)
• Provide clarity on who they are targeting, what the offer is, and why you are offering it.  (and continue to refine over time)
• Building a learning environment which is one of the key things people are looking for these days. I always believe in the “Learn, Teach, Learn” approach which requires an individual to teach something they recently learned to others)

What does it mean to you to be a media company? What is entailed? Which businesses qualify?

Oh yea, you probably asking “OK, Wilder, who is a successful one media company?

One company that comes to mind is Bloomberg LP (and I am not just saying this because I am a native New Yorker : )  It meets all the criteria I list above. For a great article on Bloomberg, check out what the New York Magazine recently had to say about them.

 

Thought of the Day: The modern assembly line: Starbucks!

With the service sector’s share making up 80% of the US economy. I have focused some of my recent interviews on service design and delivery. Namely, how companies plan and organize people to provide better services around its products for its customers. 

One of the first companies that came to mind in the service economy is Starbucks, especially after they recently purchased my favorite bread place in San Francisco: Le Boulanger.  

(When I tell people that Starbucks is a good indicator of the economy, they often comment on the number of unemployed people or consultants who spend their day working out their Starbucks office. This is especially the case, if they know that I do some of my best writing at the Starbucks in the San Francisco Presidio area.)

So, last night I did a Google search on Starbucks and came across an August 4, 2009 Wall Street Journal Article entitled Latest Starbucks Buzzword: ‘Lean’ Japanese Techniques.  The article discusses how the company wanted to be more lean and agile in order to improve its ability to service customers faster and more efficiently without sacrificing excellent customer service. 

When I go into a Starbucks, however, it often reminds me more of a traditional assembly line. An assembly line that is similar to the one that Henry Ford developed for automobiles by leveraging blue-collar workers. These people rolled up their sleeves, focused on a single task and helped kick the country into high gear growth. While they made up a large percentage of the population, I would hardly call them participants in a lean and agile process.

Ford reinvented how factories were designed and how work was conducted. One of the main principles of the Henry Ford assembly line was: “to place the tools and the men in the sequence of the operation so that each component part shall travel the least possible distance while in the process of finishing.”(Source: Wikipedia) 

Doesn’t this sound a bit like Starbucks? Interestingly, though, many of today’s service oriented companies’ look like assembly lines. And while this might have been true for most fast food establishments, Starbucks seems to be establishing a new trend by having it’s front line workers be college educated workers.

Recently, I walked into a Starbucks on Cape Cod and did a little research. I sat down with the manager who told me that 80% of her employees are college educated and 20% are currently working on a college diploma. She also told me that 100 people apply for every open position. These numbers reinforce the challenges our economy faces. There are many well-educated college students who are now Barista Assembly Line Workers. 

I have done this research at 10 Starbucks so far, and so far the numbers above seem slightly skewed towards more educated workers. However, this does seem to be the trend  — there are many smart, energetic and ambitious people behind the counter wearing green and white.

During my online research, I also discovered that Starbucks has actually asked its employees to slow down their service (or as we say in California ‘take a deep breath first’) so as not to mimic a fast food assembly line image. Seems like that’s quite a challenge. Even though the customer service is usually great, many of the baristas seem to be repeating a similar process over and over.

Is this a good thing? Let me know at scott@starbucksgeneration.com

 

Future of Work: Interview with Hugh Dubberly: Founder of Dubberly Design and Service Design Thought Leader

Awhile back, I was asked to develop a product strategy for a company that manufactures electronic vehicle charging stations. After my first client meeting, it was clear that they really wanted me to develop a variety of services to be marketed every time a customer interacted with product, most of which would be delivered via the Internet in the following four different places: In a person’s home, at their desk at work, in their car, and at the station itself.

Recently, I decided to learn more about Service Design, an area companies such as the electronic vehicles station manufacturers are just beginning to understand. So, I reached out to Hugh Dubberly, founder and CEO of Dubberly Design Office (DDO), Hugh is someone that has been thinking about the impact design can have on organizations since he led creative teams at Apple Computer and Netscape in the early 1990s.

