Service Science, Management, Engineering, and Design (SSMED) PDF

San Jose State University SJSU ScholarWorks Faculty Publications Management Information Systems 1-1-2009 Service science,management, engineering, and design (SSMED): an emerging discipline -- outline and references J....

San Jose SJSU ScholarWorks Faculty Publications 1-1-2009 Service science,management, engineering, and design (SSMED): an emerging discipline and references J. Spohrer IBM Research Stephen K. Kwan San Jose State University, [email protected] https://scholarworks.sjsu.edu/mis_pub Systems Commons science,management, engineering, and design (SSMED): an emerging discipline -- outline of Information Systems in the Service Sector (2009): 1-31. doi:10.4018/jisss.2009070101 and open access by the Management Information Systems at SJSU ScholarWorks. It has been accepted for an authorized administrator of SJSU ScholarWorks. For more information, please contact [email protected]. July-september 2009, Vol. 1, No. 3 of Contents and Design (SSMED): & References University, USA Databases Queensland, Australia Australia Development Offshoring of Naples, Italy Siena Bank, Italy Systems in the Service Sector, 1(3), 1-31, July-September 2009 1 Jim Spohrer, IBM Research, USA K. Kwan, San José State University, USA has led to a dramatic increase in our daily interactions with Service (or value-cocreation) interactions are both frequent and healthcare, education, on-line, communications, technical sup- legal, professional, government, or many other types of specialized students graduating from universities have studied anything about Science, Management, Engineering, and Design (SSMED), or service aimed at understanding service and innovating service systems. provides an extensive, yet preliminary, set of references to provoke nature of SSMED. One difficult challenge remaining is to integrate and unique service science. [Article copies are available for purchase Service Economy; Service Science Management Engineering and Design; outlined in this article (IBM Research 2004; Chesbrough, 2005; Horn, 2005; Chesbrough & Spohrer, 2006; Hidaka, 2006; Monahan, Pym, Taylor, Tofts, & Yearworth 2006; Spohrer, Maglio, Bailey, & Gruhl, 2007; IfM & IBM, 2008; Spohrer & Maglio, 2008). This section or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 acting more with strangers (Seabright 2005); even though we know the role someone is playing in a service system, we do not always know the person. So what is going on? What is behind the growth of service? Ludwig von Mises (1998) wrote, near the middle of the last century, about the fundamental understanding of value and cooperation: “Within society, cooperation substitutes interpersonal or social exchange for autistic exchange. Man gives to other men in order to receive from them. Mutuality emerges. Man serves in order to be served. (Pg. 194)” More recently, Vargo & Lusch (2004, 2006, and 2008) in their Service-Dominant Logic define service as the application of competence (e.g., knowledge, resources, etc.) for the benefit of another entity. They point out that most people today use a Product-Dominant Logic that has arisen from two centuries of measuring value as increases in physical output. For example, bushels of wheat or palettes of consumer goods are physical output. This focus on the physical products is quite understandable, in part, given that manufacturing production efficiencies have lead to enormous improvements in material wealth (Beinhocker, 2006). However, now with the rise of the internet and low-cost global communications, information and knowledge as a contributor in value-cocreation is becom- ing more quantifiable. Foray (2004) points out that information is easy to copy (known digital encoding in machines), while knowledge is hard to copy (unknown neural encoding in people). The growth of service is truly tied to the growth of information and knowledge. What’s new? While division-of-labor and cooperation are not new thoughts, the growth of service provides a new lens through which to see the world. The growth of service, seen as the evolution of value-cocreation mechanisms between service system entities, becomes a way to view human history and understand future change. Perhaps it is even true, as some writers suggest that people in modern societies are get- ting better at playing win-win games (Wright 2000). People are starting to understand that value-cocreation is the best game in town. or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 3 mechanisms between entities – the business of society is becoming value-cocreation. Basic Concepts. If we are to understand human history as the evolution and design of value-cocreation mechanisms between enti- ties, then where should we begin? Let’s start by understanding the following ten basic con- cepts: resources, service system entities, access rights, value-proposition-based interactions (a more traditional, business-oriented name for value-cocreation mechanism), governance mechanisms, service system networks, service system ecology, stakeholders, measures, and outcomes. Resources: “Things come and go, and we name them in order to communicate about them.” Every nameable physical and non- physical thing is a resource. For example, an instance of an apple is a physical resource, and the concept of a right triangle is a non-phys- ical resource. As von Mises (1998) observed: “Thinking man sees the serviceableness of things, i.e., their