servicisation and digital convergence 2011
description
Transcript of servicisation and digital convergence 2011
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Innovation and Convergence: Digital
Convergence and Servicisation
IME service innovation seminar 8
IME - Service Innovation - 2011 BMAN62052
MIIRO
Two developments requiring new strategies and capabilities
Servicisation
Digital Convergence
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Servicisation
IME - Service Innovation - 2011 BMAN62052
MIIRO Sectoral convergence
• Similar technology• White collar workforce• Customer orientation• Customisation• Many ways in which manufacturing and
services look more alike• Services become “productised”, other
sectors “servicised”.
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROProductisation of services
1. ..either the evolution of a service to include a product
2. or a service that becomes standardised to a degree where it is marketed as a product.
For example in logistics, transport contracts can be so well defined that they turn into a service that is effectively sold as a product. www..productserviceinnovation.com
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Servicisation:The increasing emphasis on service outputs
from manufacturing and other non-service firms
From Baines, Lightfoot, Benedettini and Kay (2009): Journal of manufacturing technology management, Vol 20 No 5 2009.
IME - Service Innovation - 2011 BMAN62052
MIIROSome very different aspects
Embedded services
Product services: complementary to the goods; aiding users; adding more value; support services, KIBS
Servitising goods: not rental
Process services: selling business processes
Software, comms, content [e.g. Kindle]
Aftersales, software sales, systems integration and management
Pay for service, not good
Testing, production, comms, marketing
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Why servicise?Manchester Institute of Innovation Research
The annual volume of new equipment sales compared with the size of the installed base in selected capital goods sectors (ie one car is sold for every 13 on the road).
IME - Service Innovation - 2011 BMAN62052
MIIRO Some cases: Manchester Institute of Innovation Research
T.S. Baines, H.W. Lightfoot, O. Benedettini, J.M. Kay, (2009) "The servitization of manufacturing: A review of literature and reflection on future challenges", Journal of Manufacturing Technology Management, Vol. 20 Iss: 5, pp.547 - 567
IME - Service Innovation - 2011 BMAN62052
MIIRO How is it done?
Andy Neely, Cambridge, sees 3 strategies:Product-focused strategies seek to capture information regarding product usage and then integrate any relevant findings so they influence the design of the next generation of products - for example maintenance processes, functionality upgrades
Service-focused strategies seek to address broader customer expectations concerning for example, service availability, co-location of service engineers, customer equipment training, speed and quality of response to specific enquiries
Value chain-focused strategies seek to provide integrated service solutions (such as acting as prime contractor) so that, in effect, the supplier firm takes over some part of the customer's operation
Another approach
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO “Product” Life CycleManchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture
Delivery Usage
Support End-of-use
IME - Service Innovation - 2011 BMAN62052
MIIRO
“Product”-service relations: conventional manufacturing
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
SupplierCustomer
Interaction: mainly transactional.Some product support
Some peripheral services
IME - Service Innovation - 2011 BMAN62052
MIIRO“Product”-service relations: more service
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
Product + service delivery
IME - Service Innovation - 2011 BMAN62052
MIIRO
“Product”-service relations: more service customisation
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
Customisation of product and service
IME - Service Innovation - 2011 BMAN62052
MIIRO
“Product”-service relations: more service customisation
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
Product & service codesigned: total solutions
IME - Service Innovation - 2011 BMAN62052
MIIRO
“Product”-service relations: not a linear model/stages theory
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
IME - Service Innovation - 2011 BMAN62052
MIIRO
“Product”-service relations: not a linear model/stages theory
Manchester Institute of Innovation Research
Veronica Martinez, Marko Bastl, Jennifer Kingston, Stephen Evans, (2010) "Challenges in transforming manufacturing organisations into product-service providers", Journal of Manufacturing Technology
Management, Vol. 21 Iss: 4, pp.449 - 469
Design Manufacture Delivery Usage Support End-of-use
IME - Service Innovation - 2011 BMAN62052
MIIROLarge-scale analysis is rare
Manchester Institute of Innovation Research
An exception: Andy Neely ‘The Servitization of Manufacturing: An Analysis of Global Trends’
• Data from OSIRIS [44,000 listed companies from around the world].
• Companies with primary or secondary US SIC codes in the range 10-39 inclusive, extractive & manufacturing, and over 100 employees [n=12,521].1.Pure manufacturing
PetroChina principally engaged in a broad range of petroleum & natural gas-related activities.2.Some combination of manufacturing & serviceSiemens -predominantly electronics & electrical engineering, but provides wide variety of consulting, maintenance & other services.3.Pure serviceThe Brink's Company: security industry firm - services offered include armoured-car transportation, automated teller machine (ATM) servicing, currency & deposit processing, coin sorting & wrapping, & arranging secure air transportation of valuables.