Interactions, a well-known publication that focuses on the intersection between design practice and research, points out that “Hugh Dubberly’s models are increasingly important in design—as design, in collaboration with other disciplines, increasingly deals with systems and services. Many aspects of the customer experience unfold over time and location, and thus are intangible. With their ability to visualize and abstract various aspects of a given situation, models become tools for exploring relationships in ways that are not otherwise possible”.

Dubberly’s design shop focuses on the business of designing software and services, which is a field that has greatly matured since the days when a company launched a single product and reviewed sales on a weekly basis. Now, continuous improvement and ongoing engagement are required. As Dubberly and another leading service design guru, Shelley Evens0n (who I hope to interview later on) wrote,

We view designing for service as Meta activity: Conceiving and iteratively planning and constructing a service system or architecture to deliver resources that choreograph an experience that others design. When a company provides the optimal mix it will have produced a resonating service system and that delivers an experienced advantage.” (Evenson, 2005)

Thinking in terms of a single product no longer works.

Dubberly explains “Thinking (in terms of) stand-alone products is increasingly a risky proposition and that there are a series of sort of changes that have happened similar to when manufacturing quality has ben really important and then everybody’s learned to do that.” He continues “as hardware becomes increasingly commoditized, services offer an opportunity for differentiation. A customer’s experience with a brand may extend across a family of services, each with a collection of touch points. These touch points are increasingly networked, and thus customer behavior may be logged, analyzed, and used to drive improvements.”

Everyone in manufacturing needs to consider themselves in the service business.

Service Design is especially important because today 80% of the US labor force is involved in service delivery and knowledge based information services. The chart below highlights this point:

Therefore, it is imperative that companies focus on service design to gain competitive advantage.

Tim Misner, a colleague of Dubberly’s, has a great aphorism explaining the reason for this phenomenon. He believes “All hardware products want to be websites.” What this mind bender phrase really means is that all products, especially consumer electronics, will be connected to the web and thus greatly change the design process. Instead of launching and moving to the next project, designers will be engaged with a product that requires their ongoing attention.

Automobiles exemplify this. Today, cars provide a suite of services such as GPS navigation, OnStar in-vehicle security, communications, diagnostics systems, and even access to the Internet. Their customers also expect them to respond to issues as quickly as possible.

Dubberly explains “Thinking about a continuous and holistic customer experience allows for a lot more experimentation and makes everything direct response.” All of this requires processes to gather information and understand the “no-so-obvious” ways customers interact with a brand. As a result the brand is more than a logo and tagline. Dubberly also goes on to say “the logo is merely an identifier of a brand; it’s a symbol of the quality, not just of the product, but of the experience you have with the product.”

The Big Data revolution and CRM’s evolution now enable companies to capture enormous amounts of data and conduct machine learning on it. They see patterns that humans can’t easily see, are quick to make connections, do personalization, and have a more personal relationship with the customer and others in the ecosystem. Dubberly states, “By creating a portrait of various individuals in a company’s ecosystem can create huge promise in the Health Care industry, but maybe not so for some people in the world of government.” Companies therefore need to prepare organizationally for this change.

This new-networked world, for example, will greatly impact health care, which is an area that Dubberly’s firm focuses on.

Individuals will have a view of their own health. It is also clear that there will be sharing with support groups like family, friends, and health care professionals. Then you get into patient population management where you have health care paid for on a different basis on a basis of outcomes, but you have the data to really be able to know what the outcomes actually are.

Companies need to design for and be organized for this “continuously on” environment.

All of this will impact how certain jobs are preformed. To sustain competitive advantage, the practice of software and service design—indeed most design practices—will be ad-hoc, performed on an “as-needed” basis and adapted to whatever context designers encounter. This is akin to the Agile product development process. (see my Ron Lichty interview).

According to Dubberly, designers can no longer focus on finished products and say “Okay, here it is: it’s finished.” Now, they are required to architect things, which are never really finished and continuously improved. Therefore, designers need to be conversant with Systems Dynamics, which according to Wikipedia, is the process of defining and developing systems to satisfy specified requirements of the user.