ability to minister to his ends, and acting man makes them means.” (Pg. 92); Legal man attributes rights to certain types of physical and non-physical resources. For example, adult people are physical resources with rights, and businesses, that have properly incorporated, paid their taxes on time, and fulfill other obligations, are non-physical resources with rights. Businesses may own physical resources or contract for physical resources, but as a type of resource they are themselves not physical, but instead a conceptual-legal construct. So in the end, all resources fall into one of four types: physical-with-rights, not- physical-with-rights, physical-with-no-rights, and not-physical-with-rights. In modern society, physicists are the professional authorities who tell us which resources are or are not physical. Judges are the professional authorities who tell us which resources have or do not have rights within their jurisdictions. Physicists and judges are types of authority stakeholders (a concept introduced below). As we will see later, com- munities of authority stakeholders establish and uphold the rules of the game. Thus, the concept on or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 on-line communities have emerged as service systems entities. The concept of service system entity is evolving rapidly (Spohrer, Maglio, Bailey, & Gruhl, 2007; Spohrer, Vargo, Maglio, & Caswell, 2008). Access rights. “By what authority, do you use that resource?” Service system entities have four main types of access rights to the resources within their configuration: owned outright, leased/contracted, shared access, and privileged access. Shared access resources include resources such as air, roads, natural lan- guage, and internet web sites. Privileged access resources include resources such as thoughts, individual histories, and family relationships. Value-proposition-based interactions. “I’ll do this, if you’ll do that.” Service system entities interact (normatively) via value propositions. Normative behavior is behavior that “ought to happen according to an ideal model of one or more stakeholders,” but in fact may not always occur. Interactions via value propositions are intended to cocreate-value for both interacting entities. Both interacting entities must agree, explicitly or tacitly, to the value proposition. A value proposition communicates a mutually agreeable plan to collaborate and cocreate- value, most often by reconfiguring resources or access rights to resources. A value proposition is a value-cocreation mechanism (Anderson, Narus, & Rossu, 2006; Lovelock& Gummesson 2004; Kim & Mauborgne, 2005; Slywotzky, Wise, & Weber, 2003; Afuah, 2004; Gummes- son 2007; Normann 2001). For example, an installment payment plan can allow customers to pay over time for items they get to use in advance of completing payment, while increas- ing short-term sales for the provider. The value proposition creates a win-win relationship. Governance mechanisms. “Here’s what will happen if things go wrong.” Service sys- tem entities may not realize the value expected from a previously (mutually) agreed to value proposition. If value is not realized as expected, this may result in a dispute between the entities. Governance mechanisms reduce the uncertainty in these situations by prescribing a mutually agreed to process for resolving the dispute. Gov- or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 5 Measures. “Without standardized mea- sures, it is hard to agree and harder to trust.” The four primary types of measures are quality, productivity, compliance, and sustainable in- novation. Each of these corresponds to a stake- holder perspective: customers evaluate quality, providers evaluate productivity, authorities evaluate compliance, and, in a very real sense, competitors evaluate sustainable innovation. With regard to sustainable innovation, von Mises (1998) states: “Competitors aim at ex- cellence and preeminence in accomplishments within a system of mutual cooperation” (Pp. 116-117). The ongoing challenge that service system entities (e.g., people) perceive is ‘self competition’ to sustain a balance between too much challenge (anxiety and risk of failure, if skills are lacking) and too little challenge (boredom and risk of meaningless success). A dynamic balance between anxiety and boredom helps to ensure a sense that change has meaning and value (Csiksezntmihalyi, 1990). Outcomes. “How did we do? Can this become a new routine or long-term relation- ship?” In a two player game, there are four possible outcomes: win-win, lose-lose, win- lose, and lose-win. Win-win corresponds to value-cocreation, and the other three are likely to lead to disputes. However, only four out- comes, relative to real world complexity, is too impoverished to be of much use. To create a more realistic model we developed ISPAR with ten possible outcomes (Spohrer, Vargo, Maglio, & Caswell, 2008). ISPAR (Interact-Service- Propose-Agree-Realize) includes outcomes in which: (1) value is realized, (2) the proposal (value proposition) is not understood, (3) the proposal is not agreed to, (4) value is not realized and disputes do not arise, (5) value-cocreation disputes are resolved in a manner that is OK for all stakeholders, (6) value-cocreation disputes are resolved in manner that is not OK for all stakeholder (7) an interaction is not a service interaction and is welcomed, (8) an unwel- comed non-service interaction is not