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Irene Ng, Outcome-based

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  • 1.Introducing University of Warwick, WMGand IIPSI Irene C L NgProfessor of Marketing & Service Systems, WMGDirector, International Institute of Product & Service Innovationirene.ng@warwick.ac.uk @ireneclng http://uk.linkedin.com/in/ireneclng bit.ly/vcssblogwww.warwick.ac.uk/go/sswmg www.ireneng.com

2. The University of Warwick Facts and ................................. Figures Established 1965 Undergraduates12,979Postgraduates 10,441 League table positions Times and Sunday Times (2012) - 8thInternational students6,411 Guardian (2012 guide) 6th International students 27% Independent (2012 guide) - 8th RAE 2008 7th overall Total staff4,912 QS* World University Ranking (2011) 50th Academic staff 687 We aimed to be in the top 50 by 2015International staff25% International workingTurnover419m Formal working relationships with Boston Campus size 292 hectaresUniversity, Monash University, IITKharagpur, Jawaharlal Nehru University Academic departments28and Nanyang Technological UniversityResearch centres48Overseas alumni 44,194* Quacquarelli Symonds Ltd 3. WMG Research and DevelopmentCentres InternationalInternational Automotive Manufacturing Centre Research Centre EngineeringInternational Digital Management BuildingLaboratory (IDL) 4. New CentresInternational Institute for Product and Service Innovation (IIPSI) 5. Global Partners5 6. International Digital Laboratory Product Life-Cycle Management RoboticsDigitalExperiential EngineeringManufacturingProduct Evaluation Technologies Embedded Systems Simulation and Modelling Cloud Computing Security Privacy Enhancing TechnologiesInstitute for Data Loss Monitoringe-Security Vulnerability Research Trust Management Health Informatics e-HealthInstitute of Neural EngineeringDigital Healthcare Biomedical Engineering Virtual Reality Medical Training VisualisationDigital Digital MediaTechnologies e-Business 7. International Institute of Product &Service Innovation (IIPSI)14 January, 2013 Copyright Irene Ng, 2012. All rights reserved. 8. Digital Application Innovation (techdemonstrators) Cloud for Business Mobile for BusinessSmarter Social MediaData to Intelligence 9. Polymer Innovation (sample techdemonstrators) Adding Functionality to Plastic Parts Low Volume Production Polymer Recycling 10. Experience-led Innovation (sample tech demonstrators) User Focussed Product/Service DesigCustomer EngagementVisitor Experience Energy Usage Behaviour 14 January, 2013 Copyright Irene Ng, 2012. All rights reserved. 11. IIPSI Service Systems & Business+ (bootstrappingtech innovation with service science & businessmodels research and innovation) Technology disruptions cause challenges to existing business models (e.g. Kodak) Adaptability, transformation needed both for their business models (the firms capability to serve the market) and their economic models (the way they derive their revenues and the market exchanges they participate in) Business+ research into value creating service systems, digitisation/virtualisation, service science, S-Dlogic (e.g. Bombardier, Rolls Royce, GSK); also into pricing/revenue models, methodology for new transactions & markets Transdisciplinary team of social science, technology, business & engineering 4 RCUK/EPSRC DE projects, NEMODE virtual collaboration host 12. 17 Markets PracticeScale Inform IIPSI Marketspace 2 1corporateMkt modularity6space 7 SME spaceStartup space Education 9 11SMEfunding8 Social Devt ScienceIP Passing Model,3 Pre- 10StudentIP Passing Model, independenceincubating sdemonstrators15 5 demonstrators144ResearchService Systems, New Econ/Biz models 10Experience-DigitalLower PolymerTRLsKnowledgeled(software)Innovation innovationInnovation18Transfer &19Trade Toolspubs AcademicBootstrap Projects pubs131211 primary knowledge flows, 8 secondary flows 13. Impact created 12 new high tech startupbusinesses, directly generated 70 new jobs, trained over 450 small business in a rangeof digital technologies over the last 4 years International publications, patents, toolsetc.14 January, 2013 Copyright Irene Ng, 2012. All rights reserved. 14. Outcome-based Contracts as a NewBusiness ModelResearch Insights fromAerospace/Defence contracts 15. Theoretical backgroundThe science 16. More than 200 years of Goods dominant logic: Value as WORTH14 January, 2013 Copyright Irene Ng, 2012. All rights reserved. 17. But it wasnt exchange that made us happy. Itwas experiencing what we bought that gave usthe outcomes we wantedWe buy because of the service of the object,even if it was an emotional service i.e. things areservice avatars*Mike Kuniavsky, 201014 January, 2013Copyright Irene Ng, 2012. All rights reserved. 18. But it wasnt exchange that made us happy. Itwas experiencing what we bought that gave usthe outcomes we wantedTo find ways of innovating, we need to understand value-in-use 19. So lets look at this logically We buy products to obtain benefits What are the benefits How do we get the benefits? What is the role of the firm? The customer? The GDLogic mentality of organizations. 