The role of the product manager also needs to evolve. They need to be experienced in managing and building teams consisting of people from different disciplines. A phone can be designed more or less by an individual, but according to Dubberly, “The design of the phone as a system is something, which certainly requires teams. It very much becomes more like movie making where you have to assemble groups of people to develop products and product systems. And that requires some different ways of working.”

“It’s about having a team of people that trust, a team of people that you’ve hopefully worked with before so you understand the language, you understand who’s good at what and having the right variety, having the right set of skills and discipline at the table. And that’s the thing which is going to make the product successful. Unfortunately, Dubberly believes “that product management is taught in only the most modest way in business schools. In many cases simply as a sort of appendage on marketing and it’s taught not at all in design schools.”

After having personally worked with four of the top software companies in the world in the last two years, I have witnessed this first hand. I have seen many lead product managers ‘learn on the job.’ While this is not always a problem, the lag time of a product manager getting up to speed can be expensive.

A s Dubberly states, “The smartest newly hired kid from a top business school does not really know how companies work or what really motivates people in the organization and simply where the bodies are buried. You can’t know that.” According to Dubberly, “The real issue is product management is taught in only the most modest way in business schools. In many cases simply as a sort of appendage on marketing, and it’s taught not at all in design schools.” A shorter-term solution might be having a product manager doing an apprenticeship with a more experienced person in the company. Attending a boot camp might be one way to address this. A product manager, however, needs to have a bias towards action, which requires experience, confidence, and leadership.

In a great article in Interactions entitled “On modeling, what can Steve Jobs and Jonathan Ive teach us about,” Dubberly stresses the importance of “having design conversations.”

Understanding the soul of a product (or of an organization) requires a conversation—about what you believe in, about fundamental values, and about quality. These ideas must be argued and agreed upon. Likewise, expressing the soul of a product requires still more conversations, still more argument and agreement. At this level, design is conversation.

As he told me, “Everywhere where you’d see great design in the world over a sustained period, you have fanatical founder, like Steve Jobs, plus a great designer, Jonny Ives, and they have a conversation that extends over time.”

(Interestingly, Michael Eisner in Working Together: Why Great Partnerships Succeed , which I also recommend, highlights this for the business as well by describing his own collaboration with Frank Wells as well as other famous successful partnerships.)

Dubberly highlighted Autodesk, a company heavily influenced by architecture, as a leader in service design, and Samsung as a company investing heavily in this area. For the later, a huge cultural change is required, moving from a highly paternalistic Confucius culture to a more dynamic and design driven environment.

Dubberly believes, however, there is a signifiant culture shift happening which goes beyond design:

There’s an almost millennial shift in the way we think about our relation to the world moving from a view of the world in which a central metaphor is the motion of the gears that run a clock, the clockwork mechanism… based around this causal clockwork that A turns B turns C turns a kind of chain of commonality…. The mechanistic metaphor assumes you know what the outcome will be: That there is no ambiguity. However, in reality, today’s more like “gardening or farming” with multiple potential outcomes, some which are not very when you launch a product.

As Dubberly highlights “There’s a notion that engineers in particular and engineers as managers have about managing the development of new products which would like there to be one way, one fool-proof recipe for how to do that. .. Unfortunately there’s not a one fool-proof process for doing that and there are many factors that come together that make a lot of things kind of conditional”.

So, I asked Dubberly “where is this all going?”

With the rise of consumer electronics products like the iPhoneand the rise of well designed, highly functioning web-based applications like eBay, Google and Amazon have set standards for not only for consumer products but also for business to business products. Dubberly believes design has ways to go:

It is nowhere near being a science and it probably never should be. But it’s a little bit like geology in the early 19th century. We know there’s some things going on here, and they’re kind of related to each other and some of these rocks look like other rocks but we’re kind of not sure why… so my approach is, well, it’s very much the 19th century British theologist approach. Like, let’s wander around Britain and collect some rocks and we’ll label where we got them, put them in a collection, and that will have some value. However, on a more practical level the place where the model is, where you can drag models into a real serious client engagement, is when they solve a problem.

Dubberly’s writes extensively for Interactions. His models and didactic articles can also be found on his company website.