criminal, (9) an unwelcomed non-service interaction is criminal and justice results, (10) an unwelcome non-service interaction is criminal and justice or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 exist within a social and political framework of promises and expectations. Natural history of service system entities. Service science seeks to create an understanding of the formal and informal nature of service in terms of entities, interactions, and outcomes, and how these evolve (or are designed) over time. An initial premise is that the entities, which are sophisticated enough to engage in rationally designed service interactions that can consistently lead to win-win value cocreation outcomes, must be able to build models of the past (reputation, trust), present, and future (options, risk-reward, opportunities, hopes and aspirations) possible worlds, including models of themselves and others, and reason about knowledge value (Fagin et al, 2003). The foun- dations for a natural history of service systems can be found in the anthropology literature, and the foundations for a natural history of value propositions and governance mechanisms can be found in the economics and law literature. The challenge of service science, as we see even more below, is the integration of these and other disciplines, centered on the service research literature. Basic questions. A general theory of service system entities and networks formed through value-proposition-based interactions has four parts, which directly lead to the four basic types of questions that SSMED seeks to answer: Science (improve understanding, map natural history, validate mechanisms, make predictions). What are service system entities, how have they naturally evolved to present, and how might they evolve in the future? What can we know about their interactions, how the interactions are shaped (value propositions, governance mechanisms), and the possible outcomes of those interactions both short-term and long-term? Management (improve capabilities, de- fine progress measures, optimize investment strategy). How should one invest to create, improve, and scale service system networks? How do the four measures of quality, produc- tivity, compliance, and sustainable innovation or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 7 before we can proceed.” (Pp. 2-3). We note that some say ‘service’ with a pejorative air. Service Science, Management, Engineer- ing, and Design (SSMED) is emerging as one of the sciences of the artificial. Service science is knowledge about service system entities, value-proposition-based interactions (or value-cocreation mechanisms), governance mechanisms, and the other seven basic concepts. Following Simon even further, one could argue that service system entities are physical symbol systems, dealing with symbols that are named resources, and grounded in physical routines for carrying out the symbolic manipulations related to named resources. “A physical symbol system is a machine that, as it moves through time, produces an evolving collection of symbol structures.” (ibid, Pg. 22). In our parlance, service system entities move through time and produce an evolving configuration of resources that are shaped by interactions with other service system entities. In a well working society, the interactions are based primarily on mutually agreed to value propositions. Service science seeks to improve our understanding by mapping the natural history (growth of ser- vice), discovering the mechanisms of change, and predicting future types of service system entities, value-cocreation mechanisms, and governance mechanisms. Tools and Methods al’ B2C service. “When the customer is a person.” James Teboul (2006) provides an easily acces- sible introduction to a few of the basic tools and methods that researchers and practitioners have created to both understand service and design new service offerings. The design of business to consumer (B2C) service offerings has espe- cially benefited from two basic tools, the service intensity matrix and service blueprinting. The service intensity matrix can be used to show how different businesses create different value-cocreation mechanisms that populate all the design niches, ranging from highly custom- ized and high interaction service offerings to or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 Alter (2006) has developed the work system method and customized it for the design of service systems. Alter (2008) also developed the Service Responsibility Table (SRT) as a tool to bring the customer into the preliminary stages of analyzing and transforming a work system/service system. The advantage of using SRT is that it is intuitive and could be used by a customer who is not trained in heavy-duty systems analysis and design. exist, DISCIPLINES AND EXPERT THINKING In this section, the ten academic discipline pil- lars of service science are presented. Service scientists may specialize in one of these ten areas (expert thinking skills, also known as contributory expertise), but must also be, to some degree, well versed in all ten areas in order to work effectively on multidisciplinary teams of professionals (complex communica- tion skills, also known as interactional expertise) (Collins, Evans, & Gorman, 2007; Collins & Kusch, 1999; Levy 2005). Service scientists should be T-shaped professionals (the vertical of the T - deep in their home discipline area and appropriately broad to