Esko Kilpi on “The ten commandments of digital work”

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Esko Kilpi is a profound commentator on digital work.

I recently ran across his post “The ten commandments of digital work,”  from his blog “Interactive Value Creation.”  

They seemed to be very much worth mentioning and citing:

 

  1. informed free choice, rather than compliance, is the basis for decisions
  2. active participation, rather than passively accepting instructions, is the basis of growth and development
  3. work activities are carried out within a framework of personal responsibility and goals for self-direction rather than direction from outside
  4. activities are carried out in a transparent way with the goal of distributing the cognitive load of work rather than work being based on reductionist principles and social isolation
  5. one is responsible for one’s own actions rather than being responsible to someone else
  6. a worker is engaging in complex, responsive activities with others in contrast with engaging in closed repetitions of the same activity
  7. the network, rather than offices or organizational hierarchies, is the main architecture of work
  8. productivity is a result of creative learning rather than doing more of the same. Increasing the quality and speed of learning matter more than increasing the quantitative output of work
  9. knowledge work can be understood as investments of human capital following the same logic we have used to understand financial investments. Workers should share the responsibilities and possible upsides that used to belong only to the investors of financial capital.
  10. knowledge work is about interdependent people in interaction. Intelligence, competence and learning are not any more about the attributes and qualities of individuals but about the attributes and quality of interaction

The full blog post can be read at:   “The ten commandments of digital work.”

A Constitutional Right To Keep and Bear Technology?

guntech(Posted 6/24/13) — In 1791, when the Second Amendment of the US Constitution was adopted, firearms (primitive as they were) represented a formidable instrument for protecting the lives and liberty of individual citizens (and, through the deployment of orderly militias, the nation).  But nowadays, with the endless debate of gun laws and Second Amendment rights, one really must wonder if our public discourse is really ridiculously missing the point.

In an age of near-ubiquitous personal electronic surveillance and international cyber-warfare, it’s interesting that there seems to be scarce discourse on the preservation of civil liberties and security and the rights of individual citizens to protect and own their own data (at least relative to the volume of discourse devoted to rights to have firearms).  But it is not fire arms, rather information technology, that represents perhaps the most important variable in determining the future of our liberty and security.

We may continue the debate about whether the pen is mightier than the sword, but we must now start and expand the debate of how information technology is designed and used as the ever-more primary (perhaps all-encompassing) medium for our economic and political relationships.

Information technology can be broken down into two parts:  information and technology.

Information.  We have suddenly entered an age where massive amounts of data and information about our lives, behaviors, and thoughts are being generated, sometimes accumulated, and sometimes appropriated for different uses.  This is happening for both commercial and political purposes (in the former case, “to serve us better,” and in the latter case, “to make us more secure”).  Both of these avowed purposes may in fact be valid and defensible.  But that does not mean that they comprise the whole picture.  Our data and information are also used by “others” to “increase profits” and “understand more about us.”  And if such purposes become exploitative, no gun is going to help us.

That brings us to technology.  How are our information systems, networks, and platforms being designed and engineered (in effect laying down the interstate highway system of the 21st century, promising us new freedom and welfare as was promised by the automobile)?   There was once a rather peculiar and very isolated discourse and debate about electronic voting systems…. I don’t recall how or if it was ever resolved (but this sort of discourse has since been far from commonplace).

This is an example of a typical media contribution to that public discourse:  .  The summary of the article gleefully states:  ”Consumers aren’t the only ones who would benefit if broadcasters put everything online. This is what they’re missing out on by not doing that.” (Note:  However also see my Postscript below)

The fact is that our 21st century information systems (our information superhighways) are being routed, engineered, and  deployed in ways that more and more ignore (and even scorn) our protection and control of our own personal data and information.  Just because information technology is being designed and engineered a certain way today (driven by various background interests), doesn’t mean it has to be that way.  Needless to say in this context, the greater threat to liberty does not appear to be the potential for further regulation of firearms, it appears to be the lack of public discourse on how we should protect our personal data and information (and thus protect our liberty).

When is the discussion and public debate going to begin in earnest on how technological systems are designed to allow us (citizens, consumers, labor suppliers — netizens) appropriate levels of control over our personal data and information?  Or has the complexity of our technical systems (or the opacity of technical system design and investment decisions by corporations like Apple and government bodies like NSA) long outstripped the possibility of public discourse about how our future lives will be shaped by our electronic infrastructures, networks, devices?

It seems like the battleground for the allocation of economic and political liberty (i.e,., power) has expanded from possession or control of physical resources to control of data and information and the designs of technical systems that increasingly regulate us, our lives, our relationships and communications, our work and livelihoods.  Because this expansion is now inevitable, it is incumbent on all of us to start thinking about and discussing how technology can and should be designed and used to protect and enable our ownership of our personal (small and “big”) data sets.  Corporations and government agencies are probably not going to be thinking much about this on our behalf.  Only we can do that thinking and start articulating what we want to our future digital world to be.

I personally would like to see the beginning of an intense public discussion on how we (enabled by different kinds of technical systems) can secure and own our own data and information (perhaps even as assets that we can choose to sell or trade in personal information marketplaces).

I really do think that unless we start thinking about, talking about, and agitating about these issues and choices, we may one day wake-up in invisible chains (that may already be coalescing).

———————————–

Postscript:   After finishing this post, I just came across a piece by   entitled Facebook’s shadow profiles are ‘frightening’ dossiers on everyone.  Blue’s post really does seem to get down to work on the matter.  More of this is needed.

Three Complementary Perspectives on Modern Digital Platform Business Model “Intrinsics”

 

Platformimage

In past months, I’ve found a kindred spirit sharing my interest in modern platforms.  is one of the most insightful thinkers into this domain, as represented in his blog site “PLATFORM THINKING–The Everything Guide To Internet Business Models.”  Sangeet’s thoughts are insightful as well as “thought-provoking” in the strongest sense possible.  His recent post, “DISSECTING AMAZON’S PLATFORM PLAY,” provoked the following response from me.  Thank you, Sangeet for being a great discussion partner!

I like and think the metaphor and concept of pipes and platform are helpful to think this through. I see things in a slightly different framework (?): the simplest platform supports “exchange,” as an open trading market or some other set of mechanisms (auctions, etc.). Amazon first created a “bookstore online.” But platforms can become richer and more complex as they start to provide a normative/behavioral substratum (in other words, platforms provide regulating templates for behavioral expression and interaction–and these are often the result of design–proactive or evolutionary).

Amazon (like other platform creators) started to see that it could provide pathways and capabilities to support behavioral expression and interaction. But these expressions and interactions were not random and useless, the substratum was designed so that they would be” “value creating” (in service science terminology, platforms are supporting, enabling, promoting “value-co-creation”). So the simple, basic platform supports “exchange” of valuable things already manifest (i.e., products, money, etc.), so that the individual utilities of the traders are improved. But more advanced platforms enable and promote the co-creation of things of value (often intangible, digital) that did not exist before. “Reviews” are a good simple example.

But now that new value has been co-created via the platform, it remains to determine how it shall be captured or appropriated. This is the novel phenomenon that advanced platforms present to the world. Over centuries, we have grown accustomed to producing/having things of value that we can beneficially exchange in free trade. But now we are co-creating value in digital spaces, and we are trying to figure out how to appropriate it and trade it to optimize our utilities (whether as people or shareholder value aggregation/amplification entities such as “firms”).

Platforms are disruptive because they promote new “value co-creation,” but do not automatically provide the mechanisms/rules for value appropriation and exchange among engaged/contending agents/parties. Hence arise questions like who can/should profit from the information, etc. created through behavioral expression and interaction on Facebook–for example.

Eric Schmidt makes some relevant observations in his recently published book, The New Digital Age: Reshaping the Future of People, Nations and Business:

We share a worldview about the potential of technology platforms, and their inherent power, and this informs all of the work we do, both within Google and outside it. We believe that modern technology platforms, such as Google, Facebook, Amazon and Apple, are even more powerful than most people realize, and our future world will be profoundly altered by their adoption and successfulness in societies everywhere. These platforms constitute a true paradigm shift, akin to the invention of television, and what gives them their power is their ability to grow— specifically, the speed at which they scale. Almost nothing short of a biological virus can spread as quickly, efficiently or aggressively as these technology platforms, and this makes the people who build, control and use them powerful too. Never before have so many people been connected through an instantly responsive network; the possibilities for collective action through communal online platforms (as consumers, creators, contributors, activists and in every other way) are truly game-changing. The scale effects that we’re familiar with today, from a viral music video to an international e-commerce platform, merely hint at what is to come. Because of digital platform-driven scale effects, things will happen much more quickly in the new digital age, with implications for every part of society, including politics, economics, the media, business and social norms. This acceleration to cale, when paired with the interconnectedness that Internet technology fosters, will usher in a new era of globalization— globalization of products and ideas. As members of the technology sector, it’s our duty to fully and honestly explore the impact our industry’s work has and will have on people’s lives and on society, because, increasingly, governments will have to make rules synergistically with individuals and companies who are moving at an accelerated pace and pushing the boundaries sometimes faster than laws can keep up with. The digital platforms, networks and products they launch now have an outsized effect, on an international scale. So in order to understand the future of politics, business, diplomacy and other important sectors, one must understand how technology is driving major changes in those areas.

Schmidt, Eric; Cohen, Jared (2013-04-23). The New Digital Age: Reshaping the Future of People, Nations and Business (Kindle Locations 194-213). Knopf Doubleday Publishing Group. Kindle Edition.

 

Book Review: Irene Ng’s “Value and Worth: Creating New Markets in the Digital Economy”

ValueWorthWhat follows is my January 14, 2013 Amazon.com review of Irene Ng’s latest book, Value and Worth:  Creating New Markets in the Digital Economy.  The review article was entitled:  The Tao of Value Creation and Growth for Businesses in Our New Digital World.

Irene Ng’s lucid and accessible book, “Value and Worth: Creating New Markets in the Digital Economy,” is a remarkable accomplishment, a work that should not be overlooked (that is, it most certainly should be read!) by current and prospective business managers, leaders, and entrepreneurs in every economic sector.

As national and world economies become more and more “digitized,” the opportunities/horizons for “business value creation” are expanding at a phenomenal rate. However, identifying and capitalizing on these new opportunities (i.e., new markets served by new business models) will be very difficult or impossible if we do not “update” our own “mental software” for construing and exploiting such opportunities. Ng’s book provides such an “upgrade path,” by taking us on an intellectual journey that leads us, as business people in the 21st century, to many new, useful vantage points that will significantly influence our business planning and practice.

The book is very extensive in its coverage and development of new ways of looking at value creation, markets and business models in an increasingly digitized world, so in this review it is only possible to illustrate that with a couple of examples.