Leaders in the systems and service design industry discussed during the interview:

• Kevin Kelly s the founding executive editor of Wired magazine, and a former editor/publisher of the Whole Earth Catalog.
• Stewart Brand is best known as editor of the Whole Earth Catalog. He founded a number of organizations including The WELL, the Global Business Network, and the Long Now Foundation
• Shelley Evenson works at Facebook and previously was an associate professor and director of graduate studies at Carnegie Mellon Universityʼs School of Design
• Marty Cagen, who in the course of the past 20 years has served as an executive responsible for defining and building products for some of the most successful companies in the world, including Hewlett-Packard, Netscape Communications, America Online, and eBay.
• Birgit Mager,. (good interview with Bergit Mager)
• Jay Forrester: s a pioneer American computer engineer, systems scientist and was a professor at the MIT Sloan School of Management. Forrester is known as the founder of System Dynamics, which deals with the simulation of interactions between objects in dynamic systems.
• Ikujiro Nonaka is best known for his study of Knowledge Management.
• Susan Star specialized in the study of information in modern society; information worlds; information infrastructure; classification and standardization; sociology of science; sociology of work and the history of science, medicine, technology, and communication/information systems.
• Paul Pruneau helps companies develop communications strategy & engineer content through stories and images that express customer value, build brands & foster relationships.
• Marty Cagan has 20 years experience as an executive responsible for defining and building products for some of the most successful companies in the world, including Hewlett-Packard, Netscape Communications, America Online, and eBay.

Transcript of interview

Design Programs mentioned:

• Stanford University’s Design Program
• the Institute of Design in Chicago
• Rotman School of Business at the University of Toronto
• Rhode Island School of Design

Thank you Nation!

Interview conducted on June 11, 2012 at Hugh Dubberly’s office in the Mission District in San Fancisco. The write up was started at Starbucks in Laurel Village on July 7th and finished at Starbucks in the Presidio on July 9th.

Future of Work: Interview with Jim Spohrer: Director, Global University Progams at IBM

Recorded on June 1st, 2012, and written up on Virgin America Flight 27 NYC to San Francisco on June 18, 2012

With the Service economy playing an ever-increasing role in both our professional and personal lives, I wanted to focus part of the Future of Work project on people like Jim Spohrer from IBM. Jim is a computer scientist who is leading the development of a new science of service systems, often known as Service Science, Management and Engineering. He is helping companies figure out how to turn “service” into a science. In his role as Director of IBM Global University Programs, he developed curriculum guidelines in this area for universities around the world.

[powerpress]

Jim has an interesting background:

I have studied physical systems, technological systems and now social systems, or what we call service systems, which consist of people and skills and technology and business models. I studied the evolution and transformation of complex service systems and how to best scale up innovations that can improve quality-of-life in cities worldwide, resulting from university-driven regional economic development. Smarter cities and smarter universities are fascinating types of service systems to study these days.

I felt Jim could provide some real insight into the current transformation going on in the knowledge economy. To get us started, I wanted to focus on what really is ‘”the science of service systems,” which is a term that most of my clients are not familiar with. Jim highlighted the shift from automating work in agriculture and manufacturing to a more service-oriented approach to knowledge work in the future:

You can think of business-to-business service; analytics; software-related service. Most people have the misconception that the service economy is dominated by low-value jobs, and in fact the low-value jobs, just like in agriculture or the manufacturing, are being largely automated out of existence (e.g., retail checkout) except for a few, and most of the growth is in the high-value service economy, and that includes, you know, government, healthcare, education, business service, and so forth. … If we want to get better at service innovation, then we’re going to have to approach it scientifically.

In the service economy, the new science of service systems impacts how a company competes, cooperates, learns, and improves. Most organizations fail, but some do not and that is interesting to study. Equally interesting is the societal context of these organizations, and what defines progress and improving quality-of-life in cities around the world. The study of service systems provides insights into why organizations fail and succeed, and how cities and regions, in spite of this organizational turnover, can improve innovativeness, equity, sustainability, and resiliency generation over generation. Not surprisingly, smarter cities and smarter universities are key types of service systems, along with smarter businesses and smarter families as service systems.

