tag:blogger.com,1999:blog-53993499338499029362024-03-13T00:28:57.434-07:00Value Creating Service SystemsAnonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.comBlogger43125tag:blogger.com,1999:blog-5399349933849902936.post-80666805436036419962016-03-06T11:22:00.001-08:002016-03-06T11:22:47.385-08:00Blogging on my personal websiteFor those who follow this blog, I thought you might wish to know that I will be blogging more on my personal website - <a href="http://ireneng.com/">http://ireneng.com</a>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com22tag:blogger.com,1999:blog-5399349933849902936.post-35151390943419291392016-02-20T23:04:00.001-08:002016-03-06T11:20:24.114-08:00Markets, Multiculturalism and Food<div class="separator" style="clear: both;">
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So I'm back in my home country Malaysia and of course, my friends on social media will have to live with food porn. Being a foodie, my pics are already quite food-focused but when I return to Malaysia, that goes into overdrive.<br />
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One of my more frequent laments when I return is how little has been written about food in Malaysia as a lesson to the world on markets and multiculturalism. I've always considered Malaysia as one of the older multicultural societies in the world, where the society has been shaped by a buoyant trade between the Far East and the West for 500 years. Although not as ancient as Turkey, itself also a gateway to the near East, it is as rich in its cultural mix. And the cultural mix has manifested itself fully in the food that Malaysia has on offer. Admittedly, over the past 10 years, more has been written about this and today we have Jean Duruz's book on <i>Eating Together: Food, Space, and Identity in Malaysia and Singapore</i>, papers on food and multiculturalism by many authors such as Christina Demetriou and multiculturalism from a sociological angle by Daniel Goh in Singapore.
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<span style="background-color: rgba(255 , 255 , 255 , 0); font-family: "helvetica neue light" , , "helvetica" , "arial" , sans-serif;">I'm not an expert in multiculturalism, although I dabble a little in sociology and social identity, primarily because of my work in value. I know more about markets and it's with a market lens that I wish to discuss multiculturalism. </span></div>
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<span style="background-color: rgba(255 , 255 , 255 , 0); font-family: "helvetica neue light" , , "helvetica" , "arial" , sans-serif;">Let me start with a very simple food item, one I eat too much of when I return to Malaysia. The 'ikan bilis bun'. It's a well-known food item in Malaysia but not available anywhere else. It is made of white bread stuffed with an anchovy chilli chutney of sorts and sold in many convenience shops. It's my comfort food when I am jet-lagged and awake in the middle of the night. The anchovy chutney is clearly Malay in origin, the bread is a legacy of the British (we were a British colony) and the idea of stuffing bread with something is likely to be a Chinese influence because of Chinese foods that bear some resemblance to it such as pork steam buns and the like. </span></div>
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<span style="background-color: rgba(255 , 255 , 255 , 0); font-family: "helvetica neue light" , , "helvetica" , "arial" , sans-serif;">Within a simple bun, I find a manifestation of generations of multicultural co-existence between the Westerner (I use this term to depict British, Portuguese and other Westerners who have traversed and settled in the country over 500 years), Malays, Chinese and Indians. You can see this across so many combinations of Malaysian food, often not found in China, India, Indonesia and the West. They came to be because of markets that have evolved the mono-cultural food products of the Chinese, Indian, Malays and the West into more creative and innovative ones and have tapped into the multicultural environment in Malaysia to refine all its combinations. Where they have worked, such as with the humble ikan bilis bun, Malaysians have praised with demand. </span></div>
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<span style="background-color: rgba(255 , 255 , 255 , 0); font-family: "helvetica neue light" , , "helvetica" , "arial" , sans-serif;">The reason I am blogging about this is because Malaysia is currently going through tense times in race and multicultural relations. 500 years of peaceful co-existence seem to be set aside as each race renegotiate its own social identity in a modern world of fundamentalism and geopolitical tensions. I suppose what I really want to say is that we have voted for a harmonious existence for 500 years with our spending and eating habits, through our markets, whatever the political rhetoric espoused. And when each race suddenly becomes aware of the differences between one another, it might be useful to remember the amazing food we have created together. </span>The markets spoke of our integration even before we were even aware of our differences.<br />
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Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com9tag:blogger.com,1999:blog-5399349933849902936.post-24836852187685936902015-07-30T16:07:00.001-07:002015-07-30T16:25:25.540-07:00Me, Inc as a HAT<div class="p1">
<span class="s1">Today's corporations use IT to be incredibly efficient and effective. There are IT systems for finance, accounting, inventory management, supply chains, material and enterprise resource planning. All the tools necessary for the corporation be viable and profitable amid constraints of regulation. Corporations hold vast amounts of data to achieve this. Data about production, materials, inventory, data about customers, in fact, nothing can be achieved within the modern corporation today without data and information. The corporation is also able to buy digital services of all sorts to analyse, process and make decisions from the data, from sorting out accounting to HR. Indeed, many corporations outsource and buy in capabilities that are not core to their competencies.</span></div>
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<span class="s1">Today's individuals are also using IT to also be efficient and effective. Aided by the Internet, www and our smartphones, we can organise our lives and our families, work from home, have information access at our finger tips. But in terms of computational capability, data and our ability to buy digital services, we are very far behind the corporation. Where they have data on inventory, we barely know what is in our cupboards and fridges. Where they can buy services that augment their abilities, we can just about buy a translator, maps, currency exchange. Where corporations can look back on data to inform better future decisions, we can barely recall what we ate last week. Where corporations can be omniscient through their devices and sensors, we can just about put up a camera to check on our house remotely.</span></div>
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<span class="s1">The market doesn't seem to work in our favour. More firms are coming into the digital space to share our data amongst one another, asking us for our permission to do so but the revenue models are usually ad driven or worse, selling our data, albeit anonymised, to other firms. We are starting to use our Facebook or Twitter identity data to sign on to other digital services and allowing whatsapp or LinkedIn to tap into our contact list. Essentially, as more digital applications proliferate, the more we are being harvested for our data and the more we are being sold advertising.</span></div>
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<span class="s1">Two factors contribute to this. First, we often place little value on our own data, and are prepared to sign them away for the simplest service e.g. the way we give away browser cookies to peruse a website. It is as though the corporations out there find our data precious but we, because we don't have use of them for ourselves, have little regard for the data. Second, we don't have computational or system capability to use our data as well. We don't have a software platform that enables better well being, integrating different data, not like corporations do. Firms can buy software platforms for enterprise planning, organising and coordinating but we can't. In addition, human beings use data quite differently from corporations. We cluster data and usage of objects according to our day to day contexts. Data from Tesco shopping, car journey and school pickup are bundled together more meaningfully as a "mummy run" context than saying something to grocery, automotive and education vertical sectors.</span></div>
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<span class="s1">So how do we square this? Within the HAT project team, we've spent a lot of time thinking about personal data and we are aware of the <a href="http://www.digitalcatapultcentre.org.uk/" target="_blank">Digital Catapult</a> laudable effort to create a framework to ensure privacy, security, confidentiality and trust for personal data. When it is ready, we would certainly buy in to such a framework. Meanwhile, we are taking a much faster route.</span></div>
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<span class="s1">If corporations have so much computational powers, abilities to buy services, use data effectively and have rights to keep their own data private, then why don't we just make a corporation out of everyone? Why can't each person have a server identity, much like an online shop is a server. If our relationship with our host provider is the same type of relationship between Tesco and their server hosting provider, the relationship would certainly be more equitable and I assume the host would not have a right to poke around Tesco's data. More importantly, if I decide to change hosts, I can move all my data to a different host. Essentially, I can be my own 'corporation' with my own 'personal resource planning' platform with inventory of my stuff, data about my health, well being, etc. In fact, if I have the HAT, there would be an easy way to buy apps to view, analyse, and organise my data.</span></div>
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<span class="s1">As we begin the alpha release of the HAT in September to our experimental group of 100 users, and later on to a wider community, I am mindful of the implications if we truly succeed in this. If we do, we would essentially be looking at potentially half a billion people being 'corporatised' this way when they sign on to get their own HATs. And as they do so, they will be empowered to store, analyse, buy apps and manage their data like they have never been able to do before and more importantly, they will be able to speak to corporations 'server-to-server', API to API, leveraging on the legal framework that binds firm to firm relationships that is far more equitable than firm to consumer relationships. Some individuals may decide to bring emails back to their own server, since the ontology of the HAT schema flattens data and therefore can help combine email data with other data for better planning, searching and organisation. It feels terribly powerful to have your own server, even if what you have to organise is only your own data. But the platform would certainly be attractive to developers who can create better applications to help us view, analyse, track and organise your own data that could be combined with third party datasets for better matching or recommendation services. The amazing thing about the HAT is that as a server, you can also share your data in a "peer-to-peer" manner. This means I can share my location on a realtime basis (e.g. My iPhone location data) with my husband so when he pulls out his hat, he can see my location that is shared with him and it's no one's business except the two of us. And the apps I buy to view, analyse and organise my data would not have access to my data as its like me buying a piece of software in the old days and installing it on a PC not connected to the Internet. But if I do want to share it, I can just create a data debit (which is the way all HAT data leaves the HAT) and share it with whoever I please for a time period of my choosing. Such is the HAT. A personal resource planning system for the individual. Finally.</span></div>
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<span class="s1">Even as we get ready to release the HAT over the next 6 months, I have not missed the irony that the way we have engineered a market for personal data to give control and empowerment back to the individual is to make us look like firms. Making ourselves a mirror image of the firm's digital presence might get us some respect and fair treatment, within the prevailing legal framework governing business-to-business relationships rather than being treated as passive consumers being harvested for our data. Perhaps. Wouldn't it be funny to have Amazon concerned about their data being harvested when they come to the HAT platform to provide buying recommendations. But it's ok. It's all API to API so everyone would share exactly what they are willing to share. Such is the equitability of a B2B system. I believe we have one chance, and the timing is now, at the cusp when the two major industries of manufacturing is colliding with the Internet through the Internet-of-Things, that we can jump in and introduce a system that brings back control to the individual, in a way that is innovation and economy friendly. And we will need courage. From firms, government, individuals who will back our revolution to reclaim our own data and control when the time comes to launch the HAT initiative publicly in the next few months.</span></div>
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<span class="s1">And what of democracy then, when this HAT server that is the augmented and amplified us is able to interact with governments and firms on a more level playing field? Would we finally get more collective power as a society through better coordination, better collaborative consumption through standardised platform that is scalable for apps to interact with and yet uniquely personal to us as individuals with our own data? We wait to see. I have spent more than 20 years helping firms with value, worth, service and their business/economic models to generate more profits. Seems helping individuals to be 'firm'-like could be a win-win for all with better control for individuals, yet innovation friendly, creating more jobs and greater opportunities in the digital economy.</span></div>
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<span class="s1">Finally, if this is truly successful, I am also mindful that the divide between those who can afford an augmented and amplified self through a server and those who cannot. It could potentially create a bigger divide between the haves and have-nots. The HAT would be free, up to a degree of storage and depending on who you choose as your HAT host, much like www is free. Yet, the asset of our own HAT is to have more of our own data in it so that it can be leveraged for services and exchanges. If the well being of society is at stake, then it is our interest to ensure every one, young and old, rich or poor, be given a HAT. Fortunately, the entire ontology, schema and database is open sourced and free for anyone to innovate on. Although, if you are a user and do not want to build your own software. you might prefer to just get it off a HAT platform host. In the UK, this would be <a href="http://enableid.com/"><span class="s2">http://EnableiD.com</span></a> and in Singapore <a href="http://nogginasia.com/"><span class="s2">http://nogginasia.com</span></a>. More HAT platform hosts are coming soon in your country so check this space. To be one of the first to get a HAT, sign up <a href="http://hubofallthings.com/join-the-hat-revolution/iwantahat/" target="_blank">here</a>.</span></div>
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<span class="s1">Watch out for the HAT white paper on "<i>why everyone should have a HAT: implications for government, industry and society</i>" soon to be released in September. Sign up to be informed of the HAT release activities <a href="http://warwick.us5.list-manage2.com/subscribe?u=5f2620cfcd6c7efe5b0672f32&id=43efd9e52e" target="_blank">here</a>. </span></div>
Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com5tag:blogger.com,1999:blog-5399349933849902936.post-63405004810762955672014-04-10T06:39:00.001-07:002014-04-10T07:22:52.391-07:00Three research challenges: my presentation at the NSF Workshop on
service innovation<div>As a workshop participant at the NSF workshop <span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;">(http://ccss.ucmerced.edu/nsf-workshop-attendee-info/), I </span><span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;">presented what I consider to be the 3 main theoretical challenges for service research. Note that this is not the applied challenge - that is a different challenge entirely and would be a different conversation regarding my work at the institute with industry. Rather, I have focused on theoretical and fundamental challenges because this workshop is about guiding fundamental research, sponsored by the US National Science Foundation and National Academy of Science.</span></div><div><span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;"><br></span></div><div><span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;">I begin by saying that my approach doesn't assume any sacred cows of knowledge. Instead, I propose that most of our disciplinary knowledge exhibit historical path dependencies and the many assumptions from that history has changed. In other words, when you want to build a house in the 21st century for living, you might need to go back and evaluate the nature of your bricks, wood, mortar and cement and their ability to come together for that modern house, when those materials were made to build a different house 100 years ago.</span></div><div><span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;"><br></span></div><div><span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;">So what are the challenges?</span></div><div><br></div><div><b>The customer as endogenous in the system</b></div><div>From a service dominant logic perspective, service is co-creation ( Vargo, Maglio & Akaka, 2008). That means the customer is part of the system and not outside the system. Current movement from Big Data to many systems methodologies do not often take the customer as endogenous in the system. There is a need to develop methodologies, that treat the customer as being an entity in the system ie as a human sensor, a human intelligence, meanings/context creator i.e. a resource integrating and contributing entity.... Something.... We talk about<span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;"> customer as behaviours but not as an endogenous entity within the system (co-creation by another name for scientists and engineers). For example, even when we talk about material technologies, we can talk about its resistive, absorptive etc. properties. Why do we not talk about customer and their abilities within the system. Why do we not talk about their capability to absorb variety (a big capability to scale systems) or their resilience. Because we lack the methodology and the science to understand that. Second, there are two ways to research into at an aquarium as a system: as a viewer looking into at an aquarium, or as a fish within the aquarium. In the former, the research is for the benefit of the manager/policy maker/owner of the aquarium. In the latter, the research is for the benefit of the fish. We need to question the position, mindsets and perspective of the researcher when constructing systems methodologies and the findings from the research. This is becoming increasingly important as customer resources to co-create value is evolving into a more structured resource e.g. personal data. The customer, being a more formalised entity and increasingly empowered through technologies is a driver for future economic opportunities as both a consumer as well as a producer. The application of personal data in co-creating value with a product or service can be a massive multipler effect for the future personal data economy and national economies of the future.</span></div><div><br></div><div><b>The incomplete product</b></div><div>The boundary between a service and a material product is increasingly obscured. As material technologies evolve, a physical product can be designed to be more dynamically reconfigurable in order to fit in the diverse and dynamic interactions of actors in their contexts. Dynamic reconfigurability as a concept has been widely used in system design, which enable the system to ‘have the capability to modify their functionalities, adding or removing components and modify interconnections between them’ (Rana, Santambrogio and Sciuto 2007). With the development of pervasive digital technology, dynamic reconfigurability becomes possible in future products because products could have a ‘reprogrammable nature’. This means products could have new capabilities even after a product or tool has been designed, manufactured and sold (Yoo, Boland and Lyytinen 2012, p.1399). Thus, products may not need to be ‘finished’ to be transferred to the customer but could be designed such that contexts of use could be incorporated into a modular product design and ‘finished’ through customer resources (e.g. personal data) brought into consumption through digital pervasive technologies. This ‘incompleteness’, resulting in open and flexible boundaries of products, allows offerings to materialise multiple affordances and dynamically alter their affordances with changing contexts. Products evolve to become platforms for service that could provide increasing returns to scale through standardisation even while they can be deeply and uniquely personalised. For example, the iPhone is fully standardised and enjoys economies of scale yet is able to be fully personalised, because of the boundary between the digital ‘app’ layer and the material ‘phone’ layer.</div><div><br></div><div><b>New Transaction Boundaries, Economic and Business Models</b></div><div>An economic model is the model of an ecosystem (like a market) that distributes rents (or revenues) either through the pricing mechanism or regulation, according to what the entity (such as a firm) does to stay within the ecosystem. New economic models, often arising from new business models and/or new entrants, redistributes rents within the ecosystem occasionally resulting in the exit of existing entities (disruption). With the blurring of boundaries between material and digital, firm and customer, product and service, there is a need to understand new ways to obtain revenues and the nature of transactions in the future digital service economy. Transaction is defined as ‘mutually agreed-upon transfers with compensation within the task network’ and ‘serves to divide one set of tasks and others’ (Baldwin, 2008, p.156). Baldwin's (2008) conceptualisation of transaction is developed from a ‘systems of production’ perspective. This perspective enables us to analyse the dependencies between agents (i.e., consumers and producers). The value-creating context, as a unit of analysis for service, jointly co-created by the customer and the producer, creates an interesting challenge for modularity and product/service architecture for new innovaitons. Modularisations create new thin crossing points where transaction costs are low (p.156) and also create opportunities for new boundaries where new transactions, and new business models can be created. </div><div><br></div><div>The above challenges are not merely research/innovation challenges but impact on education and skills as well as since there are increasingly greater overlaps in domain knowledge, particularly between engineering and computer science and current reductionistic curriculum is not helping in developing future engineers/technologists and managers.</div><div><br></div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com4tag:blogger.com,1999:blog-5399349933849902936.post-19020728298148013102014-03-06T05:38:00.000-08:002014-04-11T07:31:36.574-07:00The HAT (hubofallthings.com)<div class="separator" style="clear: both; text-align: center;">