work well in teams – the horizontal of the T). We also suggest that T-shaped professionals can learn and adapt more rapidly to the changing needs of busi- ness. For this reason, we also refer to T-shaped professionals as adaptive innovators (IfM and IBM, 2008). In what follows, the rationale for selecting these ten pillar disciplines will be presented as well as some of the key concepts from each of them. Because students start with a great deal of commonsense and prewired cultural knowledge about the service system worldview, even though they do not have the formal vocabulary, there is good reason to be- lieve material outlined below is not too much knowledge for students to learn (Richardson & Boyd, 2005). In the following subsections, we briefly introduce the ten disciplines that can provide an understanding of the past (a), present (b-i), or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 9 1817/2004). Paradoxically, even when one nation can do everything ‘better’ (i.e., more productively, profitably) than another nation, as long as ‘comparative advantages’ exist (i.e., relative differences in productivity), then there is often a mathematical, and therefore economic and social, advantage to interactions and ex- change. The implications of Ricardo’s insight are profound and go well beyond the notion of division of labor. Learning curves. The evolution of service system interactions in a population of service systems can be seen, in part, as each service system entity ‘doing a little bit more of what they do best, a little bit less of what they do worse, and a little bit more interacting with not just complementary service systems (‘specializa- tion’, ‘division of labor,’ ‘opposites attract’). Diversity creates the conditions for coevolution and complementary improvements of service system entities. Learning or experience curves (Argote 2005) provide further and on-going mathematical advantage to interactions (‘prac- tice makes perfect’). Value-cocreation mechanisms. Barnard provides one of the early attempts by a business practitioner to outline a theory of “cooperative systems,” including a discussion of formal and informal cooperative systems (Barnard 1938/1968). Richard Normann’s (2001) “Re- framing Business” is a more modern treatment of many of the same issues, more from a service networks and value propositions rather than an internal organization perspective, and outlines a framework for ‘value creating systems’ that are very close to our notion of service system entities and networks. Normann identifies three fundamental sources of value: new technological innovation, legal and regulatory changes, and reconfigurations of resources and value propositions from existing value creating systems. Alfred Chandler (1977) provides the historical account of the rise of industrial age business organizations (‘managers’ as the ‘vis- ible hand’). The creation of new roles in existing or new types of service systems often means that individual service systems (people) must step up to new levels of multitasking in their or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 provide a modern account of attempts to measure productivity gains in service industries, show- ing recent periods of time in the US economy where service productivity gains have actually outpaced gains in productivity in extractive and manufacturing sectors. Baumol (2002) has also written about the importance of R&D services (“the leader of the services”) to counteract the so called Baumol’s Disease (asymptotically static service productivity), and provide continuous improvement and even discontinuous jumps in service productivity. design at- b. Marketing: Customers and the Quality Measure Marketing and the customer stakeholder. Marketing, as a function within a business firm, has the responsibility to understand the existing and (potential) future customers of that business. Analyzing the relationships and interactions with existing customers, understanding the quality of the customer experience, and work- ing to communicate the appropriate image of the provider firm to attract new customers and improve the customer experience is part of the marketing function of the firm. Service is different. Service marketing is different from product marketing according to a leading textbook on this subject (Zeithaml, Bitner, & Gremler, 2006). Traditional product marketing deals with the four P’s of product, place, promotion, and price. However, service marketing adds three additional P’s: people, physical evidence, and process, because in many service provisioning situations, the service employees and customers interact directly. The service experience in these cases of simultane- ous production and consumption is determined by the people, the physical evidence where the interactions happen, and process that guides the customer-provider interactions. Of eleven challenges and questions for service marketers highlighted in this textbook (Pp. 24-25), three mention quality: How can service quality be defined and improved? How does the firm com- municate the quality and value to the consumer? (2004) or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 11 over the expected lifetime of the relationship. In B2B and IT-enabled service provisioning, contracts may explicitly call out Service Level Agreements (SLAs) with specific objective measures and penalty clauses in case the SLAs are violated. c. Operations: Providers and the Productivity