One of the key requirements is developing what IDEO’s CEO, Tim Brown, originally called T-Shaped* individuals, who are deep in a particular discipline but have broad communication skills across many different disciplines and systems. (Brown summarized the T-shaped interview in an interview with XX: Brown summarized the T-shaped individual: The vertical stroke of the “T” is a depth of skill that allows them to contribute to the creative process. That can be from any number of different fields: an industrial designer, an architect, a social scientist, a business specialist or a mechanical engineer. The horizontal stroke of the “T” is the disposition for collaboration across disciplines. It is composed of two things. First, empathy. It’s important because it allows people to imagine the problem from another perspective: To stand in somebody else’s shoes. Second, they tend to get very enthusiastic about other people’s disciplines, to the point that they may actually start to practice them. T-shaped people have both depth and breadth in their skills.)

As Spohrer stated, “you can take specialization too far, and if you specialize in one competence, either as an individual or as a city, and that one thing is disrupted – if you don’t have the breadth, you can’t be adaptive to the new opportunities.” Spohrer highlighted the importance of these individuals to our future success. Even corporations who have historically been thought of as manufacturers need to adopt this approach and think about service.

In the old days, Rolls Royce would sell an airline a jet engine, and the airline would use that jet engine, and that was a typical, you know, manufacturing company making a sale to a customer—an airline. These days, however, Rolls Royce is able to create more value by leasing the jet engines to the airlines. So, Rolls Royce has a command center where they can see all the jet engines—what altitude they’re flying at; how much fuel they’re using; whether there’s any anomalous vibration. According to Jim,

This shift from selling products to selling service & solutions goes along with IBM’s notion of a smarter planet, customers refer to buy outcomes and solution, not things. A customer really wants a 1/4” hole (outcome), not a 1/4” drill (product). With these smarter service systems that configure products to create service outcomes —you look how the customer is using your product(s), and offer more services, maintenance, support, help for the customer. You leverage the information you have about how other customers use it, you leverage information you have about how other customers want to make it better.

Spohrer points out that in our more instrumented, interconnected, and intelligent – smarter planet, “It doesn’t make sense to just sell the product and lose connection with the customer.” Therefore, it is imperative to develop a long-lasting relationship with the customer. Companies want to ”maintain information flows coming from the product, so that you can offer services to help the customer get more value from that product.”

Certainly, IBM knows a bit about transforming an organization from a purely product-oriented entity to a service-oriented powerhouse. In the 1990s, IBM made a conscious decision to focus on the IT services business and the embrace of the Internet, both of which probably saved the company. The challenge today, however, is that customers demand different types of services, such as teach me and I will it DIY (do it yourself); or “outsource” it and just create the right checks and balances to ensure a positive return. This entails really understanding the customer more scientifically, and understanding what opportunities there are to co-create value with the customer.

We also talked about how anything can be automated and Jim recommended reading Erik Brynjolfsson at MIT who has written some great material about how automation is impacting all types of jobs – even the knowledge-intensive jobs. And when services get automated, labor will have to move onto another task or project. This is why have T-shaped individuals are so important. They have to be adaptive and flexible to take on new work. This requires the employee to embrace lifelong learning to keep up with the rapid evolution of technology. (One of the reasons I really enjoyed talking to Jim is that he too is clearly a lifelong learner. He confirmed this at the end of his interview saying “I’m a voracious reader, so I try to use my Kindle Fire and download may eBooks. I downloaded three before my last trip a week ago, that I looked over on the flight.”)

Spohrer focused on the driverless car, something that has been in the press recently due to Google’s development in this area, as an example of a new technology impacting how we work and live. So, if these vehicles are safer due to better reaction time, Jim asks, “How will that impact the insurance industry?”. If you are being driven by a robot to work, your can be more productive along the way. Other industries from building construction, to product manufacturing to education will change. Spohrer mentioned innovations, such as 3D printing and Online Learning (another passion of mine) to “individuals and institutions need to become more adaptive to the opportunities as technology works its way through these different type of service systems, as we would say from a service science perspective.”