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We live in a world today where data belongs to those who collect it. So even though it's data about me, for example, if it's my purchases at a supermarket, searching online, or spend on my credit card, that data is owned by the supermarket, or by google or by the bank because they own the technology that made the data collection possible. Without the technology, this data won’t even exist. But since we don’t own it and often don’t even have access to it, we can't really benefit from integrating it to make our own lives better. In fact, even if the data is returned to us, we don’t really know what to do with it coz these data are vertically silo-ed – the format and presentation – were all collected to <i>help the institution that collected it</i> and not to <i>help us</i>.<br>
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So we now find ourselves in an increasingly digital and connected world where much of our lives can be captured digitally – very diverse types of data on transactions, interactions, movement of people and objects –what we often term as <b>BIG DATA</b>. And as things become connected, through the <b>Internet-of-Things</b>, even more data is being generated.<br>
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But again, all this data sits somewhere else owned by different institutions.<br>
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And then, as individuals, we become increasingly worried about <b>privacy, confidentiality, security and trust</b>.<br>
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Some of us may get so worried we start to withdraw from becoming too digitally visible, we cancel our Facebook accounts, we stop using google, we don’t want our data stored anywhere because we worry who has what data about us. Government then takes up this privacy and security issue and could start to regulate, thereby increasing costs. In addition, data starts becoming '<b>noisy</b>' ie its not true (much like the way I use google search to search for answers on my crossword puzzle so that they wont know if its a genuine search). This means the <b>quality </b>of data goes down. With increasing regulation, decreasing quality of data, this could then lead to institutions become reluctant to invest in <b>innovation</b> and make cool stuff and we don’t get more advanced technologies so this all ends badly for everyone. We get into a downward spiral - Less business opportunities, less innovation, less jobs.<br>
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How do we reverse this and help the digital economy spiral upwards?<br>
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Introducing the HAT project (<a href="http://hubofallthings.com/">http://hubofallthings.<u>com</u></a>)….. it’s a Research Councils UK Digital Economy £1.2m funded project with 6 universities, around 20 researchers and a whole host of companies like GlaxoSmithKline, Dyson, DCS Europe…<br>
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The HAT takes on the 3 challenges and we’d like to think that we can solve them all but they need to be solved simultaneously to create a upward spiralling effect.<br>
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First, about privacy and confidentiality and the ‘shrinking supply’ and 'quality' of data. We are building a human database where the data is owned by individuals, by us. A bit like your email, your HAT, should contain all the data you would like to have to make your life better. That means a place to hold internet of things data from your home, your personal data from social media, your health data etc. etc. If we own our data, we can use it, so that solves all the sharing issues that vertical industries have and if we keep it secure in our trusted environment like we give our money to our bank, it hopefully solves the security and privacy issue. If we owned our data and we treasure it as a <b>digital asset</b>, and it is valuable and useful to us in the way we lead our lives, we would want to generate more of it, basically become more digitally visible but we’ll only to do that if that data is ours and not belonging to someone else. And since we are using the data <b>for ourselves</b>, we will make sure it is as accurate as possible, solving the quality issue.<br>
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Second, about the ‘worth’ and ‘value’ of the data. Remember I said that this is still all vertical data and often, a lot of data scientists looking at big data out there are trying to predict us by putting the data on the inside, and the individual on the outside. But making sense from aggregating vertical data is a bit like making sense of snow drift by analysing snow fall. They’re related but not the same. Vertical data needs to be re-organised and transformed in a 'horizontal’ way so that human beings can make better decisions from data. And data can never tell the whole story. It really shouldn’t because human beings interact with our data and we also like to be in control so the human person isn't a passive. we are more like an intelligent and adaptive sensor in a way. the human person can actually perform a <i>service</i> on the data to help in <b>contextualising</b> it to make it meaningful to ourselves and so that we can use it. We don't just want smart things, we want 'smart us'.<br>
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So through a <a href="http://sdlogic.net/" target="_blank">service dominant logic</a> we develop a special kind of database. a human schematic database that organises vertical data according to the way we create value with goods and services and use information to live our lives. And we let individuals co-create that database with their own sense making and intelligence. For example, you can have data about temperature in your home from a smart home, temperature in your car by the car company, temperature data from your office building, and the weather data outside and they come from different sources and institutions. but what you really want to know is 'what is the lowest temperature you will encounter today so that you know what to wear?' And to do that you need to acquire all these data into the HAT and then transform it into something useful for your decisions, which is what the HAT can do. So HAT transforms vertical-type data and transform it into horizontal-type data.<br>
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What happens next is the fun bit.<br>
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When data is meaningful to us, it is not just of <b>VALUE</b> to us, it is now <b>WORTH</b> something,<br>
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So the third challenge for the HAT is about creating a market for all this meaningful data. Having all this data to ourselves isn’t going to be useful if we can’t trade it or exchange it and have it surface in the economy so that GDP would grow, wealth and economy would grow and there are more businesses and more jobs, what Economists will call having a <b>multiplier effect</b>. Having all this data is like having money but you hide it under your mattress - it does no one any good. This is where the HAT is also a market <b>platform</b>. Platforms are like meeting places where exchanges can happen e.g. a singles bar is a platform for single men and single women or a bazaar is where buyers and sellers meet to buy and sell. The HAT is not just a database but also a <b>multi-sided market platform</b> for us as individuals to exchange some of our data so that we can maybe buy services like advice on our health, or get some personalised grocery bundles from our diet data. Doing this will create a <b>market for personal data</b> which is important for the future growth of the digital economy but doing it in a way that it fits our lives better, be more democratic with how data is owned and accessed and in general helping institutions tailor what they offer in a way that is scalable.<br>
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This is of course not an easy project. We need ethnographers who research into how we use data in our lives, behavioural economists who looks at how our behaviours change, market economists, to understand the incentives on a platform so that both individuals and firms come together to exchange data and products and services, business models, marketing and operations specialists, computer scientists, database programmers, designers for user experiences. The HAT team has all that capability. The best bit is that we are working for both sides – for institutions so that they can give us good advice and personalised products in a way that is <b>scalable</b>, and for us, so that we own a platform to use data better in the way we make decisions.<br>
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In summary, the HAT lets you as an individual acquire data,and build your own repository of horizontal and meaningful data that is useful and can help you make decisions (ie <b>contextualisation</b>), and then lets you decide if you want to trade or exchange with firms for discounts or other cool products and services. and when we create a horizontal platform that fit to human lives, we create the next stage of the internet, that of people and things, and an epic collision of all the vertical industry of manufacturing,service and internet companies…and new horizontal-type <b>business and economic models </b>that is human-centric will emerge, and not just the old ways of doing business. That would be just awesome.<div><br></div><div>Best of all, we think we can bring TRUST back into the digital economy. And we do that by making all of us, who have largely disappeared into words like 'citizens', 'segments', 'big data' into being unique again, paradoxically by becoming making each one of us a 'server' (standardisation) and yet unique with our own data (personalisation). By doing so, we hope to make the <span style="font-family: 'Helvetica Neue Light', HelveticaNeue-Light, helvetica, arial, sans-serif;">use of data more democratic than it is today.</span><br>
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We think that everyone should have a hat of our own data. like the way we have emails or bank accounts. The HAT will be ready in 2015, and we expect it to be free although you can choose your own HAT trusted provider who could differentiate themselves by giving you additional services, like the way your email service, or your bank does. We want to start a revolution to own, control and use our own data, for the good of the economy! So we hope you will follow our blog at <a href="http://hubofallthings.com/">http://hubofallthings.<u>com</u></a> and be part of that revolution!<br>
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PS: if you are a developer or an institution interested to integrate the HAT into your offerings or develop applications on the HAT, please sign up on our blogsite as well! Software toolkit and APIs will be released from July 2014 in a trade launch and October 2014 will see a HATFest where we expect a week of 'show and tell' sessions of interesting applications around the HAT platform! Consultants helping vertical industries evolve new business models in the horizontal or IoT domain also welcomed!<br>
<br></div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com6tag:blogger.com,1999:blog-5399349933849902936.post-4070634609248112012013-12-09T08:14:00.001-08:002013-12-09T08:56:04.367-08:00Service systems group away dayOnce a year, I take my team on an 'away' day to discuss the past year, the coming year and do some brainstorming and planning. I thought I'll put down my thoughts on this year's agenda. (We are expecting 18 of us).<br />
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This year's agenda is set out in 3 sections</div>
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State of knowledge: value, service and business models</div>
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Given that there are new members of the team, I'll start with a briefing on the background to the team's approach to knowledge in value, service and business models ie the SDLogic approach. I will do a presentation in this space and then discuss who is doing what interesting research in the space globally. I will divide this space into 4 - <b>thinking</b> (concepts and ideas), <b>tinkering</b> (empirical research), <b>tooling</b> (methods, mechanisms, creations) and <b>telling </b>(publishing, teaching, communicating the research) and talk about which academic teams have 'got' the thinking in SDLogic, those who are still in the old school, the links between service, value and the future of disruptive business models and what knowledge is needed disciplinarily in computing, materials, engineering, business (strategy, Marketing, OBHRM, finance, economics etc.) that has impact on new business/economic models ala SDlogic. I will also discuss where I believe more research/thinking is really needed, integrating what everyone in the team is working on, particularly the doctoral students where "we will watch your career with great interest" #starwarshomage ;) and how the cutting edge work we expect from the doctoral students contributes to knowledge overall. This is of special relevance to the future of incomplete products and integration of personal data to future offerings, IoT markets etc.</div>
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State of industry: business models</div>
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The next discussion is basically a brain dump from me on all that I see is happening for each industry in terms of their business and economic models - financial services, engineering, telecommunication, education, manufacturing, entertainment/creative - I will discuss their markets and their business models, applying the knowledge we have and where I believe each industry will be looking to innovate, the role of regulation etc. more importantly, I will elaborate on where each industry might be going in a hyper connected IoT era, seen from an SDLogic practice perspective.</div>
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State of innovation/investment</div>
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I don't usually talk about my entrepreneurial activity in a research meeting but I thought this year I will do it since much of our research is entwined with exploitation. In a year, I usually invest between £50k-£100k of my own money either as an angel investor in startups, or investing in my own ideas/creation. I will talk through the year gone past, what I invested in (and what fruits yielded ;p) and what I look to invest in the coming year and what technological domain and business models I will be watching very closely.</div>
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Planning</div>
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Given all that I have spoken on, I'd like to hear the team's thoughts in terms of skills, capabilities, what areas of research, tools we should be investing in, capacity building etc.</div>
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Loads to discuss and I'm looking forward to it!</div>
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Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com15tag:blogger.com,1999:blog-5399349933849902936.post-67757732739945867272013-03-24T02:12:00.001-07:002013-03-24T15:29:49.884-07:00From Service Systems to Digital LivesIt has been a long time since I posted any content on this blog (did a few announcements, but no substantial content).<br />
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So I thought I should come back to my roots in service systems, service science, value co-creation and explain some of the linkages and how my work is moving on. My students and colleagues constantly say to me 'I don't see you for 2 months and you've moved on'. Some say 'you've left service systems and into technology now' and 'I don't recognise your work anymore'. so I thought its best to articulate my thought processes to show there is method and consistency to this madness they have perceived.<br />
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Much of my research in this domain have given me insights into service systems, the boundaries between a material product and a service, the relationship between exchange and experienced value in context.<br />
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<a href="http://www.sdlogic.net/">Service dominant logic</a> suggest that value is always co-created in context of use and experience. Co-creation is not an option (Vargo and Lusch, 2004, 2008).<br />
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For a few years, I have repeated that again and again on the lecture circuit. Many nodded. Many agreed. It was a logic, a way of looking at the world and it gave insights and understanding. The problem is, it didn't do much more. And I wanted more. <br />
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GD logic is not only very entrenched, it is not helping with a world that is increasingly digital and where business models are being disrupted. GD logic and the firm-centric view of the world was also starting to marginalise individuals in a big way with constant incursions into our privacy, all in the name of stimulating the economy. Data business is worth £50b in the US and we're on this slippery slope starting from 'our data is creating new jobs' onto a full scale marginalization of our rights and our privacy.<br />
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SD logic could help, but it hasn't really gone beyond a logic to influence people. At worst, people didn't buy in. At best, people were influenced but didn't know how to put it into action. Part of the challenge is because SD logic stayed largely within the business domain and business schools act only on people (through teaching, professional development, MBAs). What was needed were more methods, systems, tools, stuff that could change processes, infrastructures, outputs and materials, and not just people, into an SD logic mindset. SD logic needs to create a whole new set of tools with a new design and engineering philosophy. It's a bit like when lean thinking was just a logic, a way of thinking, although practiced by Toyota. It was a logic but it didn't stay that way. It spawned methods, certification, tools, performance indicators. The kanban, 5S, value stream mapping; the lean black belt holders, etc. All these created an entire community of champions for that way of thinking. We need that for SD logic because otherwise, it isn't going to change the world. The science of service systems, grounded on value cocreation and taking an SD logic view of the world wasnt going anywhere unless we created better linkages and synthesis to the world of technology, engineering and design. And we need to articulate how an SD logic perspective could or should change what they were currently doing.<br />
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Alarmingly, papers within the domain of service science and service systems started to appropriate SD logic to justify some GD logic research, often because they did not really understand SD logic. <br />
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Moving things along meant a focus on 2 key aspects. philosophy and methods. <br />