Three models
IME - Service Innovation - 2011 BMAN62052
MIIRO Neely casesManchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Main services offeredManchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Some trend dataManchester Institute of Innovation Research
LAY, G. 2007. ‘Towards a Comprehensive Innovation Strategy’. Quality Congress. Istanbul: Fraunhofer Institute for Systems and InnovationResearch ISI, Karlsruhe
IME - Service Innovation - 2011 BMAN62052
MIIRO
Servicisation is revenue model innovation; but can affect innovation more generally
Knowledge about customers, product use, product failures and problems
Reallocation of costs changes logic about product maintenance:
Affects product design
Scope for innovation in monitoring and maintenance
New service innovation
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Environmental argumentServices = less environmental impact (?)
Swedish PhD study , firm (and user) interviews: Oksana Mont (2004) Product-service systems: Panacea or myth? Lund University, The International Institute for Industrial Environmental Economics
Manchester Institute of Innovation Research
Drivers:Some general factors, but also market issues vary considerably across sectors; coercive market includes consumers and regulations
Barriers:Limited regulatory drivers; high costs of labour; need for better awareness on part of consumers and intermediaries (and own staff) – long learning time; credibility/demonstrability to users; diminished user responsibility; possible internal conflicts (2nd hand vs new), etc.
IME - Service Innovation - 2011 BMAN62052
MIIROChallenges for servicisers
Different management and customer relations required
May need understanding of new markets, and evaluation of potential of new service offering
May require thorough reorientation of sales workforce
New capabilities – separate organisation?
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Exercise!You work for a firm that makes high-value consumer products. (cosmetics, jewellry, babyfood, petfood....)
There is a potentially disruptive technology emerging which will allow consumers to make the final products at home, easily, and for much less money.
This is attracting a great deal of media attention, and public response to the new offering looks positive.
What do you do?
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO Some optionsWe rule out suppressing or banning the technology! (Though you could try dark propaganda against it...)
We do not rule out your doing deals with the supplier.
We do not rule out your downsizing, but you must try to remain sustainably profitable.
Could you go upmarket?
Can you complement your product with other tangible elements, or with new services?
Can you move away from the original product, and focus on ancillary goods and services that sill appeal to consumers (and maybe give you advantage with the new technology)?
Can you do other things with your skills, plant and equipment?
Can you think of other options?
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO The taskDecide on your product and on the strategy/ies you will pursue. (5 mins+15 mins.)
Consider what capabilities you will require to implement this:
Types of Knowledge
Workforce skills
Alliances
Etc (30 minutes)
Decide on what the most urgent of these are, and how you will address them. (10 mins)
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research Digital Convergence
ConvergenceWhat is digital convergence?
Digital convergence and innovation
Who does this affect?
How does it affect media, IT industries, other sectors…
IME - Service Innovation - 2011 BMAN62052
MIIRO 3 sorts of convergenceManchester Institute of Innovation Research
Disruptive innovation challenges, PLUS need to master new technologies.“Both market and technology-driven convergence tendencies along the value chain ...eventually imply entire industries to converge in the long term. ...the decision to integrate competences and technologies from external sources does not necessarily come as a strategic choice... Rather required to avoid negative effects of emerging shakeouts.”