Measure Operations and the provider stakeholder. A leading Operations Management textbook (Chase, Jacobs, & Aquilano, 2004, Pp 6-7) states: “Operations Management (OM) is de- fined as the design, operation, and improvement of the systems that create and deliver the firm’s primary products and services… while opera- tions managers use decision-making tools of OR/MS (such as critical path scheduling) and are concerned with many of the same issues as IE (such as factory automation), OM’s distinct management role distinguishes it from these other disciplines.” Service is different. Scott Sampson’s (2001) “Unified Theory of Services” extends Chase’s customer-interaction model of service production processes as distinct from traditional manufacturing production processes. Sampson is advancing a view of service operations as a distinct scientific field (Sampson & Frohle, 2006). The vocabulary of operations and op- erations management centers on the concept of process. The history of operations is primarily associated with the industrial revolution (pro- cesses with standard parts and economics of scale) and the rise of scientific management (processes with routine and repetitive human performance). More recently operations has sought an appropriate balancing between invest- ments aimed at optimizing a process (queuing theory to eliminate waiting and inventory bottlenecks) and those aimed at maintaining an increasing flexibility of a process (capacity and demand matching, agility for rapid change). A good overview of these perspectives on op- erations, including some basics of the human element in processes, is provided in the book “Factory Physics” by Hopp & Spearman (1996). or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 directly involve the customer (front stage pro- cesses). By understanding the value providers derive from a process as well as the value that customers derive from a process, appropriate operations techniques can be used to reconfig- ure activities, information, risk, etc. between people and technology, between organizations, and between employees and customers to im- prove productivity and quality of experience (Womack & Jones 2005). By segmenting types of processes into front-stage and back-stage processes, appropriate techniques can be used to optimize productivity as well as improve flex- ible responsiveness (Levitt 1976; Teboul 2006). By decomposing processes into reconfigurable components, service activities can be industri- alized as technological capabilities advance to improve quality and economies of scale (Levitt 1976, Quinn & Paquette, 1990). Industrial engineering compared to ser- vice science. The easiest way to appreciate the difference is to compare Hopp & Spearman’s “Factory Physics” to Fitzsimmons’ “Service Management.” The key difference is the focus shift from factory systems, products, and processes to service systems, value, and interactions. That is, from systems governed by physical laws to systems governed by human- made laws. d. Governance: Authorities and the Compliance Measure sourcing Governance and the authority stakeholder. Political science, legal theory, contract law, all relate to governance. Principal-agent theory in economics also relates to governance (Roberts, 2004). Management mechanisms and admin- istrative science are associated with top down control of resources in a hierarchy, while gover- nance mechanisms are associated with agents or organizations (service system entities in our vo- cabulary) interacting in the context of markets, organizations, and institutions, and preferring the efficiency and freedoms associated with self governance wherever possible. Williams (1999) in “The Mechanisms of Governance” provides theoretical and empirical investigations of al- or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 13 overcome opportunism. Langlois & Robert- son (1995) in “Firms, Markets, and Economic Change” provide a dynamic theory of the boundaries of the firm that complements much of the work by Coase, North, and Williamson on transaction costs, new institutional economics, and governance structures. 100% compliance may not be optimal.The service systems worldview does not make the assumption that 100% win-win interactions are optimal. An ecology of interacting service sys- tems with 100% win-win interactions could be achieved with 100% compliant service systems. For example, if people were as predictable as technological components in their performance, then success rates approaching 100% might be possible. However, in the case of 100% compli- ance, the ecology of service systems might not be very innovative. Risk, rewards, and learning rates. Non- compliance may be risky. John Adams (2000), the UK scholar, in his recent book “Risk” describes the way in which people self-govern risk levels to balance risk and reward. By ac- cepting some amount of risk, service system entities (people, businesses, nations) are able to take actions in a much wider range of situ- ations and learn more rapidly than otherwise might be possible. Adams also describes four models of rationality that describe alternative worldviews about risk taking behavior in soci- ety. Systems that tolerate risk taking can also (under certain assumptions) be demonstrated to convert unknown unknowns to known unknowns and sometimes to known knowns to improve future performance. Governance, compliance, risk, trust, privacy, fairness, and learning are all