We then focused the conversation on education. He pointed out that universities have three missions:

• Mission 1: Knowledge transfer, which is teaching, and that’s being really disrupted more and more by online education and new business models.
• Mission 2: Knowledge creation, which is basically research.
• Mission 3:, which rarely gets discussed, ‘applying knowledge to create value” – think start-up companies. Universities need to be thought of as incubators for entrepreneurs. Spohrer mentioned the University of Utah has been a leader in terms of startups and regional economic value being created from startups, surprisingly rated #1 in the US for two years in a row, ahead of MIT, Stanford and others.

(Note: There has always been a lot written about Stanford University’s close relationship to Silicon Valley, but lately, my local press has questioned whether the university is too motivated by this business relationship vs. giving students an education. In fact, the University conducted a research study on this last year. See Ken Auletta’s New Yorker article that focuses on Stanford University’s close relationship to Silicon Valley)

There is a big difference between a tobacco compny funding research to “prove” that smoking is healthy, and a company lending its employees to guest lecture and teach at a university about solving real-world problems, or supervising student team working on real-world grand challenge technical and social problems that society is experiencing. We have to get smarter about thinking about the triple helix – academic, industry, government collaboration to solve grand challenges that can improve quality-of-life in cities worldwide.

The explosion of online learning will increase student enrollment and decrease the cost of knowledge transfer. Spohrer believes this will also lead to an increase in faculty time spent on the research and innovation mission of universities, and in applying knowledge to create value the entrepreneurship mission of universities. As a result there will be more focus on entrepreneurship and incubators and regional innovation at the university level. As a result, there will be more partnerships formed amongst Universities, Governments, and Corporations. This was one of the key items cited in IBM’s recent 2012 CEO Study, which mentioned the importance of establishing new types partnerships. (This report is a must read!). IBM plays the role of a scale-up partner in these relationships, where an innovation is created in one region, and then scaled-up for other parts of the world.

Jim provided some guidance on how governments and educational institutions can work together to accelerate the growth of the service economy:

First of all one needs to appreciate the growth of service economy. It is a reflection of how well we have learned to use technology to improve labor productivity in agriculture and manufacturing. As a result there is growth of people and organizations augmented by technology that interact to co-create value with others… Technology advances also mean a growth of self-service, where people have advanced technology to do things without interacting directly with other people (ATMs, check-in kiosks, on-line stores, etc.) so organizations can use customer-labor to replace employee-labor, which improves labor productivity in the traditional service sector of the economy. Education, health, and government will soon be impacted by self-service technologies as well.

All the regions in the world need to figure out policies that improve innovativeness, equity, sustainability, and resiliency generation after generation. It is progress that improves quality-of-life. This is what IBM calls smarter planet, smarter cities, smarter universities, and smarter education/people. In a single statement, government, academia, business, and the social sector need to focus on transforming universities to create more start-ups that improve local quality-of-life, and then learn to partner to scale those innovations globally. Knowledge in action to improve quality-of-life in smarter cities and benefit people. Service is often defined as the application of knowledge for the benefit of others. Service is a good thing, and service science creation more service innovations.

One example, Spohrer shared was the Linnaeus University in Vӓxjӧ, Sweden, a place few have heard of, unless you know a lot about IKEA. That’s where the company was founded. Vӓxjӧ, Sweden does a great job of doing startups around wood products and wood energy thanks to IKEA, who invests in university and partners with the local government in regional innovation associated with wood products. As a result, the town has one of the greenest cities in Europe, because they use renewable wood chips for both heating during the winter and cooling during the summer.

Obviously, location is important – read Richard Florida “Who’s Your City” for example. In Arizona, for example, they focus on border security related issues. This regional focus, however, benefits from a strong understanding of science of service systems, especially because technology changes so fast, thus requiring new skills and resources. IBM Service Science Initiative works to scientifically understand these systems: How they change over time, how certain investments impact outcome, etc. Standards for measuring these service system improvements is still a challenge; however, progress is being made in this area especially due to some of the work by Stephen Ezell, who focuses on Information, Science and Technology policy and Manufacturing and Service issues at the Innovation Foundation (ITIF) and a researcher who has written extensively about the innovation economy and innovation measurement. Spohrer states that:

From a service science perspective, though, you don’t want to just be good at innovation. You know, obviously, if you look at service systems, there are productivity measures, quality measures, compliance measures, regulatory measures, and innovativeness measures. But in the broader picture, you want to balance four types of measures that matter to long-term quality-of-life: innovativeness, equity, sustainability, and resiliency.