IME - Service Innovation - 2011 BMAN62052
MIIRO Technology-driven caseManchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Convergence
For some decades commentators have addressed computer/ telecommunications “convergence” – or collision
Held by many to be a defining feature of new IT, e.g. Kobiyashi “IT=C&C”… and related to common underlying technologies (microprocessors, digitalisation)
But more industries and activities “converge” than just data processing and communication
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Digital Convergence
Historically, distinct industries dealt with print, recorded music, images, other media, telecomms, broadcasting, computer hardware, software
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Digitalisation
Text
Photography
Moving Images
Sound
Instruments
(photochemistry)
(phonography, electronics…)
(mechanical, electromechanical)
(printing)
New storage devices and displays – ebooks, CDs, MP3/4 players, etc; Web publishing
Analogue DigitalPublishing, broadcasting, etc
Doc. Processing Digital cameras “ ”, projection,
TVs, DVDs etc. DT, CD, MP3.... Digital display,
measurement
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Digital Convergence
Distinct industries have dealt with hardware, software, telecommunications, broadcasting, print and other media
They have varying assets, capabilities and types of content - and regulatory and IP systems
But now they have increasingly shared underlying technologies (microelectronics, optronics, software)
All types of data and information potentially captured, processed, communicated, stored, displayed digitally via new IT
IME - Service Innovation - 2011 BMAN62052
MIIRO
Moving over Space
Transforming, Processing
Storing over Time,
Reproducing
Manchester Institute of Innovation Research
Three Uses of Information
IME - Service Innovation - 2011 BMAN62052
MIIRO
Moving over Space
Transforming, Processing
Storing over Time,
Reproducing
Manchester Institute of Innovation Research
Three Sorts of Industry(Tele)communications
Publishing Media Computation
IME - Service Innovation - 2011 BMAN62052
MIIRO
Moving over Space
Transforming, Processing
Storing over Time,
Reproducing
Manchester Institute of Innovation Research
Traditional Features(Tele)communications
Publishing Media
(Broadcast Media)
Computation
1 to 1
1 to many
Early Online Media
CONTENTINTERACTION
COMMUNICATIONPROCESSING
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
A Growing Market Space…
Ea rly industrial
Twentieth Century
Twenty-first century:
Increasing size of markets
IME - Service Innovation - 2011 BMAN62052
MIIRO
… Within which the offerings of established industries expand
Manchester Institute of Innovation Research
Ea rly industrial
Twentieth Centuty
Twenty-first century:
Increasing size of markets
========Increasing
=== proliferation of ======= products
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
The Expanding Media Universe
Communications
Computation
Content
Time
The three “trumpet” shapes represent
telecommunications, computer, and
broadcast & print media fields.
Over time the product space to which they contribute, and its market size, expands, and the three fields overlap increasingly.
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Early Industrial Society
INFORMATION GOODS & SERVICES
COMPUTATION(TELE) COMMUNICATIONS
Paper-based communication: Stationery, Post.
C19th - telephone, telegraph
Mechanical information
processing: very limited till C20th -
punch cards, calculators
Paper-based information products - books, newspapers, etc + live
consultation & entertainment + (later) mechanical recorded media
(gramophone etc)
All (but telecomms) based on
PHYSICAL TRANSPORT
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
The mid-1950s
BROADCAST + PUBLISHED MEDIA
COMPUTERS
Telephone
Telegraph
TV (mainly monochrome)
AM radio, LP records,
valve amplifiers
Very few, very large,
valve-based electronic
computers; Keyboard
calculators
TELECOMMUNICATIONS
PHYSICAL TRANSPORT
plus increasing electronic delivery
(telecomms, TV, radio, etc.)
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
The mid-1970s
BROADCAST + PUBLISHED MEDIA
COMPUTERS
Telephone
Telegraph
Telex
TV (colour) AM and FM transistor radio, LP records,
transistor amplifiers
Numerous mainframe computers
Pocket calculators
TELECOMMUNICATIONS
Increasing role for
electronic delivery, but little
integration of media
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Telephone Answering Machines, Mobile phones, Pagers, Business Fax Machines
Videorecorders, audio CDs,
cable and satellite TV, Teletext
Numerous Personal
Computers, Home Computers and videogames,
Electronic wristwatches
Electronic mail
Bulletin boards
Videotex Online databases
for business & science
Recorded information
services
BROADCAST + PUBLISHED MEDIA
TELECOMMUNICATIONS COMPUTERS
Some integration of media,
emergence of optical media,
increasing digitalisation
The Mid/late-1980s
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Turn of the Century
Digital mobile
phones,
Widespread use of Fax,
pagers
Videorecorders, audio CDs, digital
recording cable and satellite TV
Numerous PCs, laptops.
notebooks, pocket
organisers, etc. Numerous home computers and
videogames
Electronic mail,
SMS
Mobile data comms
CD-ROM publishing
Cable telephony Audiotext
Internet
World Wide Web
COMPUTERSTELECOMMUNICATIONS
BROADCAST + PUBLISHED MEDIA
Increasing integration of media,
use of optical media,
digitalisation
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Digital mobile communications in wide use - pervasive communications
MP3 and PVR, Digital Broadcast TV
digital videorecording
High definition TV
Pervasive computers, in many types of
device (e.g. Personal Digital
Assistants, smartphones)
Internet telephone VoI,
Internet videotelephony
Internet TV Video on Demand
Interactive TV
WiFi, Next generation of
Internet & WWW,
Web2.0, Video telephones
and conferences
DVD-R+, interactive
video
c2010 COMPUTERS
BROADCAST + PUBLISHED MEDIA
TELECOMMUNICATIONS
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Successful products/applications/triggers
Design paradigms/platforms
User implementation
Emergence and take-off of markets, market structures
Product spaces
Capabilities and industrial structure
Governance of content (news, porn, gambling) and property rights (intellectual property)
Other governance issues (crime, security…)
Uncertainties
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research Regulators
UK system change
OFTEL (Telecommunications Act, 1984, on “deregulation”) + Cable Authority + ITC ….