Ng explicates her own perspective on the concept of “value” vs. the concept of “worth” as foundational to all her other analysis and commentary on business in a digitized world. “Value” is that which is beneficially realized by people or organizations as “use” [of something] in one or many specific contexts (for example, I use and benefit from my mobile phone and phone service while driving home from work, in an emergency situation, etc.). “Worth,” on the other hand, is what is assessed in the act of exchange (purchase, barter, et al), most often within a market (for example, I will pay $300 for the ownership of a mobile phone and the use of the mobile communications network service). By drawing this dichotomy of “value” and “worth,” Ng clarifies the somewhat elusive concept of “value co-created in context” from the more visible concept of entering into an “exchange relationship or transaction.” While exchange relationships/transactions have undergone significant digitization over the past few decades (credit cards, electronic payments, new payment or exchange methods (PayPal, eBay, etc.), the digitization of the world of individuals and organizations using their own “agency” and “resources at hand” (including products and service they have purchased) to “co-create” “value in context” is only starting to get underway. CIT (communications and information technology), mobile platforms, and social networks and media are among the world-wide developments that are opening up the possibility to discover and create new value (in context) and additional amounts and forms of worth (in exchange)that were not possible pre-digital.

Based on these fundamental principles, Ng explores, analyzes, and explains the many different ways and different models of how value can be created in an increasingly digitized world (value which consumers or organizations and businesses can grow and realize through “use in context” and through “worth-based exchanges, including markets). Often the ways of thinking, offered up by Ng’s framework, seem to depart from those we have inherited/adopted based on our classical economics education and assumptions, but once we begin to apply the central concept of “value in use/in context,” we begin to realize that “exchange and markets” can come back into play in surprising ways.

For example, Ng discusses the (by-now-well-known) phenomenon of “big data.” Ng points out that the current conventional concept of “big data” as massive amounts of anonymous data of consumer, use, behavior patterns–that can be used by businesses to serve customers–may be limiting and sub-optimal. If there is a market/exchange structure in which consumers/users retain rights to conceal or reveal (i.e., trade/exchange their own individual behavioral information), then we might have a scenario in which total aggregate economic value and worth (for both consumers/users and businesses)may exceed the aggregate economic value and worth that could be realized if “big data” is anonymized (i.e., excludes lower levels of behavioral information about individual users’/consumers’ realization of “value in use/context”). This is just one example of the many ways the journey, which Ng accompanies us on and guides us on, brings us to new and opportunity-rich vantage points and perspectives.

“Value and Worth: Creating New Markets in the Digital Economy” is an incredible work that has been carefully and very effectively designed, for our intellectual and business benefit, by a unique, extraordinarily insightful individual who has integrated and delivered on her many years of experience and expertise as a business executive, a management science researcher/scholar, a university and business educator, a consumer, and a person. The “worth” (price) of the book is clear and established, and I am fully confident that every reader (current and prospective business managers, leaders, and entrepreneurs) will realize (as I have/am) a “value” that very far exceeds the “worth” (the monetary expenditure/payment) of the “exchange transaction,” thus yielding an extraordinary reader ROI.

Who Benefits When Online Platforms Flatten Markets For Contract Labor?

The convergence of the proliferation of “online labor platforms” and the lingering employment crisis has catalyzed attention to “online labor platforms,” as indicated by this NY Times article “The Boom in Online Freelance Workers.”  Innovation and disruption go hand-in-hand–certainly where online platforms are emerging in the domain of work.

A March 2012 research paper by Ajay Agrawal, et al, “How Do Online Platforms Flatten Markets for Contract Labor?“ develops in-depth analysis of one potential area of disruptive effects:  namely the flatten of contract labor rates across advanced and emerging economies.  Here is the abstract:

Despite the internet’s ability to “flatten” markets, we find evidence of a significant penalty for job applicants from less developed countries (LDCs) on a major online platform for contract labor; developed country (DC) employers are less likely to hire LDC applicants, even after controlling for many observable characteristics including education, experience, and posted wage. However,platform-specific experience, which increases the likelihood of success for all applicants, has a disproportionately large benefit for LDC applicants. We attribute this DC employer behavior to the standardized and easily verifiable attributes of this platform-specific information, which disproportionately benefits applicants from LDCs whose off-platform experience and education is costlier for DC employers to evaluate. Our interpretation is consistent with another finding that LDC employers, whom we posit are more easily able to evaluate off-platform LDC experience, neither penalize LDC applicants nor disproportionately reward their platform-specific experience. Furthermore, we find evidence that DC employers with more experience on the platform are significantly more responsive to platform-specific experience, implying that even this information is costly to interpret since it requires investing in experience on the platform.

 The paper was published electronically on the internet earlier this year and is available here:  OLLaborPlat.

 

 

On the way to Part 2: “‘Modern Platforms’ and ‘Service Science:’ New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes

In recent weeks, I have been getting underway to develop Part 2 of the working paper I drafted in late 2011, “Part 1: ’Modern Platforms’ and ‘Service Science:’ New Ways of Understanding ‘Platform’ Mechanisms, Interests, and Outcomes.”  Whereas Part 1 mainly introduced “Service Science” as a way of understanding “modern platforms,”  Part 2 will be more focused on the topics of mechanisms and interests (and I am realizing I will be needing a Part 3 to address the subject of outcomes).

Having said that (and in anticipation of Part 2),  I realize that I did provide some commentary on “mechanisms” in Part 1 and that it might be helpful to provide an excerpt of that commentary here, without the numerous citings and comparisons to “service science” theories and concepts, as some contextual stage-setting for Part 2.   So here it is:

Platforms are a kind of regulating membrane (a selected and configured repertoire of protocols, mechanisms, rules, regulations, etc.) that provides a normative and structural framework for the organization of “service systems” and “value-creation networks” relationships and interactions, through which value is created and exchanged.  

Platforms emerge under certain conditions, as opportunities to establish and enact value co-creation and exchange are discovered to be possible and realizable, and they are then exploited and capitalized on by different “service systems” in different ways.  Perhaps the most important condition that has created opportunities for the discovery and exploitation of expanded protocols, mechanisms, etc. that make up “modern platforms” is information technology. At any rate, the possibility and potential for specific “artificial constructs or entities” (platforms) arise out of conditions, but the platform constructs and entities are not actuated until some “service systems” have actuated them by discovery and selection, design and manipulation, or even  by accident. 

What are some of the protocols, mechanisms, rules, etc. that may be operant in “modern platforms?”  Some might involve the volume and rate of integrating different kinds of geographically-dispersed “service systems” in a broader range value co-creating interactions and exchange relationships.  One might be the ability to maintain exchange relationships that are not dependent on single or infrequent significant transactions, but are somehow based on other norms of relationship and exchange that are reinforced by different mechanisms.  Another might be different arrangements for value-extraction and monetization (aka, pricing and revenue models) across “service systems,” time, certain conditions, etc.  Some possibilities and opportunities present in the “genome” of the “modern platform” have been discovered and exploited by different “service systems” to date, others may still be discoverable and then subject to exploitation. 

In some cases, a single “service system” (a company or a person, for example) can lead and/or dominate this process of discovery and exploitation, and such a lead or dominance may confer leverage to that particular “service system” to guide or regulate value creation and exchange and to even extract a higher or dominant share of value for itself.  The “platform businesses” that have been hailed by Phil Simon in The Age of the Platform would presumably be among such “service systems;” these companies (and in some cases, mainly a central lead entrepreneur) have been able to extract and shape from the raw possibilities of today’s “modern platform opportunity set” a subset of different protocols, mechanisms, etc. and have been able to lead, nurture, advance the development of particular “value-creation networks” in which that originating company/”service system” comes to dominate and to some extent control the service ecosystem (through more leverage in the balance or exclusive access to certain mechanisms, etc.).

Certainly, actuating and exploiting the “artificial” construct or entity that a “modern platform” consists of is not a simple task, rather one that requires significant insight and computation (intelligence) within and across “service systems.”  Establishing a functioning platform is in some sense like establishing a new complex game (rules, etc.) AND getting players engaged and playing.  However that occurs or is accomplished (whether by a “creator” and “master” or a by swarm), in the end, there will be “a game,” the “artificial” construct or entity we are calling the “platform.”  The “platform” is therefore a distinct “something,” though not really visible or easy to define:  it is what makes the playing of the game (“value-creation network”) possible and actual for all the engaged “service systems.” But we are only beginning to understand the nature and the properties of this “something” in an economic context, even as companies and individuals are leveraging and exploiting it through their “modern platform businesses.”

My most recent post, “Memento Mori:  ‘Digital Remains’ and the Regulative Functions of Platforms,” also provides some hints as to where I will be heading in Part 2.

Memento Mori: “Digital Remains” and The Regulative Functions of Platforms

Over the past couple of years, a few of my Facebook friends passed away.  In one case, the young man’s family was able to step in and manage the “Facebook exit” gracefully.  In another, the eventual exit was a bit more ad hoc and stretched out a bit longer, but the family and friends were eventually able to put the Facebook profile to rest.  In the third case, the suicide of a remarkable colleague with no surviving direct relations, it has been quite a different story:  even a year later, his profiles are still active on both Facebook and LinkedIn (and God knows where else).

A virtual afterlife?  A forensic or historical artifact?  A market externality?

It may seem strange and inappropriate to some, but these cases led me to wonder if social networks and other platforms should not be required to offer users settings for “end-of-life” options…. the possibility to provide instructions as to the disposition of one’s “digital remains.”  While existing laws do govern disposition of physical remains and possessions, our “digital remains” (except for when  copyright or intellectual property laws apply) are unregulated and do not even have a legal status within our current framework of laws.

Many questions arise:  what rights, if any, do we, our families/descendents have to our “digital remains?”  Can there or should there be a defined, regulated legal space between the “public domain” and that which is proscribed by copyright and intellectual property laws?  Does all of this have to do with legal concepts of privacy or of property?  Why don’t ”legal use” arrangements, such as leases and licensing agreements, seem to apply automatically to our leftover digital goods and assets (which are frequently connected to private property or perhaps more often arise as “products” out of often extensive value co-creation processes between us, platforms, and others)?

Once again, while it may seem somewhat bizarre or macabre to be raising this set of issues in this context, I can assure you that its shock effect is entirely utilitarian:  I am only interested in making a point about the regulative functions of platforms.

In my run-up to producing my Part II of Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes, I have been thinking quite a lot about how platforms are de facto regulators (often invisibly, subtly, and frequently disruptively conferring, precluding, and reallocating the rights and obligations of platform participants), challenging and altering institutional and legal structures of identity, privacy, property, and allocation of co-created value.