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In my mind, an SD logic philosophy is clearly grounded on a sociological and existentialist approach rather than a psychological one. Value cocreation and resource integration is something that exists, and can only be seen, in movements, in verbs and in behaviours i.e. phenomenologically. An SD logic approach is not one that you can run a survey of attitude, behaviours or intentions. The person is embedded in his actions and practices of value creation. The focus on context means the unit of analysis is in the sociology of real life behaviours. A sociological approach makes methods a problem because we've inherited a world where we have created tools from analysing water in a bucket, not by looking at its behaviour in a river.<br />
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GD logic is compelling not only because it is entrenched for over 500 years, but also because you could measure its constructs. GDP, sales, revenues, CPI - they are all constructs of a GD logic society. What SD logic needed was better methods and new constructs.<br />
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To that end, and rather ironically, I found an ally in digital technology. Here was a world of sensors and actuators with an enthusiastic community looking for novel ways of deploying them into homes and buildings i.e. the internet-of-things. Yes, many of the firms were riding roughshod over privacy issues but could we not turn that into better visibility of behaviours, could we not turn the same technologies used on us into technologies empowering us? So I started to study digital technologies in greater detail, albeit with an SD logic eye, coinciding with my move to WMG at University of Warwick. My background in computer programming and applied physics helped, I suppose, but only to the extent of confidence in learning the material quickly. The field has moved on since the 80s. Recently, Jon Crowcroft, our <a href="http://www.hubofallthings.org/">HAT project</a> partner in Cambridge insisted I read Steven Johnson's book '<a href="http://www.amazon.co.uk/Future-Perfect-Case-Progress-Networked/dp/1846147115/ref=sr_1_1?s=books&ie=UTF8&qid=1364115378&sr=1-1">Future Perfect</a>' as well as Jaron Lanier's book '<a href="http://www.amazon.co.uk/Who-Owns-Future-Jaron-Lanier/dp/1846145228">Who owns the future</a>'. Both books grounded on the future of digital technologies, but resonated with SD logic and empowerment.<br />
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I also found, as an ally, the thinking around new economic and business models. Here was another strand of literature largely marginalised by mainstream business literature because it was (the way I interpreted it) taking a systemic view of value proposition, value creation and value capture (ie, change one, change all) and the way the organisation had to be agile and transformed for it - which sat very nicely with SD logic. Also, being in the heart of a manufacturing community where pervasive digital technologies were starting to create a set of thinking around 'incomplete products' or personalised (and not customised) products, sat even better with the notion of indirect service, suggested by SD logic. (<a href="http://orgsci.journal.informs.org/content/23/5/1398.abstract?related-urls=yes&legid=orgsci;23/5/1398">see a great special issue from Organisation Science by Youngjin et.al. on Organising for Innovation in the Digitized World</a>). Customised products are firm centric. Personalised products are customer initiated and empowering. Personalised products also tend to move the product into becoming platforms to afford co-creation, which advanced the notion of symmetry in value co-creation further. Finally, with the advent of platforms, the economics of 2 or multi-sided markets completed my set of theoretical collaborators across economics, business models. manufacturing and technology - aligned to SD logic.<br />
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As my research and thinking progressed, I started to think harder into the synthesis between these domains. I found some of the connections to begin with (others could possibly do more) and that synthesis was central in my book '<a href="http://valueandmarkets.com/">Value & Worth: Creating New Markets in the Digital Economy</a>' which is now out on Kindle and the printed version by Cambridge University Press out end of the year.<br />
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Moving that thinking on, I became convinced that the science of service systems, grounded on SD logic, could not just be a contribution but could create an impact through a carefully designed experiment that could turn the world on its head, empowering the individuals, give us some interesting constructs, methods and measurements in real lives. Thus, together with excellent colleagues in technology and economics, the HAT project was conceptualised. It took some time. We applied to the Leverhulme fund and didn't get the grant and the second outing of the HAT, together with a great team, was funded. I was thrilled. <a href="http://hubofallthings.org/">I would highly recommend following the HAT project blog site here</a>. To come to this point was an amazing moment for me and I blogged on the HAT site <a href="http://hubofallthings.wordpress.com/2013/03/19/we-won-it/">here</a>. For those who follow SD logic and service science/service systems, you can probably see how it extends the work in the '<a href="http://hubofallthings.wordpress.com/background-to-research/">background to research</a>'.<br />
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I do admit, now having spent years in business, economics, engineering, technology and sociology that I struggle sometimes with the language - Some of my colleagues have accused me of introducing this new 'jargon' that I have developed that is a combination of some 5 disciplines. My approach have been pragmatic - whatever the term or language that persuades you to see the world the way I see it, is what I would use. Not very academic of me (most of my colleagues prefer to argue about definitions). I probably should care, but I don't ;p. Perhaps it might evolve into the jargon of service systems & service science? However, if I know I am speaking to an economist/sociologist/business/technology academic, I would try to use terms in their world -it just makes communicating easier. Inter-disciplinarity comes with a host of interesting issues but I might blog about it some other time.<br />
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The HAT project also brought me back into entrepreneurial activity again (a full circle, after being an academic for 15 years) because I didn't just want to create new constructs and methods as an academic, I genuinely want to turn the world inside out, creating an empowered individual and having that balanced and symmetrical view of co-creation and yet create new markets and stimulate the economy. That means the HAT has to move into deployment, becoming a world-wide-HAT so the startup company has to be formed to lead the way. I think I have become Steven Johnson's version of <a href="http://blogs.scientificamerican.com/cross-check/2012/10/08/comrades-join-the-peer-progressive-movement/">a peer progressive</a> ;)<br />
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Watch this space, as well as that of the <a href="http://hubofallthings.org/">HAT</a>! Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com16tag:blogger.com,1999:blog-5399349933849902936.post-4281268373731161512013-03-11T05:09:00.005-07:002013-03-11T05:16:01.798-07:00Printed rights of Value & Worth: Creating new Markets in the Digital Economy' acquired<span style="background-color: rgba(255, 255, 255, 0);">Dear friends, I am most honoured and pleased to inform you that the PRINT version for my e-book 'value and worth: creating new markets in the digital economy' (available at <a href="http://valueandmarkets.com/">http://valueandmarkets.com</a>) will be acquired exclusively by Cambridge University Press, the oldest printing and publishing house in the world (<a href="http://en.wikipedia.org/wiki/Cambridge_University_Press">about CUP here</a>), for all territories and all languages. Paperback and hardback is expected September 2013. I will still retain the electronic rights as I am currently experimenting with knowledge and publishing platform business models. </span><br />
<span style="background-color: rgba(255, 255, 255, 0);"><br /></span>
<span style="background-color: rgba(255, 255, 255, 0);">I am indeed very honoured that Cambridge University Press has offered for the book to be published as one of their titles. The strong interest this book has had worldwide has reinforced my belief that academic research in service, value and business models should be made more accessible to practice and provide some guidance to an increasingly fragmented and yet connected digital economy. I look forward to seeing the print version soon.</span><br />
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<span style="background-color: rgba(255, 255, 255, 0);">As an aside, I am now in the company of the King James Bible...... if only it will sell just as many ;p</span>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com0tag:blogger.com,1999:blog-5399349933849902936.post-69402500316683813332013-01-13T21:30:00.000-08:002013-01-13T21:33:57.447-08:00Release of book: Value & Worth: Creating New Markets in the Digital Economy<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHAlLEYVlm9ncDNPHdAL9J0R58pz1GoDPL2Y-UFJG8tI9HkDP7rMUc3jpQ_rQtVY4GH56Z9lKpgaqUVk4hZBrnBDkhkkw-M87IxT_iWJ5sXD8T2PeD7ipkGlfbgWG2wZP0WqnDQihEITM/s1600/book+cover+small.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjHAlLEYVlm9ncDNPHdAL9J0R58pz1GoDPL2Y-UFJG8tI9HkDP7rMUc3jpQ_rQtVY4GH56Z9lKpgaqUVk4hZBrnBDkhkkw-M87IxT_iWJ5sXD8T2PeD7ipkGlfbgWG2wZP0WqnDQihEITM/s1600/book+cover+small.jpg" /></a>The release of my book on Amazon Kindle is finally here! Read all about it at:<br />
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<a href="http://valueandworthbook.com/">valueandworthbook.com</a> or <a href="http://valueandmarkets.com/">valueandmarkets.com</a><br />
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Also, remember to register for new updates on the book and follow the book on twitter at @<a href="https://twitter.com/valueandmarkets">valueandmarkets</a><br />
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If you have been following this blog and interested in value co-creation, outcome-based contracts, service systems, new business models, new economic models and value, this book brings it all together for the future in understanding digital technologies and the role of value and the customer!<br />
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Read the preface of the book (on the websites) to know more!<br />
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Thanks to all my twitter followers and to those who follow my research work. I hope you get a lot from it and do feedback your comments on the website!Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com2tag:blogger.com,1999:blog-5399349933849902936.post-12366132064435422432012-10-31T05:42:00.001-07:002013-01-13T21:35:14.998-08:00<b>New Economic Models for personal data</b><br />
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Excerpt from the book "<b><i><span style="color: #990000;">Value and Worth: Creating New Markets in the Digital Economy</span></i></b>" available in January 2013<br />
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Link to book at <a href="http://valueandmarkets.com/">valueandmarkets.com</a><br />
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START OF EXCERPT<br />
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<b>New Economic Models for personal data</b><br />
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As the digital age progresses further, more of ourselves can now be potentially commodified. I say potentially, because it depends on the firm’s ability to do so. For practices that are measurably visible and direct such as mouse clicks, button presses, it's commodification potential is obvious. Companies like google or Facebook have sophisticated algorithms to calculate how much a recommendation, a share or a like could translate to creating worth to advertisers. However, since digital connectivity also allows us to interact, we are now digitally more visible – we vote, pay, applaud, and commodification of such practices are much more a challenge. With greater digitisation into the contexts of home and buildings, the digital self in future could be seen more transparently through how we create value within digital contexts i.e. the visibility of elements (nouns), system (verbs), structures (rules), agency, affordance and outcomes in contexts (see chapter 4). We already generate much personal data through our financial transactions, tax records, health behaviours and online interactions. There is a growing concern over our ability to control what information we reveal about ourselves over the Internet, and who can access that information. The US Federal Trade Commission has provided a set of guidelines on widely-accepted concepts concerning fair information practices in electronic exchanges called the Fair Information Practice Principles. The problems is that treating data according to what is ‚good practice’ doesn’t reduce individuals reservations about its collection and use. It breeds a culture of mistrust especially when so much of what we need to do digitally results in signing ‚informed consent’ about what firms could do with our data, documents that we cannot humanly and cognitively process in terms of its implication. In addition, injustice may arise because individuals could buy and use digital offerings under conditions of inequality or necessity which suggest that such practrices are coercive, prompted by the necessities of his situation.<br />
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How should we understand our personal data in terms of privacy, vulnerability and security for ourselves on one hand and while we wish to have firms create new offerings to serve us in context on the other? How should we think of personal data as protecting us while at the same time creating new markets?<br />
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These are the conditions we often face today for online personal data privacy.<br />
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•<span class="Apple-tab-span" style="white-space: pre;"> </span>We withhold our consent for personal data to be used because we get nothing in return.<br />
•<span class="Apple-tab-span" style="white-space: pre;"> </span>We do not wish to participate in online digital activities for fear of being digitally visible as we do not know who holds our data and what they would do with it.<br />
•<span class="Apple-tab-span" style="white-space: pre;"> </span>The firm refuses to compensate for use of personal data because it does not know yet what worth (new offerings) could be created.<br />
•<span class="Apple-tab-span" style="white-space: pre;"> </span>The firm owns part of our data and could do with it what they wish, as long as they anonymise it. But they cannot share it with another party so there is limited understanding of the data.<br />
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One way of thinking about personal data is start from the position that its ownership is our digital labour. Thus, by allowing it to be owned by someone else such as a firm is allowing for its exploitation, regardless of how the firm anonymises it. This does not mean that firms cannot be allowed access, merely that as a point of principle, the information has to be owned by individuals and firms only give the right to access it. The reason this principle should exist is that personal data could then be seen as our labour for commodification just as the way we see our real work in life as labour for commodification. This creates a market for digital labour of which firms could ‚buy’ and compensate individuals for. Continuing the logic, digital labour i.e. visible practices on line would then become an asset to individuals. By doing so, individuals may not be so restrained in their digital practices, since its a reduction of their assets, but may be more discerning on whom they could share them with, thereby sharing only when there is benefit to themselves. Firms could offer contextual digital offerings based on these assets they can view and compensate accordingly, to the individual as both digital labourer and as customer. Currently, our compensation for personal data is often what is commonly known as 'a free lunch'. So we may get back coupons, discounts, freebies from the commodification of our practices. By liberating personal data into a format where we could store and be accessible to firms, a market for prosumerism exchanges is created where individual choices can be respected even while markets can be created with new business models for compensation and experience.<br />
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This could be a solution because the current personal data held by several insitutions is often not shareable under data privacy acts. Thus different firms hold data that is partial, with visibility that is incomplete. This results in digital labour becoming less valuable to firms and commodification becomes a challenge since firms do not yet know how to create worth from digital labour. Access to a more complete visibility of the customer with suitable compensation to digital labour will create better offerings for individuals allow choice, and could stimulate market creation under conditions of fairness and consent.<br />
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Personal data may therefore be seen to be not just a privacy or legal issue but that about market exchanges of rights and the external effects that could be obtained from the creation of such a market. Our consent is not merely an ethical dilemma. It is a right not to 'work' and a right therefore not to be digitally visible, but if we decide to be visible we could be rewarded for that just as labour is compensated through work. When a market of personal data generation and use is created, individuals may be more willing to do digital work as a result, or at least, allow for their data to be visible and accessible. By doing so, they are accumulating a potential resource for a commodification opportunity, with the firm playing the role of developing its capability to create worth from that commodification. Without such a market, individuals may withhold consent and firms, being unable to create worth from partial personal data will not pay for it. With no incentive for participation, what economists would term as market failure results. While firms today talk about ‚big data’, data will get even bigger with greater connectivity and the internet-of-things. Fundamentally allowing firms to aggregate data so that they can serve the population through new services while recognising the rights of those who generate the data is the way forward. We will all benefit from better traffic information if we allow our individual travel data to be collected, aggregated and served back to help us with our travel plans but conversations around big data must recognise both the business and service generation from big data as well as the rights of the data generators who contribute their digital labour and a free market to allow more of this to happen is crucial.<br />
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When the economy is based on an exchange of ownership, we create unlimited value (or not) from what we buy. Traditional exchange economy for goods gave little visibility to value creation, especially for things. The economic system only measures worth and not the value created. As firms wish to appropriate more revenues from value creation and change their business models particularly in the digital economy, they may give up the ownership model, and instead, look to business models that derive revenues from use or experience e.g. Power by the hour. By not creating worth from value creating activities, the firm opens itself up to other ways of creating worth. Understanding personal data and how digital activities create value in context becomes a stimulus for new business models and new innovative offerings.<br />
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END OF EXCERPT<br />
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For more information on my book and to get latest updates (including previews and early release), please go to <a href="http://www.innovorsa.com/">www.innovorsa.com</a> and register your email.<br />