interrelated. Governance mechanisms can also be designed to adjust the learning rates of service system entities in service system ecologies with many unknowns and dynamic properties. For example, the prime interest rate acts as a single parameter related to the cost of capital and is used by the chairman of U.S. Federal Reserve Bank to curb inflationary tendencies (raise interest rate) or curb recessionary tendencies (lower interest rate). Investing in R&D and innovation (risk taking) in an economy tends or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 measure of the value-cocreation increase both short-term and long-term (sustainability). Stan- dard examples of service system innovation include: (1) a loyalty program for an airline, (2) a self-service system at a bank (ATMs), airport (tickets), or retail outlet (checkout scanning), (3) creating a financial services offering, (4) creating a new franchise model, (5) creating a new type of business or organizational structure, (6) specializing and streamlining a medical procedure to expand the number of patients that can afford and hence seek treatment, etc. Experience design. Experience design is often seen as a balancing act. Csiksezntmihalyi (1990) in “Flow” describes the design of opti- mal experience as balancing anxiety (too much challenge, and not enough skill) with boredom (not enough challenge, and too much unutilized skill). Csiksezntmihalyi also describes the bal- ancing act between differentiation (more unique individual experiences) and integration (more standardized collective experiences). Pine & Gilmore (1999) in “The Experience Economy” provide a perspective on economic evolution from commodities to goods to services to experi- ence and then to transformations, as balancing more customization (customer satisfaction) with commoditization (customer sacrifice). process, f. Anthropology: Privileged Access and People Resources subjective, Anthropology and the people resource. An- thropology is the discipline that is concerned with the study of humanity – all people across all places, times, and dimensions of analysis. The “four fields” approach to anthropology encompasses physical anthropology (based on physical data of biological and human evolu- tion), archeology (based on physical artifacts and environmental data), cultural anthropology or social anthropology (based on data of past and present organized groups of people who share learning contexts or culture), and linguistics (based on language data). It is worth noting the rough correspondence between the “four fields” and the four fundamental categories of a relative or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 15 tion and organizations) as they are dynamically configured into service systems that interact via value propositions to cocreate-value (as mutually measured or judged by various stake- holders; “mutually” meaning they can reason about each other’s reasoning processes – or step into each other’s shoes temporarily). The value of knowledge, which is sometime thought of as embedded in resources, changes over their life cycles depending on the context of use (Boisot 1995). g. Engineering: Owned Outright and Technological/Environmental Resources Engineering and physical resources. Funda- mentally, engineering is concerned with the translation of knowledge to value, by manifest- ing the knowledge in some physical and useful form. Engineering approaches have been broad- ly applied to areas relevant to service science, including industrial and systems engineering, industrialization of services, engineering eco- nomics (Woods & Degarmo, 1953/1959; Park 2004; Newman, Lavelle, & Eschenbach, 2003; Sepulveda, Souder, & Gottfried, 1984), activity- based costing (ABC), incentive engineering, human performance engineering (Gilbert 2007), financial engineering (Neftci 2004), process engineering and statistical process control, product engineering, document engineering (Glushko & McGrath 2005), and of course service engineering (Ganz 2006; Spath 2007; Mandelbaum and Zeltyn, 2008). Service is different. Engineering problems are solved in order to create solutions that help realize a value proposition between service systems. Engineering of sustainable service systems seeks to economize on scarce resources (individual people’s time, attention, and capital as well as environmental resources, societal and business resources, etc.). Engineering in close collaboration with their underlying science areas also seeks to create new abundant resources and infrastructures that can enable the translation of desired possibilities into reality. informa- or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 service interactions. Honebein & Cammarano (2005) in “Creating Do-It-Yourself Customers” examine this trend, starting with the rise of the sophisticated customer. Shared access. The internet and world- wide-web have greatly expanded the shared information in the world. Effective customer- provider interactions are based on shared access to information. Value propositions (one type of shared information) can be communicated (a proposal), agreed to (a promise or contract), and realized (an event or assurance of a future event). The value of shared information is central to all service system entities. Information is used to update models of all stakeholders (customers, providers, authority, competitors) in the world (world model fidelity), which is essential to creating new value propositions, realizing value propositions that are part of existing relation- ships, as well as fairly and transparently resolv- ing disputes. Customers ‘own’ the knowledge assets related to the problems they need solved. Providers ‘own’ the knowledge assets related to the capabilities that can be brought to bear to solve those problems. However, without somehow sharing the information, it is of little value. Castells (2004) in “The Network Society” describes “A network society is a society whose social structure is made of networks powered by microelectronics-based information and communication technologies.” Money as shared information. In the ser- vice system worldview, money and capital are primarily information (for example, see “The Shape of Actions: What Humans and Machines Can Do” by Collins & Kusch (1999)). The growth of on-line or virtual worlds with artificial currencies, makes the notion of “money as in- formation” even more apparent. The connection between information accumulation and culture is a strong one (see the definition of culture and its relation to information in “Not By Genes Alone” by Richardson & Boyd (2005)). in service that had ure in self- or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 17 fundamental generalization of make-buy from early manufacturing is the concern in sourcing. Sourcing creates more interdependence and less independence. Organizational intelligence. March (1999) in “The Pursuit of Organizational Intelligence” wrote “Organizations pursue intelligence… In particular, organizations (like other adaptive systems) are plagued by the difficulty of balanc- ing exploration and exploitation. By explora- tion is meant such things as search, discovery, novelty, and innovation. It involves variation, risk taking, and experimentation. It commonly leads to disasters but occasionally leads to important new directions and discoveries. By exploitation is meant refinement, routinization, production, and implementation of knowledge. It involves choice, efficiency, selection, and reli- ability. It usually leads to improvement but often is blind to major redirections.” This is a very fundamental observation. Organizations, and in general service system entities, are dynamic configurations of resources in a constant process of change. However, to continue to exist that organizational change must balance two types of activities – exploration and exploitation – in order to both exist in and adapt to a changing environment. This balance is not unlike the balance that individual people seek in optimal learning, in which too much challenge can lead to anxiety and too little challenge can lead to boredom. Balance is the key to sustainable change. Open innovation and boundaries of the firm. Historically in large firms, common perceptions were that (1) internal sourcing (central R&D) is best to create innovations, and (2) external sourcing (partnership) is best for cost reductions and industry standardizations. However, open innovation models (Chesbrough 2006) may challenge the former perspective, and increasingly standardized approaches to leaning and automating processes may challenge the latter perspective. Moore (2005) in his book “Dealing with Darwin” states that “The formula for tackling innovation and overcoming inertia in tandem is simple: Extract resources from context and repurpose them for core.” What is or distributing in print or electronic forms without written permission of IGI Global Systems in the Service Sector, 1(3), 1-31, July-September 2009 Management. Management of information systems (MIS), project management (PM), inno- vation and management of technology (IMOT), operations management (OM), financial management (FM), supply chain management (SCM), enterprise resource management (ERP), customer relation management (CRM), human resource management (HRM), intellectual property management, contract management (CM), risk management, as well as strategy and organizational change management (S&OCM) are well developed fields of knowledge related to improving decision making and the performance of complex business and societal systems. as the art PROFESSIONS AND COMPLEX COMMUNICATIONS s Before students choose to study service science, they will surely ask about future jobs and profes- sions. Is this a good career choice? Yes, from the perspective of flexibility. Service scientists must possess complex communication skills (in- teractional expertise) across multiple academic disciplines and areas of practice. Entrepreneurs and business consultants are in high demand, but it has been difficult to specify curriculum beyond exposure to technology change and management practice. SSMED offers a new opportunity to create curriculum relevant to those who aspire to entrepreneurship and busi- ness consulting. Scientists and engineers are also in high demand, but demand constantly shifts to new areas. We expect more students who aspire to be system scientists and system engineers will seek a solid understanding of service science for many different career paths in academics, government, and business. identify Entrepreneurs, Business n Consultants, and Mindset l Entrepreneurs. Entrepreneurial capitalism (Baumol, Litan, Schramm, 2007) is “a type of capitalism where entrepreneurs, who continue to provide radical ideas that meet the test of or distributing in print or electronic forms without written permission of IGI Global

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