Certainly, our governmental and judicial systems have been caught flat-footed by these blitzkrieg developments that have suddenly fully permeated personal life-worlds and commercial spheres of interaction, agreement, and transaction (with thousands of examples ranging from Facebook to ODesk, et al). And only a few platform scholars have begun to plumb and explore these economical and social deep-sea trenches: most notably,  as in “Platform Rules: Multi-Sided Platforms As Regulators,” Boudreau, Kevin J. and Andrei Hagiu,  Platforms, Markets and Innovation, edited by Annabelle Gawer.  That article/chapter,

provides a basic conceptual framework for interpreting non-price instruments used by multi-sided platforms (MSPs) by analogizing MSPs as “private regulators” who regulate access to and interactions around the platform. We present evidence on Facebook, TopCoder, Roppongi Hills, and Harvard Business School to document the “regulatory” role played by MSPs. We find MSPs use nuanced combinations of legal, technological, informational, and other instruments (including price-setting) to implement desired outcomes. Non-price instruments were very much at the core of MSP strategies. 

However, as of yet, such research has been scarce, and there has been only limited exploration and explication of “non-price value exchange mechanisms” established and activated through new e-based platform models.

What Hagiu, Boudreau, and some others do (in contrast to those scholars who tend to focus on the classical industrial and economic characteristics of platforms or to those writers and commentators who optimistically proclaim platforms as the “market marvels” and “growth and ROI engines” of the 21st century) is this:  they start to look objectively and analytically below the “surface aura” of platforms into the essential structures, logic, and processes that define, comprehensively, what they are or “are like” (what they are similar in function to):  “‘private regulators’ who regulate access to and interactions around the platform” (through “nuanced combinations of legal, technological, informational, and other instruments (including price-setting [AND NON-PRICE INSTRUMENTS]) to implement desired outcomes”).

So to repeat my assertion from above:   ”platforms are de facto regulators (often invisibly, subtly, and frequently disruptively conferring, precluding, and reallocating the rights and obligations of platform participants), challenging and altering institutional and legal structures of identity, privacy, property, and allocation of co-created value.”

Often, citing an extreme case helps to saliently and clearly make a point that might otherwise be obfuscated or even suppressed by autonomous forces or by design and more or less active intent.  We now are starting to see discussions and legal challenges related to data privacy and some other phenomenon in the context of a Facebook or a Google.  But these are just small, limited bits of issues and evidence of what might be a broader and more serious atrocity (perhaps even a kind of “crime against humanity”).  If we want to know more about the “bodies that lie buried” in platforms, we will all have to start digging deeper and wider, thinking harder, and connecting more dots (not just commercially as suppliers and consumers, but also economically, legally, and ethically as 21st century human beings).

Thinking about our own “digital remains” and their fates may be a sobering thought, but quite possibly a very helpful one.

 

Platform, a simple definition…

From Dave Gray’s, presentation: http://www.youtube.com/watch?v=CNKL2pP88wY&feature=youtu.be.   Relates to my “Modern Platforms and Service Science.” 

Publish or Perish (and Profit): The Academic/Scientific “Information Publishing” Struggle Enters Its Final Phase

In my most recent post on this subject, Where There’s Smoke, There’s Fire:  Radical Change in the Academic Publishing Ecosystem, I reported on an intensifying battle between the creators and users of scientific/academic information, on the one hand, and, on the other, the traditional publishers of this information (which are trying to maximize their shareholder value in the midst of a real Kuhnian  revolution and significant transformation of what fundamentally  constitutes publishing and distribution models).

A new development of late, in the form an advisory issued by Harvard Library (Faculty Advisory Council Memorandum on Journal PricingMajor Periodical Subscriptions Cannot Be Sustained), describes the following economic conditions:

  • Many large journal publishers have made the scholarly communication environment fiscally unsustainable and academically restrictive. This situation is exacerbated by efforts of certain publishers (called “providers”) to acquire, bundle, and increase the pricing on journals.
  • Harvard’s annual cost for journals from these providers now approaches $3.75M. In 2010, the comparable amount accounted for more than 20% of all periodical subscription costs and just under 10% of all collection costs for everything the Library acquires. Some journals cost as much as $40,000 per year, others in the tens of thousands.
  • Prices for online content from two providers have increased by about 145% over the past six years, which far exceeds not only the consumer price index, but also the higher education and the library price indices.
  • These journals therefore claim an ever-increasing share of our overall collection budget. Even though scholarly output continues to grow and publishing can be expensive, profit margins of 35% and more suggest that the prices we must pay do not solely result from an increasing supply of new articles.

The conclusion drawn:

It is untenable for contracts with at least two major providers to continue on the basis identical with past agreements. Costs are now prohibitive. Moreover, some providers bundle many journals as one subscription, with major, high-use journals bundled in with journals consulted far less frequently.

Wow! Little commentary is needed here on my part.  What is happening is startlingly clear (and different ways of referring to it).  But what happens next will be the big question, as (a) creators and users push back, (b) new competitive publishing and distribution models and organizations arise (such as INFORMS, et al), and (c) traditional publishers try to milk profits from cash cows in the short-term while trying to innovate and diversify in to “value-added” discovery and collaboration platforms.

In the mean time, Harvard’s directives to its faculty include the following:

  • Consider submitting articles to open-access journals, or to ones that have reasonable, sustainable subscription costs; move prestige to open access.
  •  If on the editorial board of a journal involved, determine if it can be published as open access material, or independently from publishers that practice pricing described above. If not, consider resigning.
  •  Contact professional organizations to raise these issues. Encourage professional associations to take control of scholarly literature in their field or shift the management of their e-journals to library-friendly organizations.
  •  Encourage colleagues to consider and to discuss these or other options.
  •  Sign contracts that unbundle subscriptions and concentrate on higher-use journals.
  • Move journals to a sustainable pay per use system,
  •  Insist on subscription contracts in which the terms can be made public.

The tide is turning.

Link to paper: ” “The Economics of Two-Sided Markets” by Marc Rysman

Excellent, foundational 2009 paper on “the basics,” “The Economics of Two-Sided Markets” scratches the surface of a very complex phenomenon that is now emerging, on an accelerating and expanding  basis, through modern  platform organizations.  Rysman:   “Broadly speaking, a two-sided market is one in which 1) two sets of agents interact through an intermediary or platform, and 2) the decisions of each set of agents affects the outcomes of the other set of agents, typically through an externality.”     Link to paper>2sidedmarkets.

Where There’s Smoke, There’s Fire: Radical Change in the Academic Publishing Ecosystem

Sniff, sniff.

A recent Forbes article, “Elsevier’s Publishing Model Might be About to Go Up in Smoke,” returns to the discussion  of the potential self-immolation of traditional academic publishers, as many fail to respond to rapidly shifting conditions, especially technology disintermediation and new platform business models.

“No,” the article states,  ”there isn’t a monopoly on scientific journal publishing: but there is on the last 50 to 60 years’ worth of papers that have been published and are now copyright of said publisher. This is leveraged into the power to make college libraries pay eyewatering amounts for subscriptions. … There’s not much new about this analysis and investors in Reed Elsevier, the owners of Elsevier, either do or should know all of this. … However, there’s something happening that might change this, for Reed Elsevier shareholders, quite delightful position. That is, a revolt of the academics who provide both the papers and the readership.”

Sniff.

As new potential channels for publication and distribution occur, academics (who are tired of giving up value to commercial interests and who are generally not stupid people) are not surprisingly seizing the opportunity to “go direct” to “the market.”

As I noted in my recent post, prominent academic researcher/platform economist, David S. Evans, has risen to the occasion to eschew traditional publishing rigmarole and has decided to simply release a compendium of segments of his research directly into the public domain.  The quote from the preface of his publication ( “Platform Economics: Essays on Multi-sided Businesses” ), circulating as a PDF in the public domain, is quite remarkable:

Given the subject of this collection, there is some irony in how I’ve chosen to bring these essays to you. Publishing has traditionally been a two-sided model. Publishers get authors and readers together. They typically make their money by charging the reader and giving some fraction of the earnings to the author as royalties.
 This 20th century model of publishing doesn’t serve authors of academic books well. Often, publishers set the price of academic books relatively high, expecting to earn the greatest profits from libraries and a handful of aficionados. For most books that aren’t aimed towards a popular audience, including most academic books, royalties are quite small. Optimistically, I might have been able to buy a pretty good new bicycle if I had published these essays in the traditional fashion, but I’d rather have more people read my work than collect the chump change from royalties.
 Therefore, the two-sided publishing model fails in two ways: the author doesn’t make much money, and the author doesn’t get read by very many people. Moreover, most publishers in my experience are still using 20th century technology to produce and distribute books. It can take many months—if not years—from a book’s conception to its appearance in a reader’s hands.
And therein lies the paradox. In order to bring my work into the 21st century, I have decided to publish my collection of essays about two-sided markets in a one-sided way. I ditched the intermediary and chose to connect directly with likely readers. I’m sure some of you would prefer the feel of paper and leather but hopefully the price is right. It was easy for me to decide to make this volume free (a bit more on Amazon) because it cost almost nothing to produce and distribute it.
 An earlier version of this book appeared in 2010. It consisted of a series of urls (website addresses) that took readers to the original papers which they could then download. I promised a real e-book in the early part of 2011. At least I got the year right which for an economist is pretty good.

Change is evident here (sniff).

In some of my previous blog posts, I have discussed business and social issues related to ongoing transformation of the general domain of publishing/news and information/media industries, key sectors of our economy and our society.   These have included: (1)  “The Huffington Post: A short course in platform business economics?,” (2)  ”Huffington Post (Redux): Not just business as usual…,”   (3) “In The News: Platform/Other Business Model Transformation Underway in News Publishing/Media,” (4)   “From Supply Chain to Publishing:  Changing the Way Publishing Works.”

Another of my posts (sniff), “The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine,”” discusses the specific, unique domain of “academic and scientific publishing” and some of the implications of the changes we may need to address as the traditional model gives way to something new.  While such changes promise greater freedom of publication and distribution, the resulting openness may lead us to confront a different set of issues that will impact how science is done and what are the standards and measures of its validity. 

So while change is evident (sniff), it is clearly non-linear.

Gawer’s “Platforms, Markets, and Innovation” now available in paperback

Annabelle Gawer’s Platforms, Markets, and Innovation is now available in paperback at Edward Elgar Publishing.  The price of the paperback will make this excellent sampling of current research on platforms more accessible to interested students and professionals.