OFCOM (Communications act, 2003)
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
1990
2003
spectrumRadiotelecommunications Agency
Broadcasting Standards Commission
But not print media – Press Complaints Commission etc.
1991
networksOftel
1984
1996?
IME - Service Innovation - 2011 BMAN62052
MIIROManagement of digital convergence
Service industries in communications and media (and software) confront or create potentially disruptive challenges – e.g. To content delivery
Manufacturers in publishing and IT face scope for new services
Major challenge to capabilities
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIRO
Jong-Seok Kim PhD Digital Covergence in South Korea
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Jong-Seok Kim: Korean mobile phone companies
2nd generation, digital services – earlier 1990s generation was analogue
2.5 generation
3rd generation
128k – 2m /sec
64k /sec
14.4k/sec
Capabilities to establish large markets for music via cellphone
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
The Network R&D Center’: to develop core technologies to ensure the continual advancement of the next generation network, which in time will become one of the core competencies of mobile network operators. The Platform Research Center: to research, develop, and operate Internet-related services, as well as to develop/grow the Financial Enabling business, which make bankingand financial transaction possible on mobile phone. In addition, to discover new sources of growth engines by creating new businesses based on existing technological platforms. Currently the Center is carrying out R&D activities on WAPbased Platforms, M-Commerce, LBSIn the year 2004, SKT placed more emphasis on the R&D of technology. In addition, aA New Business Division was established, aiming at explore new growth engines. TheNew Business Division deals with the formulation of new business strategies and theirimplementation at global levels. New managerial routines were adopted to operateefficiently and to speed up business processes. The Chief Business Officer wasresponsible for the Business Strategy Division, Business Division, and Customer Division (the new name for the Marketing Division). At the same time, with the continuous introduction of new convergent services, the number of transactions with content providers was escalating. Hence, a Content Business Unit was also formed, to deal with the many issues relating to content.
. ...while the three firms took different measures, they watched each other and worked on some common issues
SKT’s response
IME - Service Innovation - 2011 BMAN62052
MIIRONew knowledge to be acquired
DRM and relevant systems and solutions
New markets, their properties and evolving demands, incl. Attitudes to IP and preferences for payment
Knowledge of competing devices
Content providers, the existing music business
Potential new services – ringtone, streaming, downloads, associated content and marketing
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research Convergence
Blurring industry boundaries
New convergent services
Much scope for innovation in new services, improved service design
New players
Diversification, vertical integration (?)
Requirement for new strategies, capabilities, organisation
Example: “smart phone” and tablets converge entertainment (games, videos, music), communications (phone, VOIP, videophone), publishing (newspaper download), and much more (cameras, health apps)… Much alliance and networking across firms to achieve success in new markets.
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research Not just Media
New categories:e.g. chematronics, mechatronics [watch this space
for bio and nano categories]…Converged products:
e.g. “smart house” converges consumer electronics, telecomms, utilities, construction
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
Key Features of New Media:
CONVERGENCE and COLLISON:
digitalisation blurring boundaries new modes of delivery and
use of existing (types of) content
repurposing and repackaging of content
New types of content (eg MMORG)
INTERACTIVITY: promises and realities
differential development of applications and
competences on both - user and supplier sides
Sometimes technically demanding – sometimes
“democratic” innovation around types of content, interfaces, delivery
and “display” systems
IME - Service Innovation - 2011 BMAN62052
MIIROHacklin et al: strategic and operational issues
Manchester Institute of Innovation Research
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research Some implications
Standard classifications of creative industries may be destabilisedImportance of users and intermediaries, continually challenging IP systems and assumptions – not just driven by “piracy” (though this may often predominate)Liable to be continual dialectic between established players and newcomers, established consumption and production modes and new styles.Much creativity and innovation will not be managed in any recognisable way!But much will be, as major new markets are created and accessed.
IME - Service Innovation - 2011 BMAN62052
MIIROManchester Institute of Innovation Research
End of Presentation