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Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com1tag:blogger.com,1999:blog-5399349933849902936.post-80006749584290414342012-07-29T15:11:00.000-07:002012-07-29T15:11:04.398-07:00New economic models from collapse of exchange and use in retail bankingThis post was brought about because of an exchange between Wim Rampen and Arie Golshlager on twitter. The conversation is captured in Arie's post and Wim's comment at<br /><a target="_blank" href="http://ariegoldshlager.posterous.com/barclays-features-store">http://ariegoldshlager.posterous.com/barclays-features-store</a><br /><br />Essentially, Arie put up the Barclays ad on choices for retail banking and Wim commented that customisation is great but research has shown that giving too many choices stifles the customer (pointing to Sheena Iyengar's Ted talk <a target="_blank" href="http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose.html">http://www.ted.com/talks/sheena_iyengar_choosing_what_to_choose.html</a>)<br /><br />Arie asked me to comment on his post but there was so much to say that I decided to post this on my blog as well. It is also tied to my upcoming book and a recent keynote I delivered so if you are interested in more of this, sign up at the book page <a target="_blank" href="http://valueandmarkets.com">Value: Creating New Markets in the Digital Economy</a> and check the keynote at <a target="_blank" href="http://bit.ly/NeTGRk">service systems resource page</a><br /><br />The problem I have with this ad is the revenue model/economic model for retail banking. To understand this, let's go back to fundamentals and evaluate what NEED a banking service is really satisfying. Keep my money safe. Give me interest for my excess at the best possible rate, give me my money whenever, wherever I want to use it securely and fast. If I don't have any, lend me some at the best possible interest rate. <br /><br />What this means is that true retail banking service is a magic wallet for my money. It's with me all the time, and I can access, store, use, earn Interest (for excess), pay interest (for what I owe), but always at the convenience of being in my back pocket or handbag.<br /><br />Now take a look at retail banking. It has grown into monolithic institutions, creating rules, transactions, norms, practices that we have come to accept as the 'solution' to our needs but actually makes us jump through hoops just to access money (dongles to log in) in the name of 'service'. And there is an academic term for this phenomenon. It's called an institutionalised solution. Basically, it means that we have been conditioned to think that the solution to our needs takes a certain form and that form has become 'institutionalised'. Markets are therefore formed from such institutionalised solutions (ref Steve Vargo who is researching in this area - need a cite here, Steve). So we believe that the solution to knowing the time at the bedside is a bedside clock, and managing our money is the current form of retail banking. So markets for bedside clocks and retail banking emerge because people accept that it is an acceptable solution (at that time) and it becomes 'institutionalised'. <br /><br />Then technology comes along and disrupts all that because fundamentally, there could be other solutions that are way better, much easier for the consumer and in doing so, the market could potentially explode because there was so much latent need that was not satisfied with the previous institutionalised solution. Technology, in particular digitisation, can now potentially make this magic wallet come true e.g. through mobile solutions and other ways to access money. But of course, institutionalised solutions are hard to 'de-instutionalised' (reason why radical innovation is hard) so they try to modify the model to fit, by giving more choices. Often, new provisions are secondary to the 'primary solution' of retail banking; the idea that the primary solution could be wrong is unthinkable.<br /><br />So why could the retail banking 'institutionalised solution' be wrong? <br /><br />Well, wrong is a little harsh. It's just archaic, inefficient and rather 'inside-out' and sooner or later, it will be replaced (although one must never underestimate the longevity of entrenched institutionalised solutions)<br /><br />To answer this, let's go back to the simple magic wallet again. The problem with the current retail banking model is that it is still based in an old good-dominant logic of exchange (cue SD logic music now.... Vargo & Lusch 2004, 2008). They are still thinking that revenue (and therefore service) is created at the point of exchange- which is why Barclays, and so many products are doing all these customization, that could result in too many 'choices' problem. <br /><br />Why is this untenable? because the business model is now becoming too challenging to maintain.<br /><br />Quite simple really. The value created by retail banking is not at the point of exchange. It's at the point of use in context. My magic wallet creates value with me at the time I need to access, look at, use my money. Making me choose the options for my magic wallet (retail banking solution) before I use it is just passing risks over to me, and in my opinion poor service. <br /><br />At the keynote I mentioned that for all the choices that we have in the world for tea, coffee and cereal, the reality is that when you wake up in the morning, you only have the choice of what you bought. Retail banking is similar.<br /><br />Because use contexts are complex, high variety and low visibility to the bank, they still prefer the exchange model which means the consumer has to make decisions BEFORE they use. They think the customer KNOWS what they want at choice but actually, they don't and even if they think they do, contingencies arise but these institutions are not thinking of new ways to serve use contexts, they are passing the risk on to customers at the point of exchange through choice-giving.<br /><br />And they think that's good service.<br /><br />What it is, truly, and why too many choices are stifling customers is because they try to use exchange to emulate possible use contexts. Customers are stifled because, in part, they cannot possibly envisage all contingencies of contexts.<br /><br />All this is going to change with digitisation because it means that banking (and other offerings) could actually build contingent revenue models, better context pricing models ie collapsing exchange and use into the same time and space, with new platforms of both exchange and use, better aligning customer outcomes (and needs) to the exchange. And guess what, there is actually more money to be made when exchange and use collapse into the same space (check the music industry example at the <a target="_blank" href="http://bit.ly/NeTGRk">keynote</a>). Now that is truly a retail banking service to look forward to. The only question is - which bank will lead. Be careful, competition dynamics in contexts are very different with different players coming into the scene. Bedside clocks are fast becoming a thing of the past, replaced by your phone.<br /><br />I do some work with media and content context pricing - media as an industry is digitising faster than banking because they are less monolithic and entrenched and content is fast changing with user generation etc. so the product itself is evolving because of its ability to serve use contexts. At an abstract level, you can see industries changing from seeing how media and content is changing but I don't want to include more spoilers for the <a target="_blank" href="http://valueandmarkets.com">book</a> coming up so I should stop here. Do also stay in touch with the research in this area at our RCUK funded <a target="_blank" href="http://nemode.net">New Economic Models in the Digital Economy (NEMODE)</a> <br /><br /><br />Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com10tag:blogger.com,1999:blog-5399349933849902936.post-54527226966818109202012-05-16T10:03:00.004-07:002012-06-12T14:26:26.110-07:00The Future of Manufacturing and the rise of value constellations<h2>
<span style="font-family: Times, 'Times New Roman', serif; font-size: small; font-weight: normal;">I've had to tell this story so many times now that I think I had better blog it.</span></h2>
The start of the story is from the article<br />
"Siemens beats Bombardier to Thameslink train order": <a href="http://www.bbc.co.uk/news/business-13792510">http://www.bbc.co.uk/news/business-13792510</a><br />
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To begin, here are some caveats. I do not know the people in Siemens or Bombardier who have been involved in this. Neither do I know anyone in government involved in this. I do know of a friend who is working in Bombardier (not directly related to this) and we had a conversation on it which led me to this blogpost.<br />
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I am analysing this based on what I think is a good illustration of the future of manufacturing.<br />
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So here's what I think.<br />
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We are used to wealth coming from a world of making things because we have always thought of value as exchange. I make something and then give it to you and you give me money (for more on this, check out my paper on <a href="http://wrap.warwick.ac.uk/41761/" target="_blank">integrative framework on value</a>). But that world is rapidly changing as more information is being digitised and things are being connected. Exchange is increasingly less the source of wealth creation and commerce. Outcomes (some would call it solutions but I hesitate - see <a href="http://value-basedservicesystem.blogspot.co.uk/2012/01/outcome-based-contracts-are-not-same-as.html" target="_blank">my blogpost on the difference between solutions and outcomes</a>) are now being prized and as technology enabled connectivity become ubiquitous, customers are becoming more demanding. This has a massive impact on manufacturing. The manufacturing industry has always worked on a basis of exchange and ownership. The mindset and the business model is that of selling and delivering things, not the use of it. If you ask manufacturers, they still think of anything after the sale of a product as 'value-added' or something (usually a service) wrapped around the thing they make. They still don't think of fundamentally changing how things are made so that outcomes are better achieved. They have not understood that the new frontier of manufacturing is outcome, and not exchange.<br />
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How does the article above illustrates this? Well, bombardier makes trains and in the traditional way, train manufacturers make trains and give it over to the customer for them to use and operate, perhaps adding some services before, during and after the train has been manufactured as 'added value'.<br />
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But the truth of it is that trains enable an <i>outcome</i> of people getting from point A to point B. Think about the <i>use of the train</i>. By the time you get on a train, the problem is usually solved right? The real problem usually is <i>getting on</i> the train. So, what you really want to know is which train you should get on, how many seats are available on which carriage and where you can put your bicycle/pram and if you miss this train, which one can you get after and can you connect further south/north/east/west? So .... the train value proposition for exchange and the train value proposition for outcome, is quite different. In fact, I would argue that this actually could warrant a redesign of your train. In fact, you might want to think about how your train value proposition could be digitised/dematerialised to create resources for people <i>away</i> from the train so that they can get <i>on</i> to the train. This is where you need to get creative because new materials for manufacturing trains and new ways of configuring and digitizing the train offering could come up with new ways to enable people to use trains. As a start, there are aspects of the train such as number of seats available, luggage spaces etc. where you could put in sensors to communicate information. It also means that the entire train design may need to be remodularised so that the design could be more efficient to convey various information about the train. And this information could result in very different types of payment and economic models as well.<br />
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So this is where I think Bombardier didn't get it. Siemens, on the other hand, is much more clued into the information systems and connectivity agenda which I believe they have leveraged for the Thameslink bid. As an example, I've just done a simple screen dump of siemens rail and bombardier rail websites.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjB-csDsAXpbegPUiD1eHoMgq40AQG8nq3ACtuJt30kUGOzF0FRKYkTGW0VaXmrrsYRwoHIJqcZyVIjPepK2MbIVDX6j-jJEXbUz7HWEVLxEfwdnRUQSdPFWgJsU6UMUHyyYA_w8q9p_n0/s1600/bombardier.tiff" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="207" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjB-csDsAXpbegPUiD1eHoMgq40AQG8nq3ACtuJt30kUGOzF0FRKYkTGW0VaXmrrsYRwoHIJqcZyVIjPepK2MbIVDX6j-jJEXbUz7HWEVLxEfwdnRUQSdPFWgJsU6UMUHyyYA_w8q9p_n0/s320/bombardier.tiff" width="320" /></a></div>
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-eWIpqPziqPyIsgmeOcWE5SGj74JfBn4vhYbeuS4WRenXP8UZejVqjjJPly31iVV_6uH9rIVmG9wSc9ZiEq6DP96-ztAJy7jtA0LJkqYhlYPInzB6btqxZnGzj7sJj2PNNYXhfQ8hD6I/s1600/siemens.tiff" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="160" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEj-eWIpqPziqPyIsgmeOcWE5SGj74JfBn4vhYbeuS4WRenXP8UZejVqjjJPly31iVV_6uH9rIVmG9wSc9ZiEq6DP96-ztAJy7jtA0LJkqYhlYPInzB6btqxZnGzj7sJj2PNNYXhfQ8hD6I/s320/siemens.tiff" width="320" /></a></div>
It's not hard to see the difference. Siemens title of webpage is Rail solutions. Bombardier's is Rail vehicles, although they do use the word 'solutions'.<br />
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Siemens:<br />
<span style="color: #666666;">Siemens combines innovation with responsibility to deliver technologically advanced solutions ensuring journeys are punctual, comfortable and safe</span><br />
<span style="color: #666666; font-family: Arial, Geneva, Helvetica, sans-serif;"><span style="font-size: 14px; line-height: 18px;"><br /></span></span><br />
Bombardier:<br />
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<span style="color: #666666;">Bombardier Transportation offers one of the most comprehensive rail vehicle portfolios in the world.</span><br />
<span style="color: #666666;">From mainline to metro, light rail to locomotives, our strategy is one of continuous development that provides the most effective and cost-efficient rail solutions today and in the future</span><br />
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You can form your own conclusions. Remember this is just an illustration and shouldn't be seen to mean more than that but I think it does say something.<br />
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I don't think Siemens fully understand designing and manufacturing for outcomes either because, from their description, I don't think they have yet understood the role of <a href="http://value-basedservicesystem.blogspot.co.uk/2010/01/value-co-creation.html" target="_blank">value co-creation</a> and co-capability, but they are probably a few steps ahead of Bombardier.<br />
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Manufacturing is changing - <a href="http://www.economist.com/node/21552901" target="_blank">the Economist had a special report dedicated to it</a>. It doesn't quite go far enough, but you can see that slowly but surely, legacy boundaries between industries are starting to crumble.<br />
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The future of manufacturing is embedded in the role of the material, social and technological in collaborating and resource integrating value constellations (i.e. value creating service systems). Some things may be half manufactured (remodularised), and finished locally or by your customers because they know their outcome use varieties better (3D printing to finish scalable material platforms?). Some things can continue to be updated technologically and digitally (like the iPad and the operating system) for the material to adapt to other contexts of use. There will be new interactions between new types of materials, the digital realm and the social use of the object the way it has never been thought of before. New economic and payment models will follow as micro payments and contextual and outcome-type revenue models begins to pervade markets because it becomes technologically possible to track and measure use outcomes. We will see convergence between industries but for us to scale, grow and be economically more progressive, we need to know why and we need to know how to do it again and again. We need lots of new knowledge, tools, frameworks and methodologies for this new world. If you haven't been thinking about going back to research, start thinking now.<br />
<br />Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com5tag:blogger.com,1999:blog-5399349933849902936.post-48563294240632092472012-01-05T14:29:00.001-08:002012-02-21T11:06:22.762-08:00Outcome-based Contracts are NOT the same as solutioningI've been told many times that outcome based contracts, such as flying hours, power by the hour, availability etc. are actually solutions-based contracts. (more on outcome based contracts <a href="http://value-basedservicesystem.blogspot.com/2010/03/outcomes-competitive-advantage-and.html" target="_blank">at my previous blogpost here</a>)<br />
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It's not.... so I thought l'll blog about the difference. Much of these insights come from my research in OBC so if you want the papers, check out my <a href="http://warwick.academia.edu/IreneNg" target="_blank">academic site</a><br />
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1. <i><b>Diferent capability. </b></i>Ability to achieve outcomes on Outcome based contracts means a capability to co-create, partner, collaborate and work together with your customer (see <a href="http://value-basedservicesystem.blogspot.com/2010/01/value-co-creation.html" target="_blank">blogpost on value co-creation</a>). That means you recognise that you need to keep your customers engaged and working with you and you develop your capability to do that. Solutions imply a passive customer. When you deliver 'a solution' it implies you do everything, and everything is under your control and the customer stays as a passive 'consumer'. Companies that don't really know how to collaborate, co-create and partner often prefer solutioning. Why? Because they want everything under their control. Co-creating and partnering is hard because they lose control. The ability to achieve outcomes on OBC is therefore a different capability from solutions. It's a capability of managing <i>customer autonomy </i>and <i>complexity</i>.
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2. <b><i>Different system</i></b>. The system of solutioning is complicated. The system of achieving outcomes is complex. Complicated systems often means there is a central 'command and control' to achieve a solution. Complex means parties are autonomous and collaborating to achieve an outcome (see blog post on <a href="http://value-basedservicesystem.blogspot.com/2011/08/complicated-vs-complex-outcomes.html">complicated vs complex</a>). Complicated systems are based on reductionistic engineering science. Complex systems are based on holistic and systems science. Two completely different ways of understanding, viewing and analysing the system. Complicated systems are usually closed systems where anything outside comes into the system through designed and pre-specified conduits for inputs and outputs and predetermined 'touchpoints'. Complex systems are usually open systems where, because of autonomy, allows for a freer flow of people and information. I must stress that there are often closed complicated-type systems within complex systems so the distinction is a logical one, rather than a physical difference. We have inherited a world where often managers use reductionistic science to carve out the 'problem space' and solve it in isolation which can create more complexity from unintended consequences elsewhere in the system so its hard to tell the line between complicated and complex (there usually isn't one).<br />
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3. <b><i>Paradox of solutioning</i></b> is that the more you provide 'solutions' and relegate your customer to a passive role, the harder it is for you to please your customer. The logic is that an engaged customer is a happy customer because you respect their autonomy and yet able to manage the cooperation. Wanting your customer to be passive is like wanting your child to be passive and you provide everything for a child. it usually doesn't make for happy children.<br />
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4. <b><i>Sometimes more expensive</i></b>. Solutioning is sometimes more expensive than OBC. Why? Because to provide the 'solution' a provider need to price resources where ideally, some of these resources should not be provided by the provider but by the customer, because the customer, at the use end, has more updated information. For example, say you provide a security service for a house. If your customer wants 'incident-free' as an outcome, it goes beyond just patrolling the grounds or cctvs. It is also knowing when there may be a particular event in the house (e.g. a celebrity visit) where the event could attract security incidents. Your customer knows it but you may not. Not knowing it may make it costly for you as you need to overprovide or be overly cautious. If the customer is also responsible for the risk, the total cost of the outcome may come down. Of course, OBC could also be more expensive sometimes because of cost of cooperation/engagement. Hey, its a capability right? It's not meant to be easy.<br />
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5. <b><i>Complex outcomes vs functional complicated outcomes</i></b>. Some outcomes are impossible to be 'solutioned'. For example, if you may be able to provide the 'solution' of constructing a 'village' (build houses, townhall, parks, roads etc.), but you can never <i>provide</i> a 'community'. that can only be co-created. Similarly, many emergent properties of systems e.g. family, experience are co-created and not 'solutioned'. So if you are outsourcing a service of your firm be <i>very careful</i> what outcome you are outsourcing. I see firms specifying functions to be outsourced and then becoming very unhappy because they got the outcomes wrong. Its easily to think the world is about functions. Often the outcomes we want are complex outcomes and not complicated functional outcomes. Specifying only the complicated functional outcomes for outsourcing is the most common problem I encounter because it underestimates the full outcome of the 'outsourced' element and reduces it to only a function when that element was achieving more complex outcomes before it was outsourced (and when it was part of an internal division).<br />