For those seriously interested in the platform phenomenon, Gawer’s book is a must read. The book consists of a collection of papers by many of the foremost researchers in the field, offering serious insights into different dimensions of what make platforms “platforms” and how they work.  For students and professionals with more than a casual interest in understanding platforms, Gawer’s book represents a necessary complement to Phil Simon’s recently published business book, The Age of the Platform.  Whereas Simon’s book provides a broad, ethnographic surveillance of the  phenonemon of ”modern platform businesses,” like Amazon, Apple, etc., Gawer’s book offers a much more comprehensive coverage of various important dimensions of different types of platforms from the more in-depth, analytical perspectives of specialized scholars/researchers.  In this sense, Gawer’s book ”takes you under the hood” of platforms and reveals a more intricate picture of many of the “mechanics and moving parts.”   Once again, Gawer’s Platforms, Markets, and Innovation is now available in paperback a thttp://www.e-elgar.co.uk/bookentry_main.lasso?currency=US&id=13257.

Study: What are Business Platforms and why they represent the future of outsourcing

HfS Research, an outsourcing industry research firm, recently published a new study that reports continued rising interest in “Business Platform” approaches to business process outsourcing (BPO).   The actual report in PDF format can be found via a link at the bottom of this article:  “What are Business Platforms and why they represent the future of outsourcing‘”

The article and the report contain some excellent insights into the development of this approach to business process outsourcing, a phenomenon HfS defines — for the outsourcing domain/empirical context — as follows:  “Business Platforms, enabled by the fusion of Cloud Computing, SaaS and BPO innovations in an integrated singular managed service, are emerging rapidly as the desired “one-to-many” utility service provision for providers and a new source of value for outsourcing buyers. “  This HfS definition of the approach emphasizes a drive toward efficient process standardization through IT and other mechanisms, but does not emphasize properties of aggregation and network effects (which I think can often be present in such models).

In the past, these approaches have sometimes been referred to as “Platform BPO.”  In my recent working paper/taxonomy– posted at “Platform “Language Games” -  a working paper on how we understand platform“–I discussed “Platform BPO” as a kind of sub-category/special instance of “Enterprise Platforms” as follows:

Certainly, there is some overlap in what is encompassed by the definitions of “enterprise platforms,” “domain/function platforms,” and “technology platforms.” However, I would argue that there is little or no overlap of the categories “enterprise platforms” and “product platforms,” unless, as we shall see, the enterprise and its platform are geared toward providing (information or other) services, not products (and in this case, the “enterprise platform” does indeed become analogous to a “product platform” to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency). One good example of such a case is the phenomenon of “Platform BPO” (see: http://www.outsourcing-center.com/2011-08-how-amcor-achieved-it-business-transformation-by-standardizing-processes-in-10-countries-using-sap-and-a-local-provider-article-45050.html , http://www.outsourcing-center.com/2011-02-business-process-as-a-service-the-next-wave-of-bpo-delivery-article-42948.html ). However, many other examples, of different kinds, could be cited.

In other words, “Platform BPO” (or what HfS calls a “Business Platform” BPO), as a special kind of “enterprise platform” in the service sector domain, has properties that are similar to a traditional “product platform” (to the extent that the platform becomes the means for developing and supporting derivative and new service offerings, while maintaining high levels of standardization and efficiency).  At the same time, this kind of platform remains very much within the definition of an “enterprise platform” (albeit specialized).   But — at least as defined  by HfS as a ”Business Platform” — it is significantly different from what I and others have referred to as “Platform Businesses” (see: Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes or The Age of the Platform: Phil Simon Serves An Epic Feast To Business Readers), a new kind of business model structure embodied in companies like Apple, Amazon, etc. and their customer and partner ecosystems.  However, I do believe a closer look at some of these emerging ”Platform BPO” businesses will reveal additional properties of the more complex and extensive ”Platform Business” model (especially in the areas of service aggregation, supply chain intermediation, network effects, and customer experience management).

 

Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes

Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes is the first of two parts in which I explore the relevance of Service Science to understanding “modern platforms” and, with this backdrop, attempt to comment meaningfully on some of the less-discussed mechanisms, interests, and outcomes associated with such platforms.

Part 1 focuses on how Service Science, and its concepts of “service-dominant logic,” “value co-creation,” “service systems,” “value-creation networks,” et al, can provide a framework through which we can illuminate and better understand the new and still emerging phenomena of “modern platforms.” Part 2 will be focused on some of the less-discussed operant mechanisms in “modern platforms,” on the diverse interests that can come into play, and on some potential outcomes, both positive and negative.

In Part 1, I have suggested that Service Science offers a perspective and conceptual framework that can illuminate and enhance our understanding of “modern platforms.” I have further suggested that what we observe today in the real world (and refer to as “modern platforms)” are “artificial” constructs or entities which consist of certain protocols, mechanisms, rules, regulations, etc. that define and govern interactions among “service systems” (organizations and individuals) within “value-creation networks.”  I believe that, in this context, there is much, much more that we can study and learn about what we are calling “platforms,” how they can arise, how they can function, and how they may spawn different outcomes overall in aggregate across a realized “value-creation network” as well as for the different, specific, networked “service systems.”

Link to PDF: Part 1: “Modern Platforms” and “Service Science:” New Ways of Understanding “Platform” Mechanisms, Interests, and Outcomes

The Age of the Platform: Phil Simon Serves An Epic Feast To Business Readers

Phil Simon’s recent book, The Age of the Platform: How Amazon, Apple, Facebook, and Google Have Redefined Business, is an excellent, much-needed — almost epic — overview of (what I would term) “modern platform businesses,” with particular focus on four of the largest and most well-known.

I would highly recommend this book for business people and students of business and economics who are new to understanding this modern form of business that continues to evolve and take shape.

Simon asserts that while “platforms” of different kinds have been exploited for business purposes for a very long time, it is only recently that (a) a new generation of platforms has emerged from a confluence of information technology and other trends/factors and (b) a new generation of businesses have and are emerging/evolving by leveraging these new platforms in radical and often extraordinarily successful ways.

The examples of Amazon, Apple, Facebook, and Google (the “Gang of Four”) are held up as archetypes, and their courses thoroughly charted. Some less successful modern platforms (for example, Yahoo) are also cited and commented on here and there, and a set of potential “up and comers” (for example, Foursquare) are catalogued.

I particularly like Simon’s differentiation of the platforms themselves and the businesses that have developed and steered them to their business advantage. This is perhaps one of the essential points that define what makes “modern platform businesses” unique and different from traditional businesses (i.e., the openness to/enablement of integration and interactions with customers/users and a range of ecosystem collaborators, the varying degrees of ownership and control of the business over “platform assets: and what is created out of them, etc.).

Simon offers a very robust, comprehensive, general definition of this entity, called a platform, which modern businesses are establishing and leveraging (and which, at best, is barely separable from the ecosystems they engender):

This text defines a platform as an extremely valuable and powerful ecosystem that […] scales, morphs, and incorporates new features (called planks in this book), users, customers, vendors, and partners. Today, the most powerful platforms are rooted in equally powerful technologies—and their intelligent usage. In other words, they differ from traditional platforms in that they are not predicated on physical assets, land, and natural resources.
 
The most vibrant platforms embrace third-party collaboration. The companies behind these platforms seek to foster symbiotic and mutually beneficial relationships with users, customers, partners, vendors, developers, and the community at large.
 
Even though a great deal of potential commercial appeal and applications inhere in them, platforms do not exist simply as a means of vendors to hawk their wares. At their core, platforms today are primarily about consumer utility and communications.
[…]
Platforms comprise individual components, features, products, and services—collectively referred to in this book as planks. Put simply, without planks, there are no platforms. […] First, useful and popular planks give platforms their power. Second, today a company’s platform need not consist of only its own tools, applications, and innovations. On the contrary, platforms can easily and quickly integrate extremely powerful planks from the outside—that is, developers, partners, prosumers, and other third parties. (Simon, The Age of the Platform, pgs. 22-23)
 

Modern platforms and the businesses (companies) that succeed at mastering them are a different species from what has gone before, not just an evolutionary extension. Simon addresses this subject of “modern platform businesses” without entanglement in the earlier literature of product platforms, etc..

On the one hand, I think the book could have been stronger had it drawn selectively on the platform research within economics and management science over the past decade. But on the other hand, by not doing so, it is able to present a perspective on “modern platform businesses” in a clear and “bracketed” way that allows readers to contemplate this phenomenon, without distraction from past generations of concepts and from academic theories and ideas that may be obtuse for business readers.

The book dissects its vast subject matter in a series of rapier stokes — reducing it to a set of concatenated, bite-sized tableaus, each treating some aspect or facet of this complex, evolving business phenomenon. And this approach and lively style is, I think, well-tuned for business readers.

Phil Simon has set the table well and offers an expansive, small-plate feast for business readers who are newly developing a taste and sensibility for modern platform businesses. His book brings into focus a significant transformation in business models that is now happening and which we will try to understand for years to come.

Bon Appetit!

“Connecting the dots” between Service Design and Service Science

I highly recommend, Service Design – a conceptualization of an emerging practice, Katarina Wetter Edman’s licentiate thesis.   This is a much-needed and superbly articulated study of the relationship and potential positive interaction between two important emerging disciplines, Service Design practice and  Service Science theory. 

Abstract from study: Service design is an emerging design practice with an interdisciplinary heritage. Most previous research has been based on what service designers do; with the increased academic interest in service design over the past decade, the time has come to conceptualize the underlying discourses. The main purpose of this thesis is to contribute knowledge to the emerging service design discourse through conceptual comparisons of key concepts in the design and service management literatures…. The conceptual framework encompasses areas of design research, including design thinking, service design and design management. These areas are related to management research, with a specific focus on service marketing/management,including Service-Dominant logic and service innovation. The thesis includes an interdisciplinary literature review with a specific focus on how user involvement is conceptualized in service design and service management respectively, and develops a conceptual framework of service design based in descriptions of service design practice in the literature. The framework presents service design through five characteristics, as an 1) interdisciplinary practice, using 2) visualization & prototyping, and 3) participation as means fordeveloping the design object, seen as 4) transformation, and 5) value creation. This framework leads to an understanding of service design practice as a continuously repositioning activity. The thesis argues that the relation between service marketing/management and service design is complementary, particularly in tools and methods for user involvement and co-creation,and therefore the relation is mutually productive. It further argues that design practice can help realize Service Dominant logic, and a service perspective can help open up new positions fordesign practice. In sum, this thesis contributes knowledge that enriches the understanding and relevance ofservice marketing/management for the design discourse and vice versa.

“Platform ‘Language Games’ ” – A working paper on how we understand “platforms”

My focus on “platform” phenomena in business and other domains has led me to wonder about how we (as people trying to comprehend the world in late 2011) use and understand the term and concept “platform” .  That is how I came to work on this write-up, (link to PDF)  ”Platform ‘Language Games:’ Is Clearly Defining and Classifying What We Are Studying A Serious Or Trivial Pursuit For The Research Community?