Due to IBM’s international presence, it’s involved in service innovation and delivery projects around the world. Jim’s organization works with about 5,000 universities worldwide, ensuring universities have the opportunity to integrate this into their curriculum. IBM has a database of all these schools and a scorecard that in its simplest form, evaluates each school by six R’s:

1. Research—Collaboration in areas of mutual interest and value

2. Readiness—Building the skills pipeline

3. Recruiting—Acquiring top talent

4. Revenue—The university as a complex enterprise

5. Responsibility—Community service and access to IBM’s expertise/resources

6. Regions—Regional innovation ecosystems–incubators, entrepreneurship, jobs

Source for the above

Listen to more about the 6 Rs

listen: http://www.apqc.org/node/260158

IBM’s The Smarter planet Initiative involves building more intelligence transportation systems, water systems, food and manufacturing systems, energy systems, etc. Smarter building is a big topic area at IBM. We also have to have smarter commerce, retail, hospitality, finance, healthcare, education; and smarter governance at the city, state, and national level which includes security systems. We’ve got some amazing things going on the University of Memphis and the City of Memphis around reducing crime.

Part of our discussion focused on one of IBM’s technological phenomenon, Watson, which outscored the world’s champion in the game show Jeopardy—television game show. It also engaged in and was part of a victorious college bowl type of competition with certain schools like MIT, Stanford, and Harvard. However, now, Watson is having an impact on healthcare. IBM works with WellPoint, the nation’s largest publicly traded health insurer based on enrollment to place the medical records of 34+ MM people at the fingertips of doctors and nurses, so that they can provide the medical assistance faster and more accurately. “It will integrate Watson’s lightning speed and deep a health care database into its existing patient information, helping it choose among treatment options and medicines. IBM says the computer can then sift through it all and answer a question in moments, providing several possible diagnoses or treatments, ranked in order of the computer’s confidence, along with the basis for its answer.” (Huffington Post)

As Jim points out, these are exciting times for the service economy.

If we can figure out how to make the systems smarter, if we can think about them as service systems that are systems of service systems that can improve quality of life, if we can figure out the ways to invest to improve innovativeness, equity, sustainability, and resiliency year over year, you know, then maybe, you know, we’ll be approaching the grand challenge we have of what’s the Moore’s Law for service systems year over year, just like we’ve improved technological systems, computing systems, year over year. The great thing about science is, every time you answer a question you get ten new questions. So, as our frontiers become more and more open, There’s no end to the number of interesting research questions that are coming out, opening up new avenues for research, new avenues for startup companies, new opportunities for different regions around the world. So, it’s definitely an exciting time.

There are also a lot of opportunities related to making cities smarter. More than 50% of the world population now lives in cities, and the percentage is increasing. Energy for transportation and buildings, water and material recycling are just some of the areas of great opportunity. Using technology to improve self-service and using customers as co-creators of value is a huge opportunity. IBM is also making a big push in Big Data and Social Media. Some the big opportunities in the service economy late with Big Data Analytics and Social Media, two of areas that are of particular interest to me. It has made over 100 acquisitions in the last year (there’s even a Wikipedia page dedicated to their M&A activity). IBM is giving away these tools to universities and helping cities make their data available for free online at cityforward.org. When Jim talks you can hear the enthusiasm and excitement in his voice:

The analogy (for the future) in my head is, you know, you think about the pioneers going West who loaded up their wagons with, you know, maybe a saw and a hammer and some basic tools, and they would go off into the wilderness and set up their homesteads, because they have the right tools to build, you know, a family farm or whatever.”