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6. <b><i>Variety.</i></b> Solutions and reductionistic engineering science in systems are really useful when there isn't much variety in the system i.e. in the context of customer 'use' of your service, there aren't many anomalies e.g. the experience of a flight. In such cases, a fully systematic system could be put in place where almost every contingency have been covered. When you have a customer in an enclosed cabin, there isn't really much else s/he needs except sleep, eat, drink, entertain (which is why I always think they dont want to give us internet access). In systems where customer 'use' of a service could have high variety e.g. a resort hotel, trying to 'command and control' the experience could end up with the customer disengaged. Be careful how you try to limit variety because not only do you end up not co-creating value, you engineer a disengaged customer. 'Variety' is double edged. It means more work for you but also an opportunity to create a better experience.<br />
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So in short, outcome-based systems are not 'solutioning' systems!<br />
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-- Posted from my iPhoneAnonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com5tag:blogger.com,1999:blog-5399349933849902936.post-65693109584661551702012-01-04T03:23:00.000-08:002012-01-04T11:35:39.024-08:00New Year gripes on Top TennersAlright, alright since everyone is in that kind of a mood where new year predictions, and top tenners abound, I thought I'll blog mine. Here are my top six gripes about the top ten things that most top ten lists are talking about in 2012<br />
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1. <i>Big data will just be fad of visualisations</i>. Until analytics sort out HOW macro level visualisations can actually make individuals do things differently (micro level interactions), it will fizz out. The key is EMPOWERMENT and big data gives us visibility, but not empowerment i.e. it does not tell us how the individual entities can CHANGE the phenomenon, or how the phenomenon could be <i>co-created</i>, rather than merely <i>described</i>. Don't for a minute assume that the system is the aggregate of the one; when you decompose a system, you get the fallacy of decomposition i.e. what is good for the one, may not be good for all, and what might be overall 'good' for a system could be a false optimal because it may create perverse incentives and adverse selection at a micro-level. This micro-macro aggregation and decomposition issue has been around for as long as economics and systems theory and it is the reason why there is no real link between macro economics and micro economics (did you really think that macro economics derived from micro economics? stylized facts do not a theory make...ok ok I'm being harsh). I just worry that big data empowers the wrong sets of people - people who use it to manipulate, command, control and direct without any wish to empower, co-create and engage. Be careful the firm that talks co-creation but uses big data.....<br />
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2. <i>Social networks grow older, more serious, less fun</i>. Maybe you haven't noticed it but I have. Young people are starting to move out of facebook, twitter, google+. its become an 'old persons' thing now. My girls say 'Facebook is what your parents use'. Corporates, advertisements, privacy issues have taken all the joy out of social networking for the young. To the young crowd, gaffs, faulty privacy settings, faux pas - they are all part of the entertainment of social networks. Now its all 'check your privacy', 'make no mistakes', 'don't click on this', 'predators out there', 'whom to add' 'whom not to add' 'watch for spam' 'mark zuckerberg cannot be trusted with your data' - <i>adults</i> (and I mean adults in the logical sense and not the age sense) have a wonderful way of killing everything that is enjoyable (and risky of course) to the young (and young at heart like me ;p). I'm not saying we should let our children be stalked by pedophiles or give our data to zuckerberg. I'm just saying that our cautious attitudes are killing social enjoyment on line and many are leaving in droves. 'Corporatisation' is also making social networks an adult platform now, so this is all becoming all too serious. implications? well, we know the young are the derring-dos, the ones that try new and different things. They throw cows, act audaciously, say too much, show too much but resulting in more interesting interactions - adults are just. so. boring. and. careful. My pet theory is that for young people, the more they have on their network, the more they interact; for the adults, the more people on their network, the more scared they are about revealing too much about themselves so interactions reduce, which of course does not do well for the health and life of the network and I think its starting to happen already. so I predict a slowdown of ideas and innovation on such platforms. bring back the brave, the young and the risk-takers - we need you for the excitement! if not - every social network will become a linkedin. imagine how boring <i>that </i>is. I feel like throwing a cow at someone right now but that would be too old. the young have moved to 9gag and beyond. sigh.<br />
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3. <i>More firms will fail</i>. Not really a prediction, because with the 'lack of growth' and 'economic stagnation' (see gripe no. 5), one would expect it but its <i>why </i>they fail that I think is interesting. My prediction is that more firms fail because of more firms coming into the market and squeezing the old firms out of new opportunities. The firms that fail are those that think that the world is still the same, and they underestimate how quickly they need to be more agile and entrepreneurial, or how fast they have to seize opportunities. Have you noticed how many people talk about 'change' and 'innovation'? That suggests a systemic problem. 'have you also noticed how many firms start initiatives and committees on change and innovation? that suggests what they think is the solution. Folks, change and innovation is not the same as productivity and efficiency. the usual way of 'managing' it is usually the first step towards killing it. of course i am not suggesting we dont 'manage' it. i am only suggesting that we take too many of our old tools and hope that all the problems are still nails and screws. But the market is a marvellous thing. New firms, new entrepreneurs will carve the way and they may even collaborate with more forward looking old companies. I like to ask companies 'so how are you not changing today?' or perhaps 'how are you impeding innovation today'. 2012 will (I hope!) see the battle against traditional 'management' and more 'intervention', 'self organisation' and intrapreneurship.<br />
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4. <i>More intrapreneurs, less managers</i>. I read this morning an article on a top business school crowing about where their ranking is on the worldwide MBA school list and I'm thinking, do I really want to shout about that? When so many firms, with managers educated by the world's business schools are not really performing well? Are they even in touch with what's happening around the world? I know the reply to this. Schools will say they teach specialist subjects such as strategy, marketing, OB, finance and its up to the managers to practice what has been taught, rightly or wrongly but I can't help feel, as a systems person, that there is something wrong when we teach business in piecemeal terms without giving an understanding of how its is holistically practiced. I mean, the medical profession also teaches in piecemeal terms (neurology, etc.) but they extol a healthy clinical education, a holistic education as <i>part</i> of the specialist knowledge and not separate from it. I think there is something wrong with business school education but that's an old refrain from me so I'll stop. I think 2012 will herald more intrapreneurs - I mean, why is it that CEOs get the big press? I would like to see 'Tom Jones - a normal working Joe - wins intrapreneur of the year working for 'tradfirm' - Tom Jones is credited for asking for a budget to buy out his whole team to spend 6 months as a 'subsidiary-within-a-firm' offshoot to improve the way the company's products are being delivered and used by their customers, improvements to service and bottom line more than paid for the budget...bla bla.... one can only hope. sigh.<br />
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5. <i> Lower 'growth' in economies, but why does it not matter so much</i>? I get irritated when bean counters equate 'consumer spending' with the 'health of the economy'. At a micro level, I used to spend £15 to do one thing now i can spend £15 on broadband and do 20 things so...... how are we calculating productivity again? oh, wait is it still a input-output firm production measure? of course it is - oh well, if we don't measure consumer 'productivity', I guess we'll never know. We are now getting much more for our money because value is increasingly distributed in systems, shared intelligence, information and knowledge is gaining currency on its own and we can actually <i>buy</i> less and <i>spend</i> less.... someone please work out a better metric. I really dont want to be told that revival of economies will depend on how much I spend. I would like to see more jobs out there but this whole produce-spend-produce leading to jobs is just becoming nonsense in a distributed, interconnected and co-created world of multiple 'currencies'. Here's an example. Lets say I work and earn £1000 a month. For my quality of life, I spend £800 a month with £200 savings. I now find, with this new wonderfully connected world, I can get the same quality of life with £600 a month with £400 savings but actually, I dont really want to work so many hours so I now work less, earn £900 a month, still have £300 savings and an even better quality of life. Measure that. That link between GDP (total of how much an economy produces and sells) and Consumer spending (how much we spend)? its called MY LIFE, or as Christensen likes to call it, my jobs to be done! and i could do it more efficiently and with less money!<br />
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6. <i>Work and play gets even more blurred on social media</i>. Google+ is so going to take advantage of this. It cant compete with facebook. or linkedin. or twitter so its going to start hugging corporates i'm sure. big firms are needing social media so much to improve connections and relationships within the firm and to incentivise innovation, change and intrapreneurship so i think we'll start seeing SAP circle, IBM circle and then it would mesh with personal circles. Then i want to work 2 days a week so i have a few other circles, and we talk about wine, work, children, and song. this is going to be fun. and boring. but still fun. and sooooo uncomfortable for many traditionalists. roll on.<br />
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sorry for the long post. its the new year and i ate too much so there is some spare energy to burn.Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com0tag:blogger.com,1999:blog-5399349933849902936.post-29689796077283865102011-12-20T14:16:00.000-08:002011-12-20T16:04:44.768-08:00social CRM: some thoughtsSo there's been some buzz for awhile about social CRM. I must admit not to have read everything. Just bits and bobs over time but Michael Brito's blogpost about thought leadership in Social CRM (<a href="http://www.britopian.com/2011/12/11/new-thought-leadership-is-needed-for-social-crm/">here</a>) caught my attention. It made me aware that I have been doing so many seminars and talks on my research that I've forgotten the stuff I used to be teaching i.e. Marketing and how I've not really integrated the latest of my work with the bog standard stuff that used to be out there. I recently did one about the 4Ps (<a href="http://value-basedservicesystem.blogspot.com/2011/12/4ps-in-marketing.html">here</a>), but thought maybe I should now tackle social CRM, and blog some of my thoughts about this changing landscape.<br />
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So CRM is some kind of systematic way of interacting with the customer but social CRM is more than that - its about engaging the customer in 'conversations' supported by a technology platform e.g. through facebook, twitter etc.<br />
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So here's what I'm thinking. First, your customer really hasn't changed much. If he has been using your product all these years, he probably is still doing the same thing. Except that suddenly, with twitter, facebook etc. your customer now has a voice. And you can hear them. And just because you can hear them, you suddenly decide its a good idea to have a conversation with them.<br />
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The real meaning of conversation, is what Milton Wright would say "an art or creation that two persons can give life to, or play with". In other words, conversations are usually interesting. Herein lies the problem with Social CRM. It's not. I mean, how can a conversation be interesting when the point of it is (as some sites have proposed) 'to assist firms to become more social, gain intelligence or harness customers as a resource'? That sounds really like having a conversation at a bar with an egoistical self centred self serving 'friend' you just met whose interest in you is all about how you can help him. ugh.<br />
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OKOK, not all social CRM are like that but if you trawl through the internet and ask about the examples of excellent social CRM, they generally fall into 5 categories. Here are the first 4: (1) feedback (2) damage control (3) promotion (4) brand identity. But guess what. It means that social CRM is just another marketing channel because those 4 are exactly a channel where firms connect and communicate with their customers - about the FIRMS, not about their customers. Nothing new there - certainly nothing new that SOCIAL CRM is contributing to thats not already available in OTHER CRM strategies. It's the usual firm-centric engagement.</div>
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What is really interesting would be the 5th example of excellent social CRM. That is around <i>personalisation</i>. This is where I think social CRM can really make a difference both to firms and to customers that is distinct from traditional CRM and marketing.<br />
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The idea of personalisation is that the firm can get personal with their customers, and start to socialise with them, building relationships. So let me tell you about how I am social. It's to do with my friends, my activities, my interests, my life. You want to get social with me? you've got to GET me. No, its not about pulling the conversation to what you want to talk about. its about what <b><i>I</i></b> want to talk about as well. its about my value creating context around your product, not yours. What do i mean? Well, let's say the department of motor vehicles wants to get social with me (why, I have no idea). Now, to the department, my car is 'transportation', which is around their categories of transportation i.e. bus, car, rail, planes. that's the government's value context. My car? my car is not in the 'transportation' value context. My car is in 'go work-go supermarket-fetch child' context. So if you want to get social with me about my car, you'll have to get social with me about what my car enables me as a resource in my micro context. So I think the biggest problem with firms when they want to embark on Social CRM is that the content around my context for social conversations may not be their content......mm... you can't blame organisations. they've just been brought up badly. ;p<br />
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There is a second aspect of social CRM that has also intrigued me about personalisation.<br />
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The firm is a macro system. I am a micro system. So conversations between me and 'the firm' is a bit odd. Its like me having a conversation with a crowd and expecting the crowd to have a single voice i.e. that person interacting with me. i mean, how does that work? I suppose that could work functionally like if I wanted to ask Mcdonalds how many countries they are in, or if I want to know the ingredients in my shampoo, I can tweet and ask and the 'disembodied voice' that tweets back is just responding to a query. But personalisation in social CRM is about conversations - that means its more than functional. It has social and emotional dimensions. I was at my garden centre recently and checked in on foursquare and said that I was having tea and scones. I got a tweet back from the garden centre to say 'mm... i would love scones right now and hoped i enjoyed it' or something like that which is rather personal and nice in a way but I didn't know if I was getting personal with my garden centre or with this person whom I don't really know. So how do I negotiate <a href="http://en.wikipedia.org/wiki/Attribution_(psychology)">attribution</a> in these social messages? are they my garden centre talking? or someone whose messages I do not attribute to my garden centre? Interestingly, I tweeted back about the banana scone not being very good and the 'garden centre' replied to say 'thanks for the tip'. clearly, I was NOT talking to my garden centre. So what does 'personalisation' mean in this case?<br />
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My thoughts are that social CRM raises a major issue for the firm. How is the macro-level firm formed from its (micro-level) employees? social conversations are held at a micro level, The paradox of social CRM is that successful micro social conversations may run contrary to the firm's 'so-called' macro culture and identity but if employees talk too much like how mr mcdonalds or mr ikea would speak, i guarantee you it would be a very boring conversation. Social CRM is an excellent an opportunity for firms to evaluate how their culture and identity are formed by their employees and if its their employees talking personally through social channels, it should also be them talking as well. <b>The part is the whole</b>. I get this feeling that a successful social CRM would probably happen when that happens. But I also suspect that command and control organisation types would hate it.<br />
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<br /></div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com1tag:blogger.com,1999:blog-5399349933849902936.post-13025646976186511122011-12-18T01:22:00.001-08:002011-12-18T07:48:03.942-08:00Jobs of the FutureI have just read Stiglitz article in the Vanity Fair:<br /><br /><a target="_blank" href="http://www.vanityfair.com/politics/2012/01/stiglitz-depression-201201">The link to the article is here</a><br /><br />The phrase that I thought I'll blog about is:<br /><br />"We have to transition out of manufacturing and into services that people want—into productive activities that increase living standards, not those that increase risk and inequality." <br /><br />Nicely said, Professor Stiglitz but a little too simplistic. As someone who works in value, new business models and service systems, I would of course agree with you that the future is in services and I am pleased you are highlighting this. However, I suspect that the way you think about services might not the way I think about services and I do take issue with the way you have oversimplified it. Let me elaborate.
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I argue that this 'investing in services' is more complicated you think. You intimate that the solution is to throw a lot of money into investing in skills for services when I don't think anyone can even specify what those skills are. Services behave as 'wholes' and to say that investing in skills for services might as well be saying that we should in invest in skills for the economy - it doesn't mean a thing. There is also the fallacy of composition when you decide to say 'services' because these 'wholes' (service systems) don't behave like reductionistic manufacturing systems. What is good for a part is not necessarily good for a whole (I could stand up in a theatre to get a better view but that won't work if everyone stands up) - jobs where performance is held at an aggregated systemic level and working in the interfaces are a whole lot harder to specify, given that legacy institutional structures have not been designed to work in that manner. And service systems are evolving as well. Future of services include manufacturing, as the future of manufacturing is also embedded in services, so future 'services' are a hybrid of things (manufacturing) and activities (services). What jobs? What skill sets? I am a big fan of simplification, but not to the extent that promotes false hopes and misunderstandings. Your article makes policy makers think there is a simple fix-it, or that manufacturing is somehow different from services. Bad manufacturing IS different from services but excellent manufacturers (such as Apple) would see much more convergence between the two. Therefore, while I commend your emphasis on activities to improve society's well being, suggesting 'investment in services' creates a false dichotomy and allow economists and policy makers to opt out of dealing with complexity, interfaces, boundaries and interactions between manufacturing and services, and endorsing the fundamental flaw of atomistic, reductionistic economic science that got us into this mess to begin with.
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PS on article
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Economics need to move towards complex systems science, a body of theory and science of connections, as opposed to conventional economic theory, which is concerned with static elements and states. Its not much of a point to say that markets will be efficient in the end. The current business and economic environment, with all its upheavals, is in need of a greater understanding of evolution, transition, and its ascent/descent to order, disorder, or chaos. We are in urgent need of a new economic systems science.