“Platform” is a term that has appeared – ever more frequently over the past 25 years or so – in literature and discourse within economics and management science research, business management, scientific, and government circles, technology marketing, and business, scientific, and popular press and media.  “Platforms” are much discussed, today, in errantly-released internal Google emails, in a recent informative business book of Phil Simon (proclaiming that we have entered The Age of the Platform).  ”Platforms” are being discussed in conference rooms by managers, investors, and entrepreneurs as well as written about and talked about in the trade and popular press and social media. 

“Platforms” have been and continue to be analyzed and discussed by economic and management science researchers, who are responsible for our achieving a scientific understanding and knowledge of “platforms,” even as the term/concept “platform” proliferates and evolves and various “platforms” (communication, publishing, social media) lead to an intermingling of discourse in the research community, the professional community (e.g. business practitioners, et al), and the general public. 

So while my write-up is addressed to the research community, it may also be of interest to others in business and other disciplines (though I am doubtful that it will be looked at, to say nothing of read through, by many in even these communities).  While I realize few will find it of any interest, I am hopeful that it may be helpful to some in thinking about how we understand “platforms” in late 2011.

I start my write-up, tongue-in-cheek, with the paradoxical quote by Wittgenstein, “Wovon man nicht sprechen kann, darüber muss man schweigen” (“Of that which one cannot speak, one must remain silent”).  There seems to be no shortage of those who will speak about “platforms” within different contexts, and we are speaking about ”platforms” in different ways. 

Has our speaking about this captivating phenomenon/idea outrun our clear understanding? If so,  I’m not sure if this gap is of interest or considered to have any importance to anyone besides me.  In any case, my write-up is available to be read and reviewed, and I welcome all comments and suggestions.

Link to PDF: Platform “Language Games”

In the Cloud: Wireless technology and behavioral change in birds

“The time is at hand” for Phil Simon’s new book “The Age of The Platform”

I am looking forward to soon reading, digesting, and offering any thoughts I might have on what seems like a very timely and topical book,  The Age of the Platform, by Phil Simon.     There has not been a “business book” on “platform businesses”  published for a while, even as this phenomenon has become one of the most visible and significant developments in how we interact economically and socially. 

Books by what have been to date the two major scholars in the field appeared a couple of years ago.   Annabelle Gawer’s Platforms, Markets, and Innovations  (2009) collects a range of contemporary research articles/papers by academic experts in the field of platform study (the articles/papers cover a broad range of dimensions of the subject, and in very great depth;  it is priced as a scholarly book, so will put a bit more of a dent in your research budget, though it should be worth it for the highly interested). Michael Cusumano’s Staying Power (2010) looks at how “platforms” and “services” can transform businesses, markets, and industries (it is a good, accessible business book that covers a lot of ground, draws on good examples, and describes some typical behaviors of platform businesses;  the book is priced in the typical business book range).  Both books are excellent, and leave a reader with many insights and questions of a very complex, emerging phenomenon.

The Age of the Platform comes at an opportune time when platform businesses have become visible and powerful forces in the economy and society AND interest on the part of business people and the general public is perking-up (to say nothing of the fact the platforms are now integrating economic and social interactions in unprecedented ways).  The book’s author, Phil Simon is a top-notch, thorough and  insightful business writer, and judging by the book descriptions and excerpts and the outline table of contents,  the book seems to treat the subject of “modern platform businesses” in a very clear and thoughtful way (in contrast to the often scrambled treatments of this subject in the popular business press).  The book is also a very reasonably priced business book.

I can’t wait to dig in.

Almost Part 2: How Will Our Business Models Change–Now? And Why?

Since I wrote the post, Part 1:  How Will Our Business Models Change–Now?  And Why?, I have been intending to write Part 2.  Part 1 was basically an overview of business model change dynamics, based on IBM’s study “Seize the Advantage:  When and How to Innovate Your Business Model.”  This study showed “technological factors” as climbing in importance as a reason cited by all kinds of CEOs for changing business models.

My basic assertion in Part 2 is going to be that there are two major transformations affecting all or most business models at this time. These transformations, grounded primarily in information technology,  can be referred to as  “platformitization” and “servitization.”

The term ”platformitization” refers to the emergence of new economic, business, industry models referred to–sometimes ambiguously– as  ”platforms.”  As noted by Phil Simon in his new book, The Age of the Platform, “Beyond the debate of ‘What is a book in 2011?’ comes the discussion about which platform will win the book wars. Will it be Amazon’s Kindle? Apple’s iBooks? Barnes & Noble’s Nook? Kobo? A new platform we haven’t seen yet?  Sadly, the discourse has been largely misplaced. Far too many people are focusing on the hardware instead of the platform behind the hardware.“   The platform/ecosystem model is emerging across many markets and–often rapidly–radically transforming basic economic models (units and structures, like firms and industries) into wholly different patterns of production and consumption and creation and distribution of value.

The term “servitization” refers to a basic actual and conceptual/paradigmatic shift in economic activity toward “service.”  In once respect, we see a growing “service sector” (financial services, logistics services, et al) as well as the increasing importance of “services” in the business models of all kinds of product/ manufacturing firms (just one well-known example, Apple and iTunes/AppStore).  Beyond this, we are seeing the rise of technology-enabled ”information services” as well as information technology itself being transformed into a service (long ago starting with telecommunications and now with things like IaaS, PaaS, SaaS, etc.).  Phenomena indicating a trend of servitization are many, but there is also a framework of thinking which is gaining in relevance.  That is the framework of “Service Science,” arising around 2005, when it was significantly shaped by Stephen Vargo and Robert Lusch with their marketing-based research and theorizing of “Service-Dominant Logic” and further catalyzed by Henry Chesbrough and Jim Spohrer in their  publication “A Research Manifesto For Services Science.”

More discussion to follow on business model transformation along the lines of “platformitization” and “servitization” as powered by information technology.

From Supply Chain to Platform: Changing the Way Publishing Works

How and why are technology-enabled platform businesses clearly and rapidly disrupting and transforming traditional publishing and certain other industries?   As noted in many recent news reports (such as “Publishers: What are you doing while Amazon eats your lunch?” ), Amazon is continuing its transformation and “platformitization” (if I may coin a neologism) of book publishing–one of the various transformations and disruptions rippling through the publishing industry for years now (in books, news, magazines,music, movies, etc.).  

The traditional publishing industry has been one of those industries that seems to have become particularly vulnerable to disintermediation by new, “platform and technology savvy”  market entrants (such as Google, Huffington Post, Netflix, et al) who are able to leverage technology-based platform business models in innovative and disruptive ways to unlock and redistribute capturable value and change the shape of the industry. 

I suppose it should seem obvious that industries whose core has been the trade of information and media content are likely to be the most vulnerable to such transformations and, it seems–as fate would have it , in many cases (unlike manufacturers and distributors, for example)–the least prepared to adapt, innovate, reposition, and survive.  Some incumbent firms will cross the chasm, but most probably won’t.  I suspect this predetermined vulnerability has a basis, to some extent, in these industries’ entrenched supply chain business models and the inability to reinvent into platform and ecosystem models (as FT, Guardian, NYT are trying to do)–models, which I think confer practioners with overwhelming advantages in satisfying needs of the “traditionally organized” customers and suppliers. 

Why this inflexibility exists is another questions:  I suspect here it is a matter of the industries’ and firms’ built up stock of competencies and assets (which are probably both not well-aligned to platform models and technology) as well as the industries’ and firms’– to some degree — “change-resistant” values and structures (imbued originally for good reasons to promote standards of objectivity or quality, etc, but in some ways now a straightjacket). 

 It seems like all of these questions could be formulated into testable hypotheses and the opportunity to study the unfolding of these phenomenon in a real world laboratory exists for the interested researcher (to empirically establish what factors determine success or failure of firms, business models, etc.).   Of course, we (the simply curious and interested) can–unlike the publishers–casually stand-by  and observe how it all shakes out in coming years and make our own judgments as to why.  And we all can bear in mind how the cited article admonishes traditional book publishers:

Here’s a hint for book publishers: take a lesson from the music industry, and don’t spend all your time suing people for misusing what you believe is your content — think instead about why they are doing this, and what it says about how your business is changing, and then try to adapt to that. Amazon is giving authors what they want, and as long as it continues to do so, you will be at a disadvantage. Wake up and smell the disruption.
 
 
 

Google Doesn’t Get Platforms, According to Google’s Steve Yegge

Is Google an “un-platform”  by design or by default–and falling hopelessly behind in the “platform wars” by short-sightedly pursuing a “product one-off strategy?” An extremely interesting post by Danny Sullivan at Search Engine Land (The “Google Doesn’t Get Platforms” Family Intervention Memo) reports an accidental email disclosure, in which Google Staff Engineer Steve Yegge shares his spirited, critical views on Google’s pursuit of success as platform business.

Sullivan’s informative post, also treats, at some length, questions and characteristics of Google’s internal culture (+ and -), so I am filtering out that commentary and focusing here on  re-publishing the matters most directly related to platform models (not to say that far-ranging internal dynamics and culture, besides strategy and leadership are unimportant).  That said, I’d really like to read Yegge’s original email; he seems to have some penetrating insights into platform models, which he sees must be pursued purposely and early from a design and strategy standpoint.  Whether the strategy and approach to Google’s business will continue to prove enormously successful and whether it is or is becoming a platform business are questions which remain to be answered.

Sullivan introduces the subject: “Google now has its own version of the Yahoo “peanut butter” manifesto, where Google staff software engineer Steve Yegge wrote a “family intervention” memo about Google’s failure to build accessible platforms, leaving it vulnerable to the likes of Facebook. “  Sullivan goes on to trace Yegge’s argument, which compares Google to Amazon (and also Microsoft), to this basic assertion: “Google is failing to be a platform, something he [Yegge] considers the ‘the most important thing in the computing world.’”    Sullivan further quotes Yegge as writing:

That one last thing that Google doesn’t do well is Platforms. We don’t understand platforms. We don’t “get” platforms. Some of you do, but you are the minority. This has become painfully clear to me over the past six years. I was kind of hoping that competitive pressure from Microsoft and Amazon and more recently Facebook would make us wake up collectively and start doing universal services. Not in some sort of ad-hoc, half-assed way, but in more or less the same way Amazon did it: all at once, for real, no cheating, and treating it as our top priority from now on.

But no. No, it’s like our tenth or eleventh priority. Or fifteenth, I don’t know. It’s pretty low. There are a few teams who treat the idea very seriously, but most teams either don’t think about it all, ever, or only a small percentage of them think about it in a very small way.