One thing that has always struck me about IBM is the freedom it gives employees to share knowledge. In the past, I have spoken about IBM’s amazing social media policy letting any employee have their own professional blog or a twitter account. Along these lines, Jim described and stressed the importance of “technical eminence,’” which is about bout not just wanting people just to be famous inside of IBM for the work they do. “We want them to be famous outside of the company.” Jim cited the recent IBM 2012 CEO Study and reinforced the benefits of openness. He also recommended Henry Chesbrough recent book Open Services Innovation.

I have worked closely with probably 10 of the top technology companies in the world, and few of them encourage their employees to this degree to go out on the web and share their knowledge: The shared cultural information. Spohrer, however, highlights that this is changing and that organizations are becoming better at sharing information and encouraging openness. He stresses the importance of leaders having humility, which is something IBM learned from almost going out of business in the 1990s.

One of the biggest corporate changes Spohrer cites is companies’ willingness to invest in their future. It is identifying and focusing less on routine tasks, which enables them to focus their workforce on the tomorrow’s products and services. This requires T-shaped people, however, who can adapt to change and welcome new challenges. He cites the Chinese company, The Broad Group, that is able to build 30-floor buildings in 15 days. (see YouTube video of this). This requires a resilient type of approach — resilient to innovation. If a new innovation comes along, companies need to be nimble and quickly incorporate it into their processes.

This requires organizational structures and technological infrastructures to be very modular and adaptive. To prepare for tomorrow’s knowledge and service economy, C-level and front-line works need to build modular and adaptive organizational structures and technological infrastructures. Geoffrey Moore’s book Escape Velocity provides good practical insights, and IBM is one of the examples highlighted in the book. As learning accelerates, most of the opportunities are in the future; so we have to learn how to escape the pull of the past to innovate better. Service science provides the theory for service systems learning, and the book “Escape Velocity” nicely captures the practical implications.

All organizations will need improved relationships with universities (student competitions, linkages to university based start-up, life long learning and alumni activities, etc.). They will also have to factor in and prepare for the need for constantly using more technology innovation, and up-skilling their talent year over year. “Doing more with less” is the right mantra and business discipline to master year over year. This means using technology to both improve productivity and create new work opportunities in balance.

I thoroughly enjoyed my interview with Jim. He is a teacher, a practitioner and someone who truly is committed to sharing his knowledge and experience. I hope to have the opportunity to talk to him again soon.

Related Links:

• Jim Spohrer’s Blog
• IBM 2012 CEO Report
• Short Transcript of Interview
• Transcript of my interview (coming soon)
• Geoffrey Moore’s his latest book: Escape Velocity.
• Linda Sanford, IBM CIO and VP of business transformations written about in her book, Let Go To Grow. Both Let Go to Grow and Escape Velocity are about the discipline of understanding that you have to let go of the past in order to invest in the future. And if you can’t let go of the past, you’re going to – that’s going to be like a boat anchor holding you back.
• As Jim points out in one of his blog posts, the Economist humorously defined services “products of economic activity that you can’t drop on your foot. (http://service-science.info/archives/category/blogs/spohrer)
• * T-shared individuals: The concept of T-shaped skills, or T-shaped persons is a metaphor used in job recruitment to describe the abilities of persons in the workforce. The vertical bar on the T represents the depth of related skills and expertise in a single field, whereas the horizontal bar is the ability to collaborate across disciplines with experts in other areas and to apply knowledge in areas of expertise other than one’s own.
• The earliest reference is by David Guest in 1991. [1] Tim Brown, CEO of the IDEO design consultancy defended this approach to résumé assessment as a method to build interdisciplinary work teams for creative processes.
• Erik Brynjolfsson at MIT
• Stephen Ezell here in the US at the ITIF. n September 2012, ITIF President Rob Atkinson and ITIF Senior Analyst Stephen Ezell’s groundbreaking book titled Innovation Economics: The Race for Global Advantage will be widely available. The book will explore how all countries are in the race for superior innovation advantage and how the United States is losing the race.
• Ken Auletta’s New Yorker article that focuses on Stanford University’s close relationship to Silicon Valley

Transcripts are created on a rush deadline, so the accuracy and availability may vary. This text may not be in its final form and may be updated or revised in the future. Please be aware that the authoritative record of Wildervoice’s programming is the audio.

Thank you Nation!