<br /><br /><br /><br />-- Posted from my iPhone<br />Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com1tag:blogger.com,1999:blog-5399349933849902936.post-45617358032101530042011-12-04T09:32:00.000-08:002011-12-04T10:23:02.252-08:00The 4Ps in marketing - revisitedI've been hearing a lot about how the 4Ps are dead, and how the 4Ps are alive and well so I thought I'll blog my version of 4Ps and join the debate.<div><br /></div><div>The 4Ps are alive and well. But perhaps not the way we think about it. In a sense, 4Ps have always been rather firm centric - its about the price the FIRM charges, the place the FIRM sells its offerings, the product that the FIRM offers, the promotion that the FIRM has to undertake. So I thought I'll have some fun and turn things on its head..... in a co-creation sense of course. (if you need to understand value co-creation, <a href="http://value-basedservicesystem.blogspot.com/2010/01/value-co-creation.html">check here</a>).</div><div><br /></div><div>1. Price</div><div>Yes, there is still money to be charged, but increasingly, 'price' is no longer a consequence of a sequential activity. Its not what I get for what I pay for anymore. I mean, how do pay for google, or facebook? or how do I really 'pay' for getting the nutritional attributes of food in the supermarket when i scan the barcode and read it off an app? There is money floating around somewhere but increasingly, the revenue is being distributed, just as value creation is distributed within the system. Also, it's not what the 'price' we give firms now, it's what we get back, as SDLogic will always say, we are resource integrators, we integrate resources and money is just another resource. But I actually argue further - that we are getting multiple outcomes for one 'price' - e.g. paying for broadband and a computer and then getting so many different types of outcome from social networking, surfing the net etc. so I would argue that the monetary system is becoming less and less relevant in achieving outcomes through systemic collaboration and distributed intelligence and information. My favourite theory is that money, because it is so generic a resource, is increasingly 'devalued' - so an outcome for outcome exchange (I walk your dog, you cook me a meal) has greater 'goodness' or 'value' than if it went through a market which is why as technology increases efficiency matching needs from connectivity, money may be increasingly irrelevant for societal happiness. Very far fetched, I know, but as a business economist, its currently my pet theory. I'll model it if I just had some time :(</div><div><br /></div><div>2. Promotion</div><div>oo.... let's get a little creative here. Companies still promote - a lot. The ads on google, proximity marketing through foursquare; groupons etc. they are all there - just using a lot of technology. But there is a subtlety that many have not noticed. Instead of taking their products as given and 'promoting' their offerings, companies are starting to change their offerings too.... drug companies realise they are not just about medicine, there is nutrition, well being etc. so they are co-creating value in constellations that are not just about the physical, but about their meanings. From music (bands), to perfumes, firms are dematerialising their 'products' (<a href="http://value-basedservicesystem.blogspot.com/2011/11/dematerialisation-and-density-new.html">see blog post on dematerialisation</a>), co-creating value through identity, culture and families. the new world of promotion is not just about firms influencing customers, but customers influencing firms' offerings' design, and customers influencing customers through social networks and creating systems of shared values.</div><div><br /></div><div>3. Place</div><div>You know where I am going with this from the previous promotion bit. Place is not just physical space of course, but virtual space. and its not about channels of purchase, its about channels of influences, experiences, meanings, symbols, and again, the firm dematerialising the product so that it can be in multiple 'places' in different forms, creating new and interesting business models. this is beyond plurality in channels or buying channels. this is the firm being the true organiser of value co-creation, and understanding what resource or information is needed for different channels.</div><div><br /></div><div>4. Product</div><div>I am starting to sound like a broken record. but to quote previous posts, technology liberates us world from the constraints of time (when things can be done), place (where things can be done), actor (who can do what) and constellation (with whom it can be done). The PRODUCT, in ALL of that, can be better designed to allow when it can be used, where it can be used, who uses it, and with whom it is shared with. Requirements of the future is looking at technologies from quantum information to artificial intelligence, composite materials that are light to nano technology that create multiple forms of use value, we will start making things that connect better, that can be mobilised differently, can be sent differently and can be used across time and space. </div><div><br /></div><div>So that's my quick take on the Marketing 4Ps.</div><div><br /></div><div>And I can't wait for the future. Oh wait. it's here. :D</div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com29tag:blogger.com,1999:blog-5399349933849902936.post-22595621443645551532011-11-28T02:38:00.000-08:002011-11-28T04:42:50.862-08:00Dematerialisation and Density: New Business ModelsSo I spent my last post on things in context which will now lead me to talk about how we create value in context. This is quite a complex post so bear with me.<div><br /></div><div>Value is created through interactions, through acting on someone or something. We integrate resources available to us, available in context and available through the thing. These resources available in context allow us to enact out the value creating practices. These practices could be to realise what the thing is for (e.g. watch TV) or even to manipulate the thing itself and modifying it, not physically, but in terms of altering its function to what it can afford (enable) in context. A simple example would be to put a few books under the overhead projector to get it to project at the appropriate location (functional affordance) so the individual harnesses the book's material agency to achieve his outcomes. Another more complex example is the social and subtle battle between managers to locate the photocopying machine as far away as possible from their offices not because of noise etc. but the lowered social status associated with the office being closest to the photocopying machine (we've all been there before?)... you can read all about sociomateriality from Wanda Orlikowski's work.</div><div><br /></div><div>So back to the point. We can harness the thing and people around us for resources to be integrated to create value but what is the value? In my earlier posts, I talked about emotional, practical and logical dimensions of value but value, to me, is some form of 'goodness'. We co-create value in use because it's good for us and we are better off because of it right? But being good for us may not just be functionally good, it could be some emotional good. So let me give you a very concrete example around a project we are in the middle of. This project can be seen here (<a href="http://gow.epsrc.ac.uk/NGBOViewGrant.aspx?GrantRef=EP/I006885/1">EPSRC Co-production of Physical Products and Value Co-creation - Scalability in the Wild</a>). The topic..... CHOCOLATE .......the BBC coverage of our work is <a href="http://www.bbc.co.uk/news/technology-14030720">here</a>, the Telegraph coverage is <a href="http://www.telegraph.co.uk/technology/news/8620908/3D-chocolate-printer-could-be-future-of-gifts.html">here</a>. Essentially, Exeter engineers have developed a chocolate 3-D printer which allows design and printing of chocolates as gifts. This is great. My job - what's the business model? </div><div><br /></div><div>The answer is tricky because business model has to think about demand (i.e. what is the need fulfilled) as well as supply (how do we scale that fulfilment). The 3D printer isn't very scalable so if suddenly a million people wanted chocolates printed in their own customized way, there is no way that printer can do that. Also, chocolate is a complex product - hedonistic in many ways.</div><div><br /></div><div>So what did we do? Before I tell you that, let me give you description of the thinking behind our chocolate project and explain dematerialization and density.</div><div><br /></div><div>Dematerialization and density are the concepts introduced by Normann (2001) to illustrate the possibilities and opportunities to rethink the logic of value creation through reconfiguring value constellations. Technological development liberates us from constraints of time, place, actor and constellation in terms of value creation. We can separate information in terms of activities from physical world and assets and allow it to be easily moved about. This is one mechanism referred to as ‘liquification’. We can also separate activities from the well-defined existing time/space/actor units and assets (unbundleability) and then relink these activities, new time/space/actor units and assets (rebundleability) to create new value configuration. This is another mechanism of ‘dematerialization’ termed as ‘unbundeability’. Thus, dematerialization refers to the two mechanisms (liquification and unbundleability) to further promote rebundleability to create new densities (Normann, 2001). ‘Density’ is described as the best combination of resources mobilised for a particular context such as a particular customer at a given time and place. (summary above thanks to my postdoc Susan Wakenshaw. Tks Susan!)</div><div><br /></div><div>With that description, here is what we did.</div><div><br /></div><div>We went and conducted a series of interviews about what is so good about chocolate (consumption practices, ethnographical study). We found 10 major practices of chocolate and we also deconstructed the meaning and value of chocolate in these practices. Then we separated out the physical from the information. What does that mean? Out of the 10 practices, only 3 really needed the actual physical chocolate. The other 7 were practices that didn't really require the physical chocolate as a resource e.g. nostalgia, sharing - they required emotional, past memories to co-create some of the meanings but not the actual physical chocolate.</div><div><br /></div><div>What we did next. We then separated the information of the chocolate (the 7) and are now creating a new website as a chocolate co-creation platform for individuals to co-create the meaning of chocolate. In other words, we are translating the physical practices of chocolate into virtual practices of chocolate. However, there are still 3 that need the physical so we have to ensure that the platform that enacts the 7 physical-to-virtual practices (pvp) interact with the 3 physical practices by having the chocolates designed and printed out on 3D and sent/eaten. But the business model has to make sure that the 7 pvps platform can be fully scalable while rationing demand for the 3 physical value practices (not so scalable). Not going to give you the gory details but it's really interesting for me who works in understanding value and using it to derive new business models. It is also interesting as we start moving towards greater connectivity and technology how we need to understand value creating systems and what value is created where, with whom and how, and more generic frameworks around it. We also have to think about recreating contexts, and resources that can be enabled in context by the platform. Fun stuff!</div><div><br /></div><div>By the way, I need a whole community of beta testers so keep in touch on twitter and we'll let you know when it's up!</div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com1tag:blogger.com,1999:blog-5399349933849902936.post-70252936137557129242011-11-21T02:51:00.001-08:002011-11-21T04:16:54.688-08:00<b>Dematerialisation & Density: The Value of Things in context</b><br />
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We hear it all the time and I've certainly said it again and again. Value comes from use, value is in context but why is it we still hear firms talking about value as the money they get for their things, and we still hear how they firms 'add value' as though the things in themselves have value?<br />
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So I really want to blog it to set things right. It's also the first of a series of blogposts around Dematerialisation and Density because it leads up to my current research projects. So let's start.<br />
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THINGS HAVE NO VALUE IN THEMSELVES. repeat after me. ok. then you go back to business and start talking about getting more value from the things, keeping the factories open, keeping the jobs coming in and you have forgotten what you said. so let me join the dots for you.<br />
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THINGS HAVE VALUE BECAUSE YOU IMAGINE IT'S USE. so basically, its not the thing you value, its what you THINK the thing is going to do in your life. that iPad has no value, you are imagining reading a book, checking emails... you are attaching the use of the thing in the context of living your life that is of value.<br />
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so.....WHEN YOU IMAGINE ITS USE, YOU IMAGINE THE CONTEXT. so not only do you think about what the thing is doing in your life, you had an imagined scope of where and how and when the thing is used for (the context). that's why you think the thing is good. you are really thinking thing-in-context is good, which you believe means the same thing (wrong)<br />
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YOU IMAGINE THE CONTEXT IS CONSTANT BECAUSE THE THING IS CONSTANT. yup, so when you buy an iPad, the iPad doesn't change its form, get moody, or become a different iPad at different times so you believe the context of use can stay the same too........so when you buy the iPad, you are thinking about lying in bed, reading. when you're thinking of buying that apple, you are thinking about eating it in the next hour, the toaster and the warm toast etc. etc. etc. so when you're buying something, you're actually evaluating the value of the THING <b><i>thinking</i></b> that it is a THING-IN-CONTEXT<br />
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here's the bad news, firms don't manufacture context. they manufacture things.<br />
and the good news? YOU 'manufacture' the context. and then magically, they come together and it is good. <br />
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that's co-creation for you.<br />
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but CONTEXT changes. context comes with contextual resources for you to be able to use, experience the thing. From simple contextual resources such as light to read, quietness to talk on the phone, to more complex 'emotional states' that lend resources such as mood (to enjoy a glass of wine), or composite combinational resources created by you and your environment, CONTEXT is not a simple concept. And context exist in layers as well - from a micro to a meso to a macro level (see Chandler and Vargo, 2011, Marketing Theory). Also, context is not external to you. YOU are part of the context. So is the thing. So the value creating system is YOU(ACTIVITY)-THING-ENVIRONMENT - that's context. change one, change all. change the 'goodness' created. change the value of the thing.<br />
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so what do firms mean when they talk about 'adding value'? well, ahem, they just <i>assume </i>you will do your part right? just like you thought the thing was constant and you decide to manufacture all sorts of contexts to use the thing, the firm thinks YOU are constant and they decide to make better stuff (we hope). and they call that adding value because they want you to pay more NOT because they are giving you more 'goodness' (how can they do that, when they dont control the context?). what firms DON'T often get is when they change the thing, they often change the context that you need to 'manufacture' as well. example. mobile phones morphing into life-enabling-thing.<br />
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why does this matter? The world of connectivity is starting to enable different contexts, we can now 'see' context better, measure better (you see me talk a lot about context in my research into systems and how we are collecting 'verbs' etc. as measurement of contexts, I have an EPSRC research project on contextual invariances in energy consumption and business model). also, you see the rise of data analytics because the visibility of experience and consumption is giving rise to a new strategic lever for changes in behaviours and society - strategies surrounding CONTEXT. you also see things and contexts interacting at design stages.<br />
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so... for all those who really want to know what is value, how it's created and why people buy at higher or lower prices etc...........IT'S THE CONTEXT S****D.....<br />
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lol, i've always wanted to say that. next blog post (soon i hope).... more on contextual value...I will soon come to dematerialisation but these are a series of blog posts that would lead up to it.<br />
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<br />Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com2tag:blogger.com,1999:blog-5399349933849902936.post-66517352856086395602011-08-15T21:24:00.001-07:002011-09-25T13:53:40.832-07:00Complicated vs Complex OutcomesI've been asked some questions on complex outcomes so I thought I'll blog it. Question: whats the difference between complicated and complex outcomes/systems and what's the difference between performance and outcome-based contracts?<div><br /></div><div>Some of you who are systems-inclined/educated people would know the answer to this. Here are a few examples of <b>complicated outcomes</b>:</div><div><br /></div><div>1. Getting your baggage from London to Sydney</div><div>2. Designing and constructing a village/township</div><div>3. Brain surgery</div><div>4. Putting a man on the moon</div><div><br /></div><div>Here are some examples of <b>complex outcomes</b></div><div><b><br /></b></div><div>1. Giving you a good experience from London to Sydney (customer experience)</div><div>2. Designing and creating a community</div><div>3. Health</div><div>4. Bringing up a child</div><div><br /></div><div>Whats the same? Both complicated and complex outcomes have multiple components and entities. They also have many moving parts that interact. But the <b>key</b> differences between the 2 are (1) no 'mission control' (non-determinism) and (2) emergence</div><div><br /></div><div>Let me elaborate on this. In brain surgery, the doctor is in charge. in putting the man on the moon, Houston is in charge. in getting the village/township up and ready, the town planner/architect is in charge. These are complicated outcomes but there they could be determined with good algorithms, calculations, specifications, implementation - and there is a command and control structure. In complex outcomes, there is <b>no mission control</b>. These outcomes are achieved because they are co-created, collaborative, interactive outcomes that <b>emerged </b>from the system. Yet, very often, these are the outcomes we want - customer experience, communities (think facebook), nationhood, a family.</div><div><br /></div><div>Traditional science and engineering has taught us to reduce everything and then put them together to get the outcomes we want. That's good if we want complicated outcomes. Not so good if you want complex outcomes because in complex outcomes, the entities are autonomous (think of the recalcitrant child, or the villagers), and the outcomes we want require collaboration and co-creation without any explicit control mechanisms. We would like our children to co-create a family, we want the villagers to co-create the community but we dont have rights, controls or powers over their co-creation resources. </div><div><br /></div><div>Moving to the commercial world, that's the essential difference between performance and outcome-based contracts. Performance is complicated. I can get the performance of a supply chain of an aircraft by putting together people (who follow processes), processes, assets, etc. and I can determine that performance by ensuring everything works smoothly so that the plane is available and 'fly-able'. However, I can't get the <b>outcome</b> - flight from london to singapore without the help of the pilot, the engine, the avionics - usually provided by different firms or even the passengers (who may be late); so the <b>availability or 'fly-ability' </b>of the plane is a <b>complicated</b> (performance) but the flight from london to singapore by a plane is <b>complex</b> (outcome).</div><div><br /></div><div>Does that mean we cannot design for complex outcomes?</div><div><br /></div><div>Ah, now we go into my world. This is the world I inhabit. Value creating Socio-technical systems for complicated performance and complex outcomes. There is interaction between the two of course and often you can't really tell between what is complicated and what is complex. Achieving complex outcomes may sometimes lead to achieving good complicated performance. And sometimes not. Sometimes achieving good complex outcomes could result in greater complication in 'output' performance or even reduced 'output' performance - think NHS whose targets are hugely 'performance' and not outcomes (don't get me started on metrics.... sigh). What this means is that <b>sometimes</b> complicated performances are aligned with complex outcomes. Sometimes they are not because complicated performances could result in perverse behaviours leading to poor complex outcomes. Example? Easy. Imagine measuring a doctor's performance based on how many people he treats. Worse metric in the world (but many healthcare people already know that). It incentivises the doctor to 'treat' and count the numbers treated rather than maintain good health and well being in the community (which of course reduces the number of people being treated). you get my meaning.</div><div><br /></div><div>So the first thing to do with any system is to check what is complicated and what is complex. What is the <b>value</b> or <b>outcome</b> each actor/entity wish to get from the system, how do they co-create it and how is each actor/entity's co-creation aligned to the system outcomes. Is the system outcome complicated (deterministic) or complex (emergent)? how are the complicated performances aligned with the complex outcomes? How do they interact? What are the resources to co-create the complex? or complicated? are they human or material (stuff)? who are the 'actors' or 'entities' that integrate these resources that co-create that outcome? That is the heart of where my current work sits. And why SDLogic (Vargo & Lusch 2004, 2008) is a useful lens for such environments. Some of my current research into contexting, enabling platforms have actually made some advances so watch this space.</div><div><br /></div><div>Oh, dont forget the very human tendency when we talk about outcome to only like to talk about the 'outcomes' we can control. It took me ages in a national library project to get them understand that their true outcome is their contribution and alignment towards achieving the nation's literacy (which they don't control). they preferred to talk about their outcomes as book browsing, lending etc (which they do control).</div><div><br /></div><div>Increasingly, we see governments, firms, institutions trying their best to 'engineer' or 'specify' so that complex outcomes could be achieved. to them, i say - 'which part of emergence did you not get?' We have spent the last 100 years doing complicated rather well. We can pat our backs on putting the man on the moon, doing brain surgeries etc. We are now moving to a world where complex outcomes matter and this is a new capability. This capability uses different words. We can <b>determine</b> complicated outcomes. We can only <b>enable</b> complex outcomes. We can <b>specify</b> complicated systems. We can only <b>intervene</b> in complex systems. Often, the best way to think about whether a system is complex or complicated is to ask - 'what is the outcome'; 'is it achievable through a command and control structure' and if the latter is no, then it's usually complex.</div><div><br /></div><div>What has happened in the last 50 years is that we've been trying to use deterministic tools to achieve emergent outcomes, essentially because those are the only tools we have learnt (systems thinkers are still a minority unfortunately). We treat complex systems like complicated systems. we try to design, specify, impose, dictate when we should be designing, enabling, intervening, stablising. The former is a different skill set and have a different set of tools from the latter. And before you think that we can treat all the world as complex, we need to factor in the fact that we have built 100 years of complicated legacy systems, often with some measure of success. The politics and boundaries of complicated legacy systems sitting within complex system/outcomes cannot be ignored. We do not have a clean slate to design systems for complex outcomes. </div><div><br /></div><div>Yet, if we want communities (think about the London riots and how important the sense of community and engagement is as an outcome), nations, experiences, families, we have to be much much better at achieving complex outcomes, both in its understanding (research) and in its implementation (practice). Where do we start? Fund my research. ;p</div><div><br /></div><div><div><br /></div></div>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com31tag:blogger.com,1999:blog-5399349933849902936.post-27985315161568552532011-07-06T13:59:00.000-07:002011-07-07T02:46:29.933-07:00The 5 Myths of ServitizationIt's been some time since I've blogged so I thought I'd better start before I get rusty.<br /><br />Topic of the day. Servitization. I hate the term but for the life of me, I can't find anything else so I'm going to use it. Basically, this term comes from equipment manufacturing (economists would refer to this as production of durable goods) and the move towards more 'added-value services' (another term I detest) to achieve customer outcomes better. So .... the literature says that firms add value by selling consultancy, integration, education, blah de blah... so this is the phenomenon called 'servitization'. In fact, some firms are earning more revenues from selling such 'services' than they are selling the equipment itself so this means more revenue. Some studies have shown that servitizing is difficult and while revenues may be high, profitability is low and some studies have shown that servitizing is so difficult that many have failed. I thought I'll pen down some of my thoughts on this.<br /><br />Myth no. 1<br /><br /><span style="font-weight: bold;">Servitization is an extension of your company's offering so who better to do it than the original manufacturer</span> right? wrong. that's like saying i can't reach the pears at the top of the tree so I should grow my arm longer. Buy a pole, dummy. Achieving customer outcomes cannot be more different an organisational capability than the organisational capability to make equipment. The <span style="font-style: italic;">value</span> of the former is achieving benefits for the customer through co-creation. The <span style="font-style: italic;">value </span>of the latter is the transfer of equipment ownership. two. completely. different. value. and which would require different sets of resources, capabilities, flexibilities, you-name-ities. So the pole maker could possibly have a better chance of achieving outcomes (getting the pears) than you because your own set of resources (arms) would limit you. ok, maybe not the best analogy in the world but you get it right?<br /><br />Myth no. 2<br /><br /><span style="font-weight: bold;">Servitization is about solutioning</span>. Remember that your customer has been doing this job long before you tried to do it for them. They've realised your value proposition (equipment) through internal processes, internal education, usage policies etc. Except that nowadays you try to take over some bits of what they have done, call it a solution and sell it back to them. It could work. Strategic outsourcing has earned IBM billions so don't knock it but just make sure you can do it better and cheaper and don't moan about how hard it is. The part that some firms have become smarter at is understanding that it's <span style="font-style: italic;">not</span> solutioning but co-creating because customers often have resources that are more appropriate than yours and collaboration for outcomes could work better (more profitably) than you taking over their job.<br /><br />Myth no. 3<br /><br /><span style="font-weight: bold;">Service revenues and equipment revenues are different. </span>There is a popular belief that firms should focus on service revenues and less on equipment orderbooks. Actually, equipment have become so d**n complicated that you need a rocket scientist on the customer end just to realise its use-value. To 'help' customers, firms selling complex equipment must therefore provide service. Therein lies one of the greatest moral hazards of the technology surge. Firms can make equipment that are impossible to use (in the name of great technology) then sell all the 'solutions' to ensure the customer can only get the full benefits <span style="font-style: italic;">if </span>they help them. brilliant strategy. Of course, this is not all bad. After all, we have achieved some huge breakthroughs in technology. What it does mean, though, is that service and equipment revenues and resources dynamically interact - the specification of one necessitates the respecification of the other. For equipment customers, the next time an equipment salesman comes calling, check <span style="font-style: italic;">your </span>resources to <span style="font-style: italic;">realise</span> the equipment's use and before you are completely sold on equipment advances, calculate the cost of realising that use value internally. That's the hidden cost. Working with defence, I am reminded of the story told to me that 20 years ago, anyone can drive a tank. Today, you need an engineering degree (and we wonder why our defence budget keeps going up and up?).<br /><br /><br />Myth no. 4<br /><br /><span style="font-weight: bold;">Servitization is 'wrapping services around the equipment'</span>. We've written on this actually (see Maull, Smith and Ng, 2011; Ng and Briscoe 2011). What we found is that when you wish to co-create value to achieve customer benefits/outcomes better, you cannot believe that your equipment is a sacred cow. I mean seriously - remember the value of the equipment is a <span style="font-style: italic;">transfer of ownership</span> and the value of the combined service and equipment is <span style="font-style: italic;">achieving outcomes</span>. Now if you want to achieve outcomes, sometimes, the way you have designed the equipment actually gets in the way. I'll give you an example. Say you are manufacturing an engine. You manufacture it in such a way that you can hand it over to the customer who will install it on their plane. You then provide service and support for the maintenance of the engine. Simple right? Then you find that the engine requires more maintenance and repair than normal and the costs of service goes up. It turns out that certain monitoring devices within the engine (e.g. device to monitor the health of engine component parts) are not coping very well with the heat within the engine. In fact, if what you really want is an outcome of consistent and reliable engine use, you would redesign the engine such that these devices are on the plane and not in the engine but the plane doesn't belong to you. So the design of an engine for transfer ownership is not the same design of an engine to achieve outcomes. So its not so straight forward that you can 'wrap' service around equipment. What you 'wrap' is dependent on the equipment itself. You could have much more cost effective service if you designed the equipment for outcomes (see Myth no. 5 below).<br /><br />Myth no. 5<br /><br /><span style="font-weight: bold;">Servitization is not profitable because it requires more human resources and capability and that is just not scalable or easily replicable. </span>Here, too, our research has given some insights and this is related to myth no. 4. Remember the example I gave about the engine? What it means that maybe (and this is just a maybe) that the reason why your service is not very profitable or scalable or replicable is because you designed the <span style="font-style: italic;">equipment</span> wrong, resulting in the need for more skilled human resource that may be less scalable or replicable. This is what Icall the paradox of servitization. The increase scalability, replicability and profitability of the service may not rest in the service but on the equipment around which the service supports. Equipment which are better platforms for co-creation (think iPhone) and which are able to absorb greater customer variety of use, either through modularity or clever engineering design, require not only lower skills and knowledge from your service employees but also less of such resources. In other words, the equipment itself could require redesign for more scalable and efficient service activities. This would eventually translate to greater margins and if you could by some miracle, actually make it easier for customer resources to realise the use value of the equipment as well, you could get better prices and higher demand as well. Now THAT would be the right way to 'servitize'.<br /><br />One of the reasons why an SDLogic (Vargo and Lusch, 2004, 2008) approach is so useful for 'servitization' (there's that word again) is that it allows one to see the system as a competency for outcomes, whether achieved through equipment or the firm's people or the customer. Service is competencies for competencies and an SDLogic lens allows one to see the equipment competency, the human competency and the customer competency in a way that can help us make better decisions on where the competencies could be material (equipment) or human or even from the customer depending on variety absorption, scalability, replicability etc. Also, through this lens, bringing in external entities (other equipment or team integration or outsourced partner) in a multi-actor network is now framed as a outcome competency decision <span style="font-style: italic;">as well as </span>a marginal revenue/marginal cost decision for a set of outcomes for all stakeholders. Making all competencies <span style="font-style: italic;">endogenous</span> (i.e. up for change/amendments) instead of assuming a piece of material equipment is sacred, is the way forward to better design of the service system. There's more work to be done! <span style="font-family: "Times New Roman","serif";mso-fareast-ヒラギノ角ゴ Pro W3"; mso-ansi-language:EN-US;mso-fareast-language:EN-US;mso-bidi-language:AR-SAfont-family:";font-size:11.0pt;color:black;" lang="EN-US" ><br /><br /></span>Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com27tag:blogger.com,1999:blog-5399349933849902936.post-68243208379210694102011-01-09T12:33:00.000-08:002011-01-10T07:36:20.523-08:00A primer on viable systems modelI've had requests to do a quick primer on viable systems so I thought I'll pen this here, as well as elaborating a little on my earlier post. Since this blog is about value-based service systems I think I need to explain systems a bit better. Earlier, I have explained systems thinking but now I will explain viable systems because it is foundational to value-based service systems.<br /><br />So here's the primer, my style. Viable systems came from Stafford Beer (1960s) and like all the great systems thinkers out there, Beer was a real genius even when he was not sober. Actually, I kind of see the pattern here - geniuses tend to drink. which of course is my excuse for drinking. next time you see me with too much to drink remember i'm practicing at being a genius ;p<br /><br />More about Beer <a href="http://en.wikipedia.org/wiki/Anthony_Stafford_Beer">here</a><br /><br />Beer spent a lot of time studying systems, the interconnectedness of it all so here's a summary:<br /><br />A viable system “is a system with an identity and purpose which is, in principle, capable of surviving its appointed time, whether definite or indefinite” (Leonard in Beer, 1994:347). Basically, if you think about ANY system, it is able to sustain itself and be 'viable' because there are 5 systems.<br /><br />system 1: the core transformation (the purpose of the entire system)<br />system 2: regulation/tactical - interface between system 3 and 1<br />system 3: operations planning, control/audit - this system sets the rules, resources, rights, responsibilities – interface between 4/5 and 1/2<br />system 4: management (and R&D), strategy, environment scanning (for adaptability)<br />system 5: policy: usually board of directors (decisions on what the entity of the system is, balance demands from all parts, steer the organisation)<br /><br />So if you think of the human body as a viable system, then (taken from Jon Walker - brilliant website on VSM in layman terms <a href="http://www.esrad.org.uk/resources/vsmg_3/screen.php?page=0cybeyes">click here</a>):<br /><br />SYSTEM 1: All the muscles and organs. The parts that actually DO something. The basic activities of the system. The KEY TRANSFORMATION (in my world, the value proposition)<br />SYSTEM 2: The sympathetic nervous system which monitors the muscles and organs and ensures that their interaction are kept stable.<br />SYSTEM 3: The Base Brain which oversees the entire complex of muscles and organs and optimises the internal environment.<br />SYSTEM 4: The Mid Brain. The connection to the outside world through the senses. Future planning. Projections. Forecasting.<br />SYSTEM 5: Higher brain functions. Formulation of Policy decisions. Identity.<br /><br />You must realise now that the reason we die (i.e. become non-viable) is because one system fails. That is a key point. ALL viable systems MUST have ALL 5 systems to REMAIN VIABLE (this is a strong statement as my good friend Roger would say).<br /><br />It's a very good way to think about the firm. What cybernetics and VSM does NOT tell you, however, is where to draw the boundaries.<br /><br />So my natural biasness will draw the boundary on value - not just any value mind you - the value that is co-created with the customer to achieve customer benefits (hey, this is a value-based service system blog -what do you expect?). So here comes the immediate problem. At the narrowest of system boundaries, the firm produces something and the system's purpose is to have a high quality 'thing'; and if you broaden that boundary a little, the customer is in the system co-creating value with the firm and the system's purpose is to achieve customer outcomes. An example would be helpful so let's say I manufacture helicopters. I could have been viable all this while coz I make good helicopters. I know the customer uses it and co-creates value but it's not really my problem because the contextual use of the helicopter isn't going to hugely affect how I design and manufacture the helicopter because as a firm, I've become a viable entity just making helicopters. So although value co-creation happens, I have drawn a boundary such that my 'environment' (what is exogenous) is the customer, the contextual uses. Customer inputs into my system is usually through predesigned feedback mechanisms. The resources that inform the key transformation (i.e. manufacturing the helicopter) and the metasystem that manages, control and guide the policy of the firm are all surrounding this key transformation - manufacturing.<br /><br />So let's say competitive forces have come in and it's no longer enough to make helicopters. The customer wants to make sure these helicopters are 'usable' and any failure of the helicopter has to be immediately rectified. The firm now has to say - my core transformation is no longer making helicopters, it's to repair them when they're faulty. The firm still doesn't have to understand value co-creation and can still treat the customer as 'environment' because the value is 'pulled' by the customer on the basis of need.<br /><br />Now let's say it becomes more competitive and the customer now wants to buy availability of the helicopter, not the thing itself. The system immediately demands a redrawing of boundaries - because if availability is the value proposition of the firm, what is it the firm is DOING? making stuff is one thing, but delivering a value proposition of availability means understanding the contextual variety of use, making sure there are parts on standby on shelves to minimise possible down time, even redesigning the helicopter so that it might be easier to change parts, or cater to greater variety of contextual use without downtime. this would immediately imply that the resources for the core transformations before and after the new boundaries are different, as is the metasystem that controls and manages it. This is a serious threat to viability because the firm may not be equipped to deal with changes in resources and the metasystem. More importantly, 'the environment' is now the context and the customer has moved into the system boundary of the firm (previously both customer and context is 'the environment'). This means the customer is a recursion in the system as well as a transformation through which the firm needs to deploy a different set of resources.<br /><br />Now let's take the most extreme - the helicopter is being purchased for its outcomes i.e. what they do e.g. how many soldiers or supplies it ferries. oh - oh, the firm now has to redefine what is 'environment' and what is in the system. if the firm is committing to outcomes, every possible context is now within the firm's boundaries. the firm has to think about redesigning the helicopter and supporting activities in the system for every possible use. that hypervariety is going to be a real challenge and can quite easily threaten the viability of the system. Here's another example of changing the core transformation:<br /><br />customer paying for an airtanker (<a href="http://www.airtanker.co.uk/">http://www.airtanker.co.uk/</a>) refuelling their jets themselves vs customer paying for 1000gallons of fuel per minute from the provider (with increased price if the time spent decrease). For the provider? very. different. system. with very. different. resources. and very. different. management. of the system. Viability? No one really talks about it. It's like 'sure, if you can manufacture an air tanker, it's easy-peasy asking you to provide 1000 gallons of fuel in mid-air'. And when the firm don't do it well, marketing people say its not being customer-centric enough, it needs to change to co-create value etc. etc. but they don't really tell you how. Someone once told me it's easier to get a manufacturer of mobile phones to make tractors than for them to co-create mobile phone outcomes. Some manufacturers have become seriously unviable trying. I'm sure you know who I'm talking about.<br /><br />My colleague once asked me if I had any sagely advice to give to Nokia. In my most 'sage-like' way ;p I said 'try not to think of yourselves as a mobile phone. try to think of yourselves as being a 'life-enabling-platform'. Of course, that's hard. because they have always been a viable firm as a phone manufacturer. now you're asking them to be something else. Apple had it good (resource and viability-wise). it was never a phone.<br /><br />So that's my simple primer. Yes VSM doesn't give enough understanding of interactions, emergence and co-creation but it's a great start to develop the thinking and the research in a systemic way. So much of our own research (and solutions) are reductionistic. We do research in marketing, or strategy or CRM or something or another and pretend that the insights we have developed are able to apply without some efffect elsewhere (marketing solve marketing problems etc. etc.) but if we are to be truly systems researchers and systems practitioners, we cannot provide solutions and insights without saying something about the systemic effects of our insights. That is the challenge of systems researchers. The VSM helps us stay true to systems thinking and help us say something about the narrow bits of knowledge we give to firms and we can show where the knowledge we propose would sit within the VSM of the firm. As someone who believes in the power of service dominant logic to improve organisational effectiveness to co-create value with the customer, I am compelled to use SDLogic in tandem with VSM because it helps me sympathise with the challenge of transitioning from Goods dominant logic (due to the systemic and viability disruption it create). Yet, the mere visualisation of such disruption through VSM helps firms understand that disruption and allows researchers and consultants alike to develop paths towards effectiveness. That has to be better than just badgering the firm to death about customer centricity.Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com1tag:blogger.com,1999:blog-5399349933849902936.post-26300593353835014392010-12-21T14:04:00.000-08:002010-12-21T15:56:05.002-08:00Value and Viability: A viable systems way of transitioning to a service-dominant logicA lot of this blog deals with value and the way a firm delivers its value proposition for the customer to co-create value. So if you think about it from a service dominant logic point of view, resources of people went towards making or delivering a value proposition and the resources of customers go about realising the value proposition through co-creation to achieve outcomes right?<br /><br />The reality, as they say, is always a little more complicated. So let's use my favourite example of a phone. The idea is for a customer to be able to talk to someone so the old value proposition was a switchboard with an operator and you pick up the phone in the house, tell the operator who you want to call and the operator connects you and you talk to the person (and hope the operator is not listening in).<br /><br />That value proposition consisted of the phone in your house, a switchboard operator, a switchboard, a network of phones. The resources of the firm went about delivering that value proposition to allow the customer to co-create value by knowing when to call, whom to call, the number to call. oh - and don't forget the customer has to be at a particular context/location (home) to make the call.<br /><br />Today's similar value proposition is a mobile phone. pick it up, make a call, talk to someone - in whatever location/context he is in. what has changed? the value proposition of the firm has clearly changed. it used to consist of resources of people+materials+equipment and it has become material+equipment only with the people resources embedded into the material/equipment. in co-creating value, the customer resources has also changed. it used to be '<span style="font-weight: bold;">talk</span> to the operator to connect you', it has now become '<span style="font-weight: bold;">key presses</span> on a mobile'. End to end, it is still competencies for competencies (SDLogic style) but the dynamics of the middle has changed. The dynamics of the middle is often referred to as the market system but from my perspective, it is about boundaries of the market system and the viability of an organisation.<br /><br />Let me explain.<br /><br />Say the organisation in the old value proposition world was providing a really really good value proposition. it had thousands of operators, calls were put through quickly and efficiently and the network integrity was good and with good capacity. That means the CORE TRANSFORMATION (CT) of the firm (i.e. what the firm DOES to ensure a good value proposition) is functioning well. It also means all the resources of the firm were configured optimally, effectively and efficiently. From a systems perspective, if means that CT minus 1 (all resources) are supporting CT well and CT plus 1 (all governing/policy/auditing/managing) are managing CT well. A viable system is when CT-1 and CT+1 are doing its job to support CT and whatever the shocks in the environment, CT+1 is able to manage by supporting it with other/more resources from CT-1. Homeostasis is achieved.<br /><br />Now you go up to the firm and say you've got this new invention that basically automates everything and you don't need operators anymore. You say that customers get better outcomes if they can call whenever they want even when there isn't an operator. The logic is sound, the outcomes are better, customers co-create value for better benefits so this is good right? only snag is - your entire organisation has had resources supporting CT and your board, your departments etc. have been managing CT and CT is now going to change into something else. In fact, the change in CT is pretty drastic. the firm who was a network provider with thousands of operators is now going to be a factory making mobile phones.<br /><br />In viable systems, there is an O for operations (which is where the CT sits), an M for the metasystem that governs O and an E for the environment (see pic). Together, they define what the boundaries are and <span style="font-style: italic;">most importantly </span>where is the boundary for E as this defines the viability of the fir<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzCqRACfnvP6vvSxuR2p66x1ekZ4S_Po7oJoUTXw7Le-7rIOjq4pxjd0o29tSDGOqBrXXlmjttL2nk3_IpYdQUX-gHR4KIG-F6uFFmQulJJ438NuTAU7WlyPUmr9FBapFH6bDxCmZpiE4/s1600/vsm.JPG"><img style="float: right; margin: 0pt 0pt 10px 10px; cursor: pointer; width: 310px; height: 320px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjzCqRACfnvP6vvSxuR2p66x1ekZ4S_Po7oJoUTXw7Le-7rIOjq4pxjd0o29tSDGOqBrXXlmjttL2nk3_IpYdQUX-gHR4KIG-F6uFFmQulJJ438NuTAU7WlyPUmr9FBapFH6bDxCmZpiE4/s320/vsm.JPG" alt="" id="BLOGGER_PHOTO_ID_5553273760244377666" border="0" /></a>m (ability to achieve homeostasis) as this boundary determines what is outside and what is inside. IF the CT changes, what was previously the environment could now be a resource and the metasystem could be managing something completely different.<br /><br />In essence, this is what is happening today with technology convergence that mixes customer resources (to co-create) with the firm's value proposition. It is happening because, thanks to SDLogic, we tell firms to see themselves as a cog in a wheel of co-creating value-in-use. Yet, to do so, it becomes harder to tell what the firm's value proposition is, what is the environment, what are the resources to configure (especially if they include customer resources) and what should the metasystem be managing. In other words, to achieve true customer centricity and value-in-use, more is needed than just the will. To walk the talk, structural CT changes are needed. More importantly, if the firm doesn't get it right, it could cease to be viable, even while it's motivations are good. Customer centricity and achieving value in use is beyond traditional marketing and requires marketing to engage fully <b>inside</b> the firm. <br /><br />So for me the transitioning from a goods dominant logic to a service dominant logic is understanding where the old boundaries are (usually delivering a value proposition that is some exchange value or a tangible product) and moving them to new ones (value-in-use or outcomes). It would then require the reconfiguration of CT, CT-1 and CT+1 for a core transformation that includes co-creation. It requires a careful transitioning programme to realign CT-1 and CT+1 as CT changes to maintain the firm's viability because delivering value-in-use means a much more open, agile and flexible system (nature of E and variety is very intrusive) which in turn requires a relooking at the nature of resources in CT-1 and the nature of firm's governance in CT+1 even while CT deals with a hybrid of old and new value propositions.<br /><br />Someone asked me why do I take a viable systems approach instead of, say, a resource based view etc. of the firm. The viable systems model (VSM) is the most robust model of a system, be it a human body, an organisation or an economy. It specifies the conditions through which a system can be viable, and can remain viable. Many of the midrange theories (including RBV approaches) tend to be formed through GD lens. Moving from GD logic to SD logic requires going back to fundamentals and VSM is a pretty good fundamental to go back to. Unfortunately, like all systems approaches, they never tell you where the boundaries should be drawn. I draw systems boundaries around contextual value-in-use. But of course, as a value-based systems researcher, I'm totally biased ;p <br /><br /><br /><br />Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com0tag:blogger.com,1999:blog-5399349933849902936.post-1043279305318156722010-08-14T17:48:00.000-07:002010-08-15T21:04:23.815-07:00Facebook.. tskI'm interupting my usual academic ramble to blog about facebook, business model and system.<br /><br />Don't get me wrong. Unlike the many social network bashers out there, I absolutely love facebook. I use twitter and linkedin for my professional life and facebook for my personal and social life.<br /><br />Here's how I co-create value on facebook:<br /><br />I update my status at least once a day, to a max of 3 times. I have 30+ family members over 4 continents and it's the means through which I keep in touch with their children, events and general life and they can keep in touch with my life. I have a further 200 friends all over the world and I am grateful that everyone bothers to update and keep in touch as well so we form a good community. We share photos, joys, pains, irritations from big events (such as graduation, births etc.) to menial stuff like what we ate for lunch. We share youtube links, photos and jokes from the downright ridiculous to those that get you on the floor laughing. My three girls (2 teen and 1 adult) are all on facebook as are my mom and dad and my aunts.<br /><br />Our interactions keep us connected. Some of us just play farmville. Some are just stalkers. Some are too shy to say anything, some (like me) often say too much. Some post political links and opinions and others upload mobile photos from where they're travelling. When my husband created an 'eggs'-plosion because he forgot he was boiling eggs in the kitchen, the photo was online within minutes and family from various parts of the world commented on it. I have 500+ photos online and with my iPad, I pull them down to show photos of my house, kids, garden etc. when I visit family who don't have facebook accounts. The interactions can be many and menial, few and life-changing or a combination. All in all, it makes us all log in at least once a day. The combination of interactions surrounding the big and the menial happenings in our daily lives result in various emergent properties in a social network system - community, comfort and serve to generate further activities outside of the online world and make the world a lot smaller.<br /><br />What of privacy? There is an old saying - we are only afraid of inventions that happen after we're born. hydrochlorofluorocarbons are in your fridge but we don't seem to cringe when we go to the kitchen. Radio was harmful when it was first introduced. I'm not trying to underplay privacy issues. Rather, I am saying that everything in the world is dangerous if you don't know how to manage it. A hammer, nails - all very dangerous. But we're not threatened by them. We know how to keep it out of reach of children and use it safely because we have the skill set to manage it. So facebooking is a 21st century living skill set that you need to acquire to co-create value in a social network. And if you acquire that skill set, you acquire resources (knowledge) to make wonderful things happen.<br /><br />What is this skill set?<br /><br />First, managing privacy.<br /><br />I have 4 privacy levels - limited profile for people I don't know well; acquaintances for those I know but aren't close. normal for... well, normal friends; close and family friends for the 'inner circle'. With 53 photo albums, my friends have various access rights to view some albums but not others e.g. As an academic, I have public albums viewable by all and family albums viewable by inner circle only. I even have information that is available to 'everyone' and is 'google-able' (horrors!). I don't think everything should be private nor do I think everything should be out there. The skill is to know what information should be private or public depending on what benefit you can get from it. It may sound complicated but its as complicated as learning to programme a VCR back in the eighties and as a 21st century skill set, I believe I have it. Do you?<br /><br />Second, managing time<br /><br />How much time do I put into facebook? To many of my friends, they think I spend too much time. Actually, I don't. Usually I am on fb for my downtimes - at airports, waiting for the next appointment, in trains. It can be a distraction (so can my hubby but I'm not getting rid of him) but you just manage it because the benefits are there. Does it require some discipline? probably... i mean do we require discipline to not reach for that third/fourth/fifth glass of wine?<br /><br />Third, managing effort<br /><br />I upload photos, comment of friends statuses (statii?).. I have downtimes (when I'm on online once a day) and uptimes (on all day). More importantly, I cajole, persuade and badger other friends and family to come onto facebook because it is the community and interactions that matter - not the size of my network. So my effort is to keep my page active and to badger others to keep theirs active.<br /><br />So the currency of facebook isn't money. I don't pay money for it. Yet I do ' pay' for it in effort, time and privacy so as to attain the joys, connectedness, company from my friends and love from my family. At the loneliest place in the world (i.e. airports), I am still connected. If you see a woman smiling at her iPhone in the middle of an airport, that would be me - seeing the latest photo of my nephew, or laughing at a link posted by my daughter.<br /><br />Note that the three skill sets above are the (operant) 'resources' I put in to co-create value. There are revenue model implications here if fb wants to charge a subcription because they would then be making me add a <span style="font-style: italic;">fourth </span>resource - my money; mmm....you can, but you need to think about how.<br /><br />Which of course leads me to the facebook business model. Which is? capitalising on the size of the network which in turn generate the eyeballs and click throughs on ads. Are you feeling something is not right? of course...here's where the problem is.<br /><br /><span style="font-weight: bold;">Misalignment of value</span> <span style="font-weight: bold;">in the Business Model</span><br /><br />Think about google. What is the value of google for a user? Ads and information that is tailored for my needs as precisely as possible when I use the search engine. How does google make money? through ads and information tailored more precisely for the customer's needs. See the match? The value I co-create with Google is the same value Google is deriving revenues for (even if paid by advertisers).<br /><br />Facebook? the value I co-create above is obviously NOT the same value Facebook derives revenue for. Sure, if I get more people onto facebook I get a bigger network which is great for facebook - but getting people onto facebook is for me a means to an end. I don't really get a whole lot of value from just getting my friends on facebook. I get it when they interact with me. So obviously, there is a whole misalignment of the value I co-create and the value facebook derives revenue from.<br /><br />This misalignment poses a huge challenge on the viability and sustainability of facebook as a system. At it's current state, it is barely viable, even though the network is growing. Long term sustainability becomes an issue. I have seen many companies who don't recognise that the customer value from their offering is not the value they derive revenues from. It usually ends tragically. An organisation core competence must come from its capability to effect core value transformations which are the same transformations that is co-created with customers and which are valued by the same customers. The alignment becomes valuable for revenues to the extent that customers may not even have to a penny for it. While there can be revenues from other sources (as it is for Google), primary revenue should come from that alignment. Until facebook achieves alignment of core value transformations, it's unsustainable, at least, from my point of view.<br /><br /><span style="font-weight: bold;">Emergent Properties</span><br /><br />This value that I attain from facebook is an emergent property. It's community, it's perceived connectedness, it's company - all of which are emergent from interactions. If you've been reading my blog you would understand that you can't determine emergent properties - merely intervene where it could catalyse, faciliate and enable the system to achieve the properties. And how does facebook do that? asking you to click through more targeted ads. wow. really? actually, i would argue they are NOT interested in the emergent properties. they just want more eyeballs - a bigger network - more, more, more! someone should tell them about roman empire...which part of hearts and minds did they not get?<br /><br />Also, emergent properties, systems and interactions are a new science. i guess i can just call them uneducated. but again, if they don't get their act together, big systems can fail. big time.<br /><br />OK, so what should facebook do (aside from hiring me that is, but I'm too busy facebooking, sorry..)<br /><br />Focus on transforming information - not just harness information - facebook spends too much time with the analytics guys and not enough with value guys. If they know how to assist facebookers in transforming their information better, they would have a much more robust revenue model.<br /><br />Focus on enabling quality interactions - it's not the people ...s****d! it's their <span style="font-style: italic;">interactions! </span>Quality interactions generate quality information and great emergent properties. Help your facebookers transform interactions and information and you're on the right road.<br /><br />I decided to write this blog (and give fb some free advice) because this morning, something happened that p****d me off. My darling nephew, only 7 months old, had a facebook page. It was my sister who created it because she wanted to keep her identity separate from his. I visit this site often as my sister would update his activities, teething problems, crawling, smiling. Loads of photos and videos and i love it. 'Marcus is feeling cranky this morning'; 'Marcus misses his dad who is away for the weekend'.... it was a wonderful way to watch Marcus grow up. I show it on my iPad to family as well. All of us family around the world love the page.<br /><br />Facebook closed it this morning because you need to be 13 and above to have a facebook page. I understand why. With the number of nasties stalking the internet, we need to protect the young and vulnerable. But shutting it down? could you not create a better mechanism design for this that protect privacy but allow for interactions? Well, fb would probably think - nah... we should just close him down coz he's not going to click on any ads and he's not going to generate more friends, and we can show we care about the vulnerable users.... as long as fb has this current business model, they will continue to struggle with privacy issues and business model sustainability...this is because misalignment of value transformations would result in decisions made that would change the dynamics of value in the system ..<br /><br />From my read of facebook, these guys probably have a good idea how they became successful (analytics will tell you that) but are completely oblivious to <span style="font-style: italic;">why</span>..... without understanding the core value transformations that made facebook what it is today they would need to be very careful what they tweak, because a system that spirals upward can easily spiral downwards (think myspace) if the interventions are wrong and if you focus on the wrong transformation. Facebook - listen and learn and for heaven's sake, give me my nephew's page back!Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com0tag:blogger.com,1999:blog-5399349933849902936.post-72052324965499451202010-07-27T04:03:00.000-07:002010-07-27T04:10:42.728-07:00How to innovate in value co-creation - part 1I have just finished writing the paper for the Forum on Markets and Marketing - the meeting in Cambridge with Bob Lusch and Steve Vargo entitled 'Value Co-creation in Complex Engineering Service Systems: Conceptual Foundations'. Don't be put off by the word 'engineering' in the title. the paper is intended to integrate the engineering service research and the management service research streams. In the paper, I had 5 propositions and I thought I'll expand on each managerially in my blog because my blog would probably explain it better than a dry academic paper. (and it IS dry - starts with philosophy and ends with engineering design.... enough said). Also, I do think the 5 propositions set the stage for innovation that is value based.<br /><br />So... on to proposition 1<br /><br />Proposition 1: A perfect system for the co-creation of use-value makes endogenous all co-creators use-values.<br /><br />Yikes...where do i start.<br /><br />If you've been following my blog, you should have read all about co-creation and use value (<a href="http://value-basedservicesystem.blogspot.com/2010/02/value-in-use.html">http://value-basedservicesystem.blogspot.com/2010/02/value-in-use.html</a>) and (<a href="http://value-basedservicesystem.blogspot.com/2010/01/value-co-creation-and-service-systems.html">http://value-basedservicesystem.blogspot.com/2010/01/value-co-creation-and-service-systems.html</a>). You would need to read those to understand this post.<br /><br />lets say, very simply, a firm is in the business of producing cups. so the CEO will say, what do customers want from cups? lets do market research. needs analysis. requirement analysis. focus groups. dance the salsa...la di da..<br /><br />you come up with a spec list.<br /><br />1. cups should have handles<br /><br />2. it should hold x ml of fluid<br /><br />when you brainstorm on the research you realise - wait, some people want hot beverages, some people drink a lot, some people drink very little, some people want it pretty, some people want lids/covers etc. etc. so you go to the marketing department and say - find me the segment of market i should target if I made cup type A, cup type B, cup type C and so on.... and tell me which should be my target market segment...so the clever marketing chaps do their rocket science and comes up with ta-da! cup type A would give you £A in revenues, cup type B gives you £B revenues and then you sit down and make a decision on which cup types you can make, how many types and how to make them as efficiently as possible. That was how the world worked.<br /><br />Marketing folks like to match the type of person with what they buy. so you buy a pretty cup type B and they say - aha... woman age X of this type of behaviour and lifestyle would buy cup type B because they are concerned with selling to you. Actually, I would like many types of cups for many different uses and different contexts. So, mr marketing, my cup-using behavior is actually more important than my myers-briggs score (not that you use it)...also, my cup-using behavior is driven by whom i'm with, what time of the day etc. etc. so .....could you go design and make a multi-context cup please?<br /><br />firms don't, and i'll try to explain why.<br /><br />My training now tells me I have to use a mathematical word so forgive me. What that whole process above says is that value has been determined exogenously. This means it's OUTSIDE the use and co-creating system. it means the firm has decided to determine what the value is, make it and then deliver it. it means that when the cup is used by the customer, it can no longer be changed (its exogenous remember?).<br /><br />but wait. how do i <span style="font-style: italic;">really</span> value my cup? when i take my cup to the garden, i want a lid to keep the bugs away. when it holds water, i want more of it and when it holds expresso, i need less of it. so what I value about my cup is use-value i.e. a cup that understand my context of use which can change but if my use-value is not endogenous to the firm's, how would they even think of designing a cup for my ever changing context?<br /><br />they don't. instead, it's easier to exogenously determine use-value for many contexts and construct their value propositions around them. so they produce many different cups. of course they go through the whole process of determining value. they call it a 'value-driven approach' (*irony*) and its step one in the lean handbook - 'first determine what the customer values'......(i will blog about about this in the next post)<br /><br />its the world that has existed because we don't interrogate our assumptions. because its just easier to make different cups to fit different contexts. but by doing it that way, the determination of value will always be exogenous to the use of value and when use-value is co-created, which is contextual. firms are fixated on the idea that one has to come first. so value determination and specification is exogenous to use. So when I co-create value with a cup i.e. use it to drink stuff etc. etc. I am actually co-creating with a value proposition of a firm that have already decided and determined what I wanted from this cup and in what context and I, as user of cup, would then co-create value when I am in the context that has been predetermined... meaning, I make sure I, in my own world and own system 'fit' the cup context that has been predetermined. that is why i buy many cups. because i have many contexts of cup use. and dont even get me started on contextual emotional value-in-use.<br /><br />but it doesn't have to be like that. especially if you're thinking of innovation. .<br /><br />why dont firms look at use value as endogenous? because traditional marketing looks at exchange value and choice and once you choose, they aren't really very bothered with the different contexts on how you use the thing (because you paid for it already). So they push the problem (and risk) of contexts to you. Let you decide what your most common context is and let you choose which cup to buy.<br /><br />but that's a little unfair. in return for my use-value of a cup, i give you, the firm, money. so you get money, i get cup. but my use-value of the cup is limited to the contexts you predetermined whilst your use-value of the money is... oh wait.. infinite in context (don't you just lurrve the acontextual use-value of money? ha ha..). So mr firm, i am actually probably quite happy to give you more money if you could give me greater degrees of contextual freedom of my cup. In fact, we could design a perfect system of co-creation where you give me different cup for every context i might want a cup and I could pay you a lot of money for it. let's just call it a multi-cup carrying butler.<br /><br />a perfect system for value co-creation is when every co-creator's use value is endogenous in the system. the firm's use value (money, which has use-value across infinite contexts) and your multi-contextual use-value of the thing. It probably is too expensive but hey, a great starting point to think about innovation and its a great way to think about the role of technology. and it's starting to happen as well.<br /><br />take a good look around you. there are some companies out there who no longer make value exogenous to use. simplest example is the phone. it used to be a phone. to talk, to communicate. today, its not a phone anymore. yes yes they call it a smartphone or somethingphone but it's become a platform onto which you can use it for whatever you need at the context you wish to have. so my iPhone can be a compass at the context where a compass suddenly became necessary. its not just technology driven. its a mindset change in understanding use-value and contextual co-creation in design and delivery - the understanding that value is always use-value within changing contexts and value propositions do not have to be exogenous in the co-creation process.<br /><br />so where's my smart cup?Anonymoushttp://www.blogger.com/profile/08253400460544569556noreply@blogger.com3