Yegge cites Google+, as a follow-on, reactive move, consistent with Google’s  ”un-platform” business strategy:

Google+ is a prime example of our complete failure to understand platforms from the very highest levels of executive leadership (hi Larry, Sergey, Eric, Vic, howdy howdy) down to the very lowest leaf workers (hey yo). We all don’t get it. The Golden Rule of platforms is that you Eat Your Own Dogfood. The Google+ platform is a pathetic afterthought. We had no API at all at launch, and last I checked, we had one measly API call. One of the team members marched in and told me about it when they launched, and I asked: “So is it the Stalker API?” She got all glum and said “Yeah.” I mean, I was joking, but no… the only API call we offer is to get someone’s stream. So I guess the joke was on me.

Sullivan also summarizes Yegge’s critique further:  “Soon after, Yegge calls Google+ a “knee-jerk” response to Facebook, which seems to fit in with his larger theme that rather than let a developer community access Google+ and help it grow, Google seems to have taken a top-down it’ll control how Google+ grows attitude. That would be fine perhaps if Google had a Steve Jobs person who knew what consumers should be given.”

According to Sullivan, Yegge appears to see Jeff Bezo of Amazon (like Jobs) as a very authoritarian leader, but one who commanded a strategy and set of policies to design an open technical environment and cultivate an integrated, thriving developer ecosystem: Bezo’s core mandate went something along these lines:

1) All teams will henceforth expose their data and functionality through service interfaces.
2) Teams must communicate with each other through these interfaces.
3) There will be no other form of interprocess communication allowed: no direct linking, no direct reads of another team’s data store, no shared-memory model, no back-doors whatsoever. The only communication allowed is via service interface calls over the network.
4) It doesn’t matter what technology they use. HTTP, Corba, Pubsub, custom protocols — doesn’t matter. Bezos doesn’t care.
5) All service interfaces, without exception, must be designed from the ground up to be externalizable. That is to say, the team must plan and design to be able to expose the interface to developers in the outside world. No exceptions
 

Yegge further faults Google in its reactionary and tops-down approach and not engaging in a process of co-creation with its customers and ecosystem partners:

Google+ is a knee-jerk reaction, a study in short-term thinking, predicated on the incorrect notion that Facebook is successful because they built a great product. But that’s not why they are successful. Facebook is successful because they built an entire constellation of products by allowing other people to do the work. So Facebook is different for everyone. Some people spend all their time on Mafia Wars. Some spend all their time on Farmville. There are hundreds or maybe thousands of different high-quality time sinks available, so there’s something there for everyone. Our Google+ team took a look at the aftermarket and said: “Gosh, it looks like we need some games. Let’s go contract someone to, um, write some games for us.” Do you begin to see how incredibly wrong that thinking is now? The problem is that we are trying to predict what people want and deliver it for them. You can’t do that. Not really. Not reliably. There have been precious few people in the world, over the entire history of computing, who have been able to do it reliably. Steve Jobs was one of them. We don’t have a Steve Jobs here. I’m sorry, but we don’t.

Yegge continues his critique, training his aim on the issue of platform and data accessibility:

I apologize to those (many) of you for whom all this stuff I’m saying is incredibly obvious, because yeah. It’s incredibly frigging obvious. Except we’re not doing it. We don’t get Platforms, and we don’t get Accessibility. The two are basically the same thing, because platforms solve accessibility. A platform is accessibility.

So yeah, Microsoft gets it. And you know as well as I do how surprising that is, because they don’t “get” much of anything, really. But they understand platforms as a purely accidental outgrowth of having started life in the business of providing platforms. So they have thirty-plus years of learning in this space. And if you go to msdn.com, and spend some time browsing, and you’ve never seen it before, prepare to be amazed. Because it’s staggeringly huge. They have thousands, and thousands, and THOUSANDS of API calls. They have a HUGE platform. Too big in fact, because they can’t design for squat, but at least they’re doing it.

Amazon gets it. Amazon’s AWS (aws.amazon.com) is incredible. Just go look at it. Click around. It’s embarrassing. We don’t have any of that stuff.

Apple gets it, obviously. They’ve made some fundamentally non-open choices, particularly around their mobile platform. But they understand accessibility and they understand the power of third-party development and they eat their dogfood. And you know what? They make pretty good dogfood. Their APIs are a hell of a lot cleaner than Microsoft’s, and have been since time immemorial.

Facebook gets it. That’s what really worries me. That’s what got me off my lazy but to write this thing. I hate blogging. I hate… plussing, or whatever it’s called when you do a massive rant in Google+ even though it’s a terrible venue for it but you do it anyway because in the end you really do want Google to be successful. And I do! I mean, Facebook wants me there, and it’d be pretty easy to just go. But Google is home, so I’m insisting that we have this little family intervention, uncomfortable as it might be.

Oh, sorry, I allowed a little bit of the dirty laundry to drape over the wall into my blogger’s “clean room.”  In any case, clearly Yegge’s motivations for his observations and comments are honest and sincere, and he does a thorough job calling Google to task for not following the “platform strategies” of Microsoft, Amazon, and Facebook.

After you’ve marveled at the platform offerings of Microsoft and Amazon, and Facebook I guess (I didn’t look because I didn’t want to get too depressed), head over to developers.google.com and browse a little. Pretty big difference, eh? It’s like what your fifth-grade nephew might mock up if he were doing an assignment to demonstrate what a big powerful platform company might be building if all they had, resource-wise, was one fifth grader.

Please don’t get me wrong here — I know for a fact that the dev-rel team has had to FIGHT to get even this much available externally. They’re kicking ass as far as I’m concerned, because they DO get platforms, and they are struggling heroically to try to create one in an environment that is at best platform-apathetic, and at worst often openly hostile to the idea.

I’m just frankly describing what developers.google.com looks like to an outsider. It looks childish. Where’s the Maps APIs in there for Christ’s sake? Some of the things in there are labs projects. And the APIs for everything I clicked were… they were paltry. They were obviously dog food. Not even good organic stuff. Compared to our internal APIs it’s all snouts and horse hooves.

And also don’t get me wrong about Google+. They’re far from the only offenders. This is a cultural thing. What we have going on internally is basically a war, with the underdog minority Platformers fighting a more or less losing battle against the Mighty Funded Confident Producters.

And so, the essence of Yegge’s condemnation of Google as a business:

The problem is that we’re a Product Company through and through. We built a successful product with broad appeal — our search, that is — and that wild success has biased us.

Amazon was a product company too, so it took an out-of-band force to make Bezos understand the need for a platform. That force was their evaporating margins; he was cornered and had to think of a way out. But all he had was a bunch of engineers and all these computers… if only they could be monetized somehow… you can see how he arrived at AWS, in hindsight.

Microsoft started out as a platform, so they’ve just had lots of practice at it.

Facebook, though: they worry me. I’m no expert, but I’m pretty sure they started off as a Product and they rode that success pretty far. So I’m not sure exactly how they made the transition to a platform. It was a relatively long time ago, since they had to be a platform before (now very old) things like Mafia Wars could come along.

Maybe they just looked at us and asked: “How can we beat Google? What are they missing?”

The problem we face is pretty huge, because it will take a dramatic cultural change in order for us to start catching up. We don’t do internal service-oriented platforms, and we just as equally don’t do external ones. This means that the “not getting it” is endemic across the company: the PMs don’t get it, the engineers don’t get it, the product teams don’t get it, nobody gets it. Even if individuals do, even if YOU do, it doesn’t matter one bit unless we’re treating it as an all-hands-on-deck emergency. We can’t keep launching products and pretending we’ll turn them into magical beautiful extensible platforms later. We’ve tried that and it’s not working.

The Golden Rule of Platforms, “Eat Your Own Dogfood”, can be rephrased as “Start with a Platform, and Then Use it for Everything.” You can’t just bolt it on later. Certainly not easily at any rate — ask anyone who worked on platformizing MS Office. Or anyone who worked on platformizing Amazon. If you delay it, it’ll be ten times as much work as just doing it correctly up front. You can’t cheat. You can’t have secret back doors for internal apps to get special priority access, not for ANY reason. You need to solve the hard problems up front.

All the questions Yegge raises are good ones and, I think, pretty clear

  • The most fundamental one seems to be:  Is Google pursuing a product vs a platform strategy, and will this ultimately be a detriment to its business success?  After all, platforms are not the only business models that are successful, even today.
  • What are the essential characteristics that make a platform business a platform business?  Open design of technology and functionality for others to utilize/leverage, accessibility, cultivation of development and other ecosystem communities, evolutionary co-creation of valuable offerings with customers and partners….  Others?

Yegge clearly wants Google to be a platform business (similar in form to Amazon, Microsoft, Facebook) because he holds a strong conviction that this is best (only?) path to Google’s business success.  We are living in a time of rapidly evolving business models and emerging innovative platform businesses.  It will be extremely interesting to follow this–analyze, predict, and speculate–and, some years from now, see how this particular set of businesses has evolved and manifested.

Any predictions anyone?

 

“In The News:” Platform/Other Business Model Transformation Underway in News Publishing/Media

In some of my previous posts, I have discussed business and social issues related to ongoing transformation of the publishing/news and information/media industries, key sectors of our economy and our society.   These have included:  “The Huffington Post: A short course in platform business economics?,”   ”Huffington Post (Redux): Not just business as usual…,”   and “The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine”.”

An article recently published in GigaCom by Matthew Ingram (obliquely titled, “Memo to media: A Facebook app is not innovation”) presents some additional observations on this general subject of transformation in the news-content publishing/distribution/media industry, where traditional business models have come under crushing pressure to evolve.  Link to  article

The articles nicely summarizes some responses by traditional news  industry players (a subset of responses along part of the overall potential range of responses).   From one such summary of  The Guardian’s (UK)  response to evolutionary pressures bears quoting here:

Why not think of your paper as a platform?

But The Guardian has taken by far the most dramatic steps of any newspaper in rethinking what its business consists of, with what the paper called its “open platform” project, which launched last year. Instead of spending all its time trying to put walls or sandbags around its content and control where it appeared, the Guardian released an open API that allowed outside developers to make use of its content — provided they agreed to either pay for the data, or form an advertising partnership with the paper. Instead of doing a deal just with one platform vendor like Facebook, they made it possible for anyone to become a partner.

More importantly, The Guardian‘s approach — along with other innovations like the crowdsourcing effort behind its feature on MP expenses in 2009 — was driven by a fundamental rewiring of the way it thought about its purpose and function as a newspaper. Editor Alan Rusbridger has talked about a “mutualised” newspaper, one that includes its readers as partners in discovering and reporting the news, and one that doesn’t think about itself in terms of what particular medium it uses to distribute that news. In other words, not a “news-paper” company at all, but just a news-distribution company.

