Professional Documents
Culture Documents
Services:: What Is A Service?
Services:: What Is A Service?
Services:: What Is A Service?
What is a service?
Víctor Tang
victang@alum.mit.edu
INTERNATIONAL CONFERENCE ON ENGINEERING DESIGN, ICED'09. 24 - 27 AUGUST 2009, STANFORD UNIVERSITY, STANFORD, CA, USA
FIRST-PRINCIPLES FOR SERVICES AND PRODUCT-SERVICES-SYSTEMS: AN R&D AGENDA
VICTOR TANG1, RUOYI ZHOU2 (1) MASSACHUSETTS INSTITUTE OF TECHNOLOGY, (2) IBM ALMADEN RESEARCH CENTER © v tang.
What is a service?
system of
interactions
work product
expectations
money provider
client
objects
time
Lucas!
production
value
Consulting
Project
© v tang.
Landmarks in service thinking [1]
7676
74
80 70 76 75
66
69 68
60
54 57 62
40 22222428 32
42 42
20 21 22 28 28 38 40
32 48 45
0
© v tang.
Landmarks in service thinking [2]
© v tang.
IHIP attributes of services
Intangibility. Unlike a physical good, services
cannot be seen, tasted, heard, or smelled before
purchase.
Perishability. A service
“perishes” unless experienced.
lucas
Services cannot be stored.
consultant
© v tang.
IT Product-Service-System – 4 subsystems
external
SITUATIONAL CONTEXT
IT STRATEGY
BUSINESS STRATEGY
GOVERNANCE
GOVERNANCE
business technology
ORGANIZATIONAL IT INFRASTRUCTURE
INFRASTRUCTURE & SUBSYSTEMS & PROCESSES
PROCESSES
internal
7
Adapted from: Henderson & Venkatraman 1999, Strategic Alignment. IBM SJ © v tang.
Winter games scope of IT
Tickets 1.8x106
Phones 20,000
Athletes, officials, press, TV, … 97,356
Volunteers 36,000
8
© v tang.
Stakeholders=herding Cats
IOC
9
Source: v tang analysis © v tang.
Landmarks in service thinking [3]
2. A service is any act or performance that one party can offer that is
essentially intangible and does not result in the ownership of
anything.” (Kotler 2006, 402).
3. Services are economic activities that create value and provide benefits
for customers as a result of bringing about a desired change in - or on
behalf of – the recipient of the service. (Lovelock and Wirtz 2006, 3).
2. A service is any act or performance that one party can offer that is
essentially intangible and does not result in the ownership of
anything.” (Kotler 2006, 402).
3. Services are economic activities that create value and provide benefits
for customers as a result of bringing about a desired change in - or on
behalf of – the recipient of the service. (Lovelock and Wirtz 2006, 3).
2. A service is any act or performance that one party can offer that is
essentially intangible and does not result in the ownership of
anything.” (Kotler 2006, 402).
3. Services are economic activities that create value and provide benefits
for customers as a result of bringing about a desired change in - or on
behalf of – the recipient of the service. (Lovelock and Wirtz 2006, 3).
definition
Lucas!
identify
Consulting
domains
Project
© v tang.
Deconstruction of Definition
Service.
definition
A solution performed for consideration identify
definition domain
© v tang.
Epistemic Rules
Service.
definition
A solution performed for consideration identify
© v tang.
First principles
Service.
definition
A solution performed for consideration identify
© v tang.
The “ilities”
Service.
definition
A solution performed for consideration identify
domain principles
∰ system principle:
design & manage “ilities”
© v tang.
The Gap Model
© v tang.
The New Gap Model
© v tang.
Nash equilibrium – we both win or we both lose
We both
LOSE lose.
LOSE WIN
. ℛIBM <<1
.
ℛOlym <<1
C2 Olym
cost . . cost
C1IBM C2IBM C1IBM C2IBM C2Olym C1Olym
Source: v tang. INFORMS 2012, Beijing. Services , Value, Benefits, Pricing : Axioms and First Principles ©
(c)vvtang.
tang
Solution space ℛ=
benefits
costs
benefitsIBM IBM to Olympics benefitsOly
cost shift function
ℛOlym >>1
ℛIBM >>1
C1Olym
ℛOlym ok
ℛIBM ok
. ℛIBM <<1
C*Olym
.
ℛOlym <<1
C2 Olym
cost . . cost
C1IBM C*IBM C2IBM C1IBM C*IBM C2IBM C2Olym C*Olym C1Olym
Source: v tang. INFORMS 2012, Beijing. Services , Value, Benefits, Pricing : Axioms and First Principles ©
(c)vvtang.
tang
Solution space ℛ=
benefits
costs
benefitsIBM IBM to Olympics benefitsOly
cost shift function
ℛOlym >>1
ℛIBM >>1
C1Olym
ℛOlym ok
ℛIBM ok
. ℛIBM <<1
C*Olym
.
ℛOlym <<1
C2 Olym
cost . . cost
C1IBM C*IBM C2IBM C1IBM C*IBM C2IBM C2Olym C*Olym C1Olym
Source: v tang. INFORMS 2012, Beijing. Services , Value, Benefits, Pricing : Axioms and First Principles ©
(c)vvtang.
tang
Nash Equilibrium
Vp= ln((1/20)*(Rp+200)/5)
Vc= ln((1/25)*(550-Rc)/7)
1.03
1.01
benefits 1.00
0.99
0.98
68 70 72 74 76 78
provider client
reservation price reservation price
region of
Nash Equilibria
V Tang, 2013. Services’ Value-Price Nash-Equilibrium: Normative Principles. INFORMS Annual Meeting. Minneapolis, Minnesota. © v tang.