20. SD Logic: The co-creation of value for outcomes/benefits/value-in-usePeace of mindEntertainmentLove CO-CREATED Realise VALUE that isRESOURCES higher than proposed EnhanceRESOURCES???? 21. 1. Value is co-created: Customer resource toco-create needs to be a feature of design &innovation Ng, Irene C.L. (2010) The Future of Pricing and Revenue Models, Journal of Revenue and Pricing Management, Vol. 9, No. 3, pp276-281 Ng, Irene C.L., and Laura Smith (2012), An Integrative Framework of Value in Review of Marketing Research Special issue on Toward a Better Understanding of the Role of Value in Markets and Marketing, Stephen L. Vargo and Robert Lusch (Eds) Vol 9, pp 207-243 22. From a Value co-creation perspective, outcomes couldcome from several types of contract point A to B Getting fromGood driving experienceDriveCarActual outlays are Other driversTrafficresources available to co-create value 23. Key issues in value co-creation foroutcomes There is (perhaps) only a difference between aproduct and a service if youve already made theproduct From an outcomes perspective, the key issue is(a) what should be the value proposition(combination product/service) (b) how does thefirm participate in value (co)creation by thecustomer to achieve those outcomes and (c) howdo we capture worth ($$$). In other words whats the business model14 January, 2013 Copyright Irene Ng, 2012. All rights reserved. 24. BUSINESS MODELContext ECONOMIC MODEL BUSINESS MODEL - Where exchangesVariety come from, what exchanges are there,person monetization ResourcesValue (co) Experiencing/u se of Capturing worth Money fr access, outcomes, Creation equipment ownership, personal data Resources Value prop Viability/ScalEquipment14/01/2013abilityWMG 24 25. Outcome-based Contracts Some simple analogies English lessons, holes in the wall More complex OBC Rolls Royce Power by the hour ,Availability of equipment, Popularity of afiction collection in a library25(c) Irene Ng, University of Exeter, All Rights Reserved 26. Understanding Efficient and EffectiveValue Co-Creation and the MarginalAnalysis of Service for OutcomesThe Case of Rolls RoyceSmith, Laura, Irene CL Ng and Roger Maull, (2012) The Three Value Cycles ofEquipment Based Service, Production, Planning and Control, Vol 23, Issue 7, pp1-18, DOI:10.1080/09537287.2011.640055Ng, Irene C.L., Glenn Parry, Roger Maull, Laura Smith, Gerard Briscoe (2012),Transitioning from a Goods-Dominant to a Service-Dominant Logic: Visualising theValue Proposition of Rolls Royce, Journal of Service Management, Vol 23 (3),pp416-439Maull, Roger, Laura Smith and Irene C.L. Ng, (2012) Servitization and OperationsManagement: A Service-Dominant Logic Approach, International Journal ofOperations and Production Management, forthcoming 27. The value-creating service system ofequipment (the vertical) 28. Transcending Logic of Value Creation GD Logic Value PropositionsSDLogic - Value Creating Activities (Collaborative co- (provision of assets, time and creating activities to achieve value-in-use) i.e. what we information as exchange value) do together (and with other entities) i.e. what we can sell you Engine (asset)Equipment Performance TimeTechnical Variance SparesTechnical Query Resolution Information Repair Service Maintenance Service Parts Forecasting & ProvisioningExchange value Installation and commissioning of equipmentValue propositionas units Through-Life and Obsolescence Planning Capability Forecasting & PlanningExchange value Equipment Training/Operating Advicevalue proposition as Capability Advice firms contributionto value-in-use14/01/2013 Copyright Irene Ng, all rights reserved28 29. Visualising Exchange and Contextual Value &Resource Integration informed by SDLogic Visualising exchange value from value-in-use Understanding customer choice through ConjointMethodology Visualising Resource Integration S-D Logic suggest that resources are not, they become. (Vargoand Lusch, 2004, p.2) resources are only active in enabling processes. depiction of resources as activities and the focus on process inservice is the domain of operations management (Silver, 2004;Ponsignon et al. 2011) to visualise resources as activities we first developed a processmodel for each of the VCAs and then developed a discrete eventsimulation model to visualise the impact of changes in volume andvariety of inputs on the resources.14/01/2013 WMG29 30. How should the firm contribute to value-in-use?14/01/2013WMG30 31. Demonstrator (1) 32. Demonstrator (2) 33. Demonstrator (3) 99,999 88,888 34. Demonstrator (4) Marginalanalysis 35. Case study on value co-creation: BAESystems & outcome-based contractsATTAC Outcome- based contract 36. BAE Systems Ng, Irene C.L., Xin Ding and Nick K.T. Yip, Outcome-based Contracts as New Business Model: The Role of Partnership and Value-driven Relational Assets, forthcoming in Special issue on Bu