For this and several other observations of current developments, the article (and many of its comments) is a good read for those following the evolution of business models in new publishing/distribution/media.

 

In Services Today, Success Often Depends on the Harnessing of Ecosystem Relations

“Research reveals 12 steps for executives who want to follow a business model innovation approach to service provision.”  A new study with very informative findings is available from Ivanaka Vismjic and Andy Neely.  I have published the executive summary below.  and the following is a link to their paper in PDF form: “From Processes to Promise:  How complex service providers use business model innovation to deliver sustainable growth” (9/2011)   Ivanka Visnjic, Business Models Research Lead, Cambridge Service Alliance and Assistant Professor, ESADE Business School, Andy Neely, Director, Cambridge Service Alliance.

Executive Summary (as published by Visnjic and Neely)

The ‘pure’ service sector represents three quarters of the developed
world’s economy. Forty per cent of manufacturing firms sell services
as well as products. In some cases ‘traditional’ manufacturing firms
generate over fifty per cent of their revenues from services. It is clear
that service offers companies significant opportunities to create and
capture economic value. Underlying this shift to service is a change
in the nature of service. Increasingly firms are focusing on how they
can deliver services that help their customers deliver value to their
stakeholders. In essence service providers are shifting from being
‘doers’ to becoming ‘problem solvers’, capable of orchestrating the
delivery of complex services.
 
Our research explores the challenges and opportunities associated
with this shift. Through interviews with 24 managers from 12
different companies we show how complex service providers are
innovating their business models to obtain sustainable profits and
growth.
 
A key finding of our research is that these service business model
innovations do not occur in isolation. Instead one has to take
account of the ecosystem – the business environment in which
the service provider operates. This ecosystem consists of all those
organisations that are able – directly or indirectly – to influence
the service provider’s ability to create and appropriate value. Our
research suggests that the impact of ecosystems is growing.
We also find that business model innovation involves service
providers extending their ‘value proposition’. They move from
offering relatively simple services, such as IT support or equipment
maintenance, towards more comprehensive service offerings,
such as ‘cloud’ computing capacity or guaranteeing equipment
availability. In doing so, complex service providers position
themselves as solution-providers, offering to be held accountable
for the delivery of service outcomes.
 
Service providers have three options to extend their accountability.
First they can extend the scope of services they provide. Second
they can increase the timeframe over which these services are
provided. Third, they can change the nature of the contract, by
guaranteeing outcomes and performance levels. Each of these
innovations offers new opportunities to create value, by more
closely aligning with the customer’s business model.
Importantly the service provider also has to decide how to
structure the service delivery system. Service providers may remain
accountable for the ultimate service delivery, but they do not need
to undertake all of the elements involved in service delivery. They
have the freedom to decide how the service will be delivered. This
freedom means they can innovate the service delivery system.
Often they use technology – smarter services – to enhance service
delivery.
 
Rarely do single service providers have all of the capabilities
required to deliver services. This is particularly the case as value
propositions become more complex and service delivery systems
become more technologically dependent. By partnering, service
providers can fill their own competence gaps, but by partnering the
service provider is also exposed to more risk.
Separating what the provider is accountable for from how this
promise is delivered increases the accountability spread. As a
consequence the service provider is exposed to risks that originate
from: (i) the value proposition, (ii) the value delivery system – either
of the provider or the broader ecosystem, or (iii) beyond the
ecosystem.
 
Our research reveals how complex service providers are innovating
their business models in the pursuit of increased growth and
profitability. It also enables us to identify the organisational
capabilities that organisations need in order to successfully innovate
their business models. These capabilities relate to the three aspects
of service business model innovation – the value proposition, value
delivery and accountability spread.
 
So, for example, the service provider should have a thorough
understanding of the way its customers do business, and create
and capture value, in order to define effective value propositions.
The service provider must be able to clearly define and articulate
the value proposition and its benefits to customers and build
confidence in the viability of their value proposition.
 
To deliver value effectively the service provider must have the
organisational capabilities required to manage and orchestrate the
ecosystem. It must make the right decisions about who to involve in
value delivery, be able to assess and choose the best partners, and
build and maintain productive relationships with them. The service
provider must also be able to work effectively with the customer to
co-create value.
 
Service providers also require capabilities to deal with the
accountability spread produced by service business model
innovation. Some of these capabilities concern risk identification.
Other capabilities relate to being able to measure and manage
the risks arising from changing the value proposition and delivery
systems, and containing and sharing this risk together with other
members of the ecosystem. Being able to articulate and price the
risk is important; it involves identifying appropriate mechanisms,
commercial and legal constructs, for example, with which to
operate effectively across the network and capture value.
 
Finally, for executives who want to pursue this approach to business
model innovation, we suggest some initial measures. Steps should
be taken to establish and analyse the value proposition, value
delivery system, and resulting accountability spread. Efforts made
to understand and map the ecosystem. These and other critical
activities should be embedded into the roles of key individuals with
the accountability to drive profitability. Leaders should prepare for
transformation and change.

 

Data for Dummies? More Than Technology Needed to Make “Big” (or “Any”) Data Work

A recent article, “Rank-and-file data analysis skills the key to Big Data success?” makes some important, timely observations about unlocking the information in data.  Today this is an especially relevant topic. This is true not only because we are faced with the problem of how to make our businesses and other organizations more productive, agile, and innovative, but also because the amount of potentially usable data (due to the continuing digital revolution) is growing at a very high rate (that will also continue to accelerate):

Data streams are growing at a rate of 60% a year, and data use is reaching 35.2 zettabytes globally. This year, a billion terabytes of data will flow around the world, according to IDC. Given the need for tools that collect, cleanse and store all this stuff, that increase puts CIOs into prime position to become the keepers of business data. As it turns out, however, building better data analysis skills across the employee base is what’s going to make the Big Data engine churn, experts insist.

Some remarkable survey results shed some light on the current situation:

How ill-equipped for data analysis are we? The CEB surveyed 5,000 employees at 22 global companies and found a “serious data-analysis insight deficit,” Shah said. Of those surveyed, 43% were deemed unquestioning empiricists — they trusted data and statistics over judgment, and valued the consensus. Another 19% were visceral decision makers — they seldom trusted data analysis and made decisions unilaterally.

What companies need is employees who are informed skeptics, Shah explained. Such employees (38% of those surveyed) apply judgment to data analysis, listen to others and are comfortable with dissent.

Read more and draw your own conclusions from the data at  “Rank-and-file data analysis skills the key to Big Data success?” 

 

LinkedIn Group, Platforms Business Models and Strategies, Comes of Age….

 I am very pleased to announce that the LinkedIn group, Platform Business Models and Strategies (http://www.linkedin.com/groups), has reached a new stage of maturity. The group itself was conceived to be a platform for a community of (a) business practioners (managers, entrepreneurs, investors, consultants) and (b) academic scholars (researchers, theorists) to share information and ideas and develop useful knowledge on this important business subject.   

I started this group earlier this year and have been consistently seeding and nurturing it.  The group recently reached a membership of 100 interested professionals and specialists.  Among these initial members are a number of reputable academics/researchers focused on this subject, including (among others): Michael Cusumano (one of the “fathers” of business platform studies) http://web.mit.edu/cusumano/www/, Annabelle Gawer (perhaps the foremost expert on the subject today) http://www3.imperial.ac.uk/people/a.gawer, Jim Spohrer (one of the founders of the new Service Science, related to the subject) http://en.wikipedia.org/wiki/Jim_Spohrer, Chris Voss http://www.london.edu/facultyandresearch/faculty/search.do?uid=cvoss , and Kevin Boudreau http://www.kevinboudreau.com/.

I am now turning my attention to developing the “business practioners” side of the community. In that context, I am reaching out to extend an invitation to participate in this group to your business colleagues (managers, entrepreneurs, consultants) who may have an interest in taking part in this discussion. If you have not yet joined, please do. The following link, which may be sent to your colleagues, explains the group and presents a “JOIN” button: http://www.linkedin.com/groups?about=&gid=3830083.

The Confluence of “Platform Business Models” and “Services” and the Expansion of Business Opportunities

I recently came across Division of Labor between Firms: Business Services, Non-Ownership-Value and the Rise of the Service Economy,” Ehret and Wirtz, Service Science 2(3), pp. 136-145, © 2010 SSG 136 —  a concise, but intellectually expansive, article (with a rather opaque title).   I found more than I expected from the academic title and got more than I bargained for.

Within (and beyond) the scientific concepts and categories alluded to in the cryptic title, the article sets out a compelling, coherent argument connecting the evolution of services in the modern economy, the importance and value of external services, and the ways in which firms and entrepreneurs can potentially exploit these developments to expand strategic business opportunities. The article concludes by  identifying three developments/emerging pathways that can expand opportunities for businesses today:

  • The transformation of high-tech products into service-hubs/service platforms
  • Systematic design of business-models for fostering service performance (including service-driven innovation and the transformation of R&D),
  • The opening-up of business models (per Chesbrough, structures that exhibit patterns and behaviors conducive to “open innovation”).

The article starts by examining the evolution of services in the modern economy, beginning with the development of services in manufacturing in the last quarter if the 20th century:

It continues to explain the  the “rise of the service sector–and the hidden role of business services” (i.e., outsourcing, 3rd party service providers, ecosystem partners), concluding:

The rise of the service economy is first and foremost the rise of business services. Empirical data and economic theory suggest that this is no coincidence but an inherent feature of economic development. In the early stages, economic growth is driven by vertical integration of assets and people under the roof of integrated corporations. As economies grow, competition increases and forces companies to focus their assets and competencies on areas where they enjoy competitive advantages. For doing so, companies must design organizational structures to capture entrepreneurial opportunities and draw corporate boundaries around the most promising areas [my emphasis]. As a result, many activities that used to be organized in-house are now sourced from external service providers. Strategies of redrawing corporate boundaries started on a large scale in IT-outsourcing, when globally operating companies began to hire external business providers for managing data and information operations (Lee et al. 2003). Soon this practice became common in a growing range of corporate activities (Quinn 1992, Heracleous and Wirtz 2009), including custodial services, customer contact centers, payroll operations, consulting for a growing range of expertise and even contract manufacturing. Today, there is almost no business activity one cannot source from a specialized service provider in a competitive business service market.