Every field has its paradigmatic process
confidentia © v tang.
Method - paradigmatic meta-process for the practice
Crawley, E., Malmqvist, J., Ostlund, S., & Brodeur, D. 2007. Rethinking engineering education:: The CDIO approach. New York: Springer.
Seering, W.P. 2003. Redefining engineering. MIT Faculty Newsletter. Vol. XVI(1).
http://www.answers.com/topic/axiom#ixzz1sUz0DZhP confidential © v tang.
Even the big-bang is a process
* Kuhn, T.S. 1965. The Structure of Scientific Revolutions. MIT Press, Cambridge, MA. confidential © v tang.
The Service Method a meta-process for the practice
confidential © v tang.
Phase process schema
used in used in
an engagement mechanism
following
service principles
to produce
shape shape
a client & provider recognized output
that marks
stipulated at stipulated at provider’s
client’s decision phases’s commit point
decision
for an outcome
sufficiency and Φ4. engineer the plan? deployment resources sufficient and complementary? sufficiency and
complementarity requirement agree to embody plan; with no gaps in s-t resources complementarity
of social-technical mechanism engineering of social-technical
resources output resources
co-engineered specifications of social-technical system
Φ5 operationalize the plan? client+provider social-technical systems ready?
reciprocal reciprocal
responsibilities and requirement operationalize social-technical systems obligations and
obligations mechanism operations responsibilities
output client and provider taktchronous operations
Φ6.. intervene? client+provider values threatened?
client expectations requirement spec in-process and end-process value measurements provider expectations
of itself and provider mechanism adaptation and control of itself and client
output commit to fix problems that threaten value
confidential
© v tang.
client VALUE CO-CREATION – PHASES provider
decision factors mechanism, propositions and principles decision factors
Φ mechanism - exploration
needs, Beer (1995, 1996) policy, intelligence functions (req 4, 5) capabilities,
capabilities, Brodie et al. (2011), Badinelli interactive experience, psychological state needs,
expectations et al 2008) context, final purpose, goals (prop 10,11) expectations
Chandler & Vargo (2011) context as framing effect
Vargo et al. (2008) service as value proposition & relationship (PF 7, 8)
Φ mechanism - negotiation
IBM (1993) cost effective solutions versus competition
client reservation Beer (1995, 1996) policy, intelligence functions (req 4, 5) provider reservation price,
price, Aviontis et al. (2006) pricing bases - market, customer, discounts… and financial return
and affordability Tang & Zhou (2009) Nash equilibrium principle
Vargo et al. (2008) value-creation phenomelogy (PF 2, 7, 10)
Otto et al. (2004) service economic value
70% reduction in product development cycle time. 80% reduction in design hours.
33% reduction in prototype development. 50% reduction in inspections.
25% time reduction between engineering and manufacturing.
50% reduction in product cost. 90% conformance of design-to-cost targets.
5-sigma design quality level.
V. Tang & K. Otto. 2009. Multifunctional Enterprise Readiness: Beyond The Policy Of Build-test-fix Cyclic Rework. Proceedings of the ASME 2009
International Design Engineering Technical Conferences & Design Theory and Design. IDETC/DTM 2009. Aug 30 – Sep 2, 2009, San Diego, CA. USA
MARKET WIRE. 2005. “$300K Typical Gain from Design for Six Sigma Projects”. SEATTLE, WA. July 18.
Oppenheim, B.W. 2004. “Lean Product Development Flow”. Systems Engineering, 7(4), pp. 352-376.
Fiore, C. 2005. “Accelerated Product Development: Combining Lean and Six-Sigma for Peak Performance”. Productivity Press, N.Y. © v tang.
Methods compared and contrasted
measurements,
quantities, units
mechanism
science of
principles
agnostic
end-end
process
Tests of
domain
neutral
validity
units
goal
first
Popper’s experiments, SI units:
Scientific understand
falsibility yes yes yes mathematics, M kg S A yes
Method nature natural laws cd mol
rule
Decision rational decision utility axioms, preference
yes yes yes natural units
Paradigm choice axioms researchers axioms
Axiomatic consistent rules of mathematical sets, math
yes yes yes
Method structures inference consistency elements axioms
sciences: market ,
Engineering useful SI units
natural & no* yes yes engineering, yes
Method products economics
MKS
artificial
SSME, market, too many, very thin,
Service PSS ad hoc, mostly
Tang/Zhou yes yes yes engineering,
Method satisfaction economics unorganized absent
principles
* Truncasted at release to manufacturing, missing are services, maintenance, and end of life processes.
Crawley, E., Malmqvist, J., Ostlund, S., & Brodeur, D. 2007. Rethinking engineering education:: The CDIO approach. NY: Springer.
http://physics.ucr.edu/~wudka/Physics7/Notes_www/node6.html http://www.answers.com/topic/axiom#ixzz1sUz0DZhP
Bell,D.E., H. Raiffa, A. Tversky. 1988. Decision making: Descriptive, normative, and prescriptive interactions. pp 28.Cambride Univ. Press ©vv tang
(c) tang.
Services
A service is a system of interactions between a client and
service provider.
Provider’s goal is to solve a client problem, with a solution that is
taktchronously co-produced product-IHIP composite, performed for
consideration to create a stream of benefits.
Client’s goal is for a provider to taktchronously solution a problem,
obtain a benefit stream, for consideration.
A service is multidisciplinary with first-principles..
domain first principles
market and customer needs customer satisfaction
finance, and contract law fair Nash-equilibrium
production management lean production
product co-design and co-development systematic design
engineering and behavioral economics physics, behavioral economics
project and strategic management satisficing under uncertainty
Value is co-created.
vtang 37
© v tang.
Questions?