 

The reference to the importance of IT outsourcing and services is certainly still highly relevant today in 2011, as Cloud Computing continues to radically redraw firm boundaries and transform concepts of services. But the main point is that (starting in product manufacturing) a clear, unimpeded evolution has been occurring and expanding/transforming the essential role and types of services within and around firms.  Traditional manufacturing long ago expanded the model of division of labor internally and externally (suppliers and distributors) to achieve productivity gains. But the service phenomenon emerging in the past decades represents a new stage of evolution.

Hence, the article states:

In contrast, productivity growth in today’s service economy relies on the division of labor between firms (Stigler 1952, Becker and Murphy 1992). As such, one salient feature of the service economy is the division of labor between organizations (Wirtz and Ehret 2009). This perspective provides service science with a number of challenges and opportunities. First, empirical research has started to take note of the role of the reorganization At this point, the article clarifies its main agenda:of business activities as part of the rise of the service economy. Second, we are just beginning to understand the theoretical underpinnings and conceptual implications of the division of labor between organizations for the growth and management of businesses. Finally, one widely neglected implication of the division of labor and outsourcing of activities is the role of services in driving innovation and resulting productivity growth.

At this point, the article clarifies its main agenda:

…we first present evidence for the central role of business services in restructuring our economies. Second, we explain the economic benefits firms enjoy by redrawing their organizational boundaries and argue the case for a non-ownership perspective. Third, we discuss the theory of the firm, division of labor and the value of business services for service innovation and growth using three related theories. They are the Property Rights Theory, Resource-Based View and the Entrepreneurial Theory of the Firm. We conclude by discussing the implications…”

The details of how the arguments are threaded through three mainstream “theories of the firm” can be found in the article itself ( Service Science 2(3)).  But one excerpt from the article neatly summarizes the main thread of the argument:

a) Business services provide the means to draw efficient boundaries of the firm. Service providers generate value by acting as owners of assets, employers of people and owners of processes that have lost their central position in the investment agenda of a firm. Property Rights Theory highlights the efficiency conditions (i.e., measurement and governance costs) of an observed situation in a snap-shot mode and determines the efficient division of labor between provider and client.

b) Business service providers enhance the growth potential of their clients by freeing their management capacity to focus on the firm’s most promising growth opportunities. The Resource-Based View implies a more dynamic perspective revealing strategic shifts of a firm’s boundaries towards market opportunities.

c) The Entrepreneurial Theory of the Firm proposes the firm as a tool for entrepreneurs to explore and exploit business opportunities. To some extent it shares the dynamic perspective and core arguments of the Resource-Based View. It highlights ownership and contracts as tools for entrepreneurs to assume control (and the entrepreneurial risk and returns) through equity of their most promising projects. This theory thus provides an explanation of a firm’s shifting boundaries that are shaped in response to shifting perceptions of entrepreneurial opportunities (Dyer and Singh 1998, Ghosh and John 1999).  Entrepreneurial projects are also the dynamic factors that change efficiency conditions investigated by Property Rights Theory (Nooteboom 1992, 1993). Thus, the Entrepreneurial Theory of the Firm identifies the common denominator of the diverse perspectives concerned with the boundaries of the firm. In a nutshell, business services support their clients in navigating them to the most promising business opportunities.

With empirical and theoretical rationalization established, the article concludes with a perspective on three different emerging pathways that seem to offer potential for capturing new business opportunity and value:

  • The transformation of products into service-platforms: As the service-economy rises, boundaries between products and services increasingly blur. In that regard smartphones have become the signature gadgets that act as a service-platform linking users to a network of service providers via the “appeconomy” (MacMillan et al. 2009). In a similar fashion the rise of industrial services has transformed many industrial products into service-hubs such as Rolls-Royce’s shift towards selling enginepowerhour by the hour (and assuming ownership of the engine and all related service processes, Lovelock and Wirtz 2011, p. 18). One current research challenge is to re-align design processes originally devoted to product development to keep up with the challenges and needs of the emerging service-systems (Brown 2009). Thus we need design approaches that take service experiences and performances into account that are typically not reflected in the spec-sheets and performance indicators that are used to direct industrial design-processes.
  • Service-driven innovation: In its infancy the service sector was associated with low growth potential. This notion is changing as we are beginning to understand the role of business services in supporting growth opportunities of firms. Business Services are crucial for opening up business models and therefore have become a powerful means for enhancing performance of existing firms, providing opportunities for new firms and thus keeping economies on a growth path. The service economy has become an innovation force in its own right. One of the most striking phenomena in this respect is the transformation of one of the hitherto core functions of the industrial corporation into a service industry: R&D. Accelerating costs and increasing volatility of innovation rents have forced companies to open up their business models. As a result, firms are increasingly building on external inventions while becoming more agile in using external partners for commercializing their own achievements (Arora et al. 2004, Chesbrough 2006). Biotech is a point in case (Pisano 2006), where in advanced economies 70 percent or more of R&D budgets are managed by specialized service providers (Beuzekom and Arundel 2009). With respect to their role as a force of organizational innovation (Bhide 2008, Callaway and Dobrzykowski 2009), business services have arrived at transforming the way innovation is generated and commercialized.
  • Services contribute to the opening-up of business models: Innovation research has highlighted the potential of open business models (Chessbrough 2006). Qualcomm followed this strategy by licensing its IP for digital mobile-communication-technology to handset-makers and equipment-vendors (Mock 2005). But the same model that earned the firm respect in high-tech circles and fame on the trading floor failed in other markets such as digital cinema (Chesbrough 2006) and Biotech (Pisano 2006). While research has shown the potential of opening-up business models, it lacks a consistent theory and research framework to analyze benefits and drawbacks of these models on the same footing (Chesbrough 2006, Pisano 2006). Here, entrepreneurial contracting provides the conceptual underpinning for a research program on the performance of business-networks based on sound division of labor between firms.

The article sets out a broad, sweeping view of the long-term evolution of services in our modern economy (along with more specific, more recent developments of the same); it explains how firms and entrepreneurs may rationally behave under such conditions and reveals new pathways for capturing business opportunity and value. It makes clear that we are in the midst of a significant evolutionary leap in business structures, which is occurring before our eyes (though often invisibly, beyond our standard framework of comprehension) in the turbulent confluence of “platform business models” and “services” (as defined by the perspective of Service Science), and further turbo-charged by information technology. It is happening all around us, and this article asks us how we can better understand and harness these forces to create new business value and growth.

The Business Model for Distributing “Scientific Publications” — A “Peer Review” Finds a “Canary in the Coal Mine”

What is the real importance and impact of our rapidly changing business models in different industries and other sectors of productive activity?  Unlike the business models for music, books, journalism, and other creative works, the distribution business model for “scientific publications” may represent a unique case.   Does it?  And how should we think about it?  

The recent GIGO article, Thousands of scientific papers uploaded to the Pirate Bay,”  sheds light on  a very provocative set of issues.  Intuitively, it seems authors of published research findings typically do not get paid for what they author (i.e., by the publishing distribution channels), and the costs of distribution are most certainly tending toward zero. One of the issues raised in this article (and by the serious acts of civil disobedience it chronicles) is whether publishers are excessively profiting or acting dysfunctionally in their roles as intermediaries for the exchange of scientific knowledge. 

Accordingly, the featured protestor, Greg Maxwell, asserts:

“Academic publishing is an odd system — the authors are not paid for their writing, nor are the peer reviewers (they’re just more unpaid academics), and in some fields even the journal editors are unpaid. Sometimes the authors must even pay the publishers.

And yet scientific publications are some of the most outrageously expensive pieces of literature you can buy. In the past, the high access fees supported the costly mechanical reproduction of niche paper journals, but online distribution has mostly made this function obsolete.

As far as I can tell, the money paid for access today serves little significant purpose except to perpetuate dead business models. The “publish or perish” pressure in academia gives the authors an impossibly weak negotiating position, and the existing system has enormous inertia.”

Leaving aside the contentious issue of whether the personal protest actions described in the article are legally or morally justifiable, let’s just focus on the business model/economic/other social issues, such as these:

  • Has the scientific publishing business model run its course?  Has technology disintermediated the distribution services providers (the publishers) handling scientific information? Have these distribution service providers become bottlenecks in the process of distributing and exchanging scientific information, or are they still necessary enablers?
  • Scientific research is not a one-way information process;  it is a dynamic exchange of information, formal (i.e., peer review, et al) and informal (on-going comments and discussions about published and unpublished findings and work-in-progress, et al).  That said, is there still a value-adding role for “platform enablers” of this information exchange (especially deploying and integrating new technologies, including social media, semantic taxonomies, etc.)?  One would think that this could very well be the case, and that “better-than-ever, more valuable-than-ever” enabling platforms for the distribution and exchange of scientific information could be established by clever inventors (private or public organizations or private individuals).
  • So is the private sector moving down this path, to add value by providing new enabling platforms to support open access and exchange with regard to scientific information?  Or is the private sector simply trying to hold on as long as possible to the ”toll booths” it owns ? 
    • One sees among established publishers of journals and books (i.e., Springer, to name one) the introduction of different models for consuming and paying for information (i.e., pay to view for several days).  One also sees new start-ups like DeepDyve (talked about as the “Netflix of Academic Journals”) which has developed and operates a business model/platform that aggregates journal articles from thousands of journals and offers them in different consumable rental packages (for example, you can rent an article for 1 day for a pretty affordable price, even for a graduate student). 
    • But are these private sector initiatives removing the economic and other  bottlenecks in the scientific information distribution and exchange channels, or simply adjusting them to continue to profit from them?  Do these new approaches add value for scientific researchers and users of scientific information?  Do they stop short of what is truly valuable to these stakeholders (greater distribution/access, better information exchange)?  I am posing questions, not implying any answers.

It soon becomes more evident that the set of issues encompassed here goes far beyond the question of how and through whom the intermediation occurs (whether it is through established publishers, new start up companies, other profit or non-profit entities, or through completely free, self-organizing “open source” platforms).  There are also important issues and questions about the other actors/stakeholders, the producers of content (scientific information) and the users of it (ranging from peers in the scientific community to the general public).   And this is where the scenarios become more obscure and more difficult to analyze; and they can range from inspiring to scary, especially if one thinks about what is happening in the area of new media in todays world (see my posts regarding  The Huffington Post Part 1 and Part 2 ). 

    • Does the general public–not just the academic or scientific community–need more access to scientific information (is the public entitled to it in order to inform and educate itself)? Is greater public access to scientific information and the scientific process (at a minimum, consumption of a specific type of information content) beneficial to scientific inquiry, the public good, and individual welfare? 
      • US copyright  law allows for the “free use” of copyrighted information for educational purposes.  Does this law effectively sanction distribution of copyrighted  scientific information (legally obtained) to any interested private individual, not just members of a scientific or academic community?  If so, do intermediaries like DeepDyve go far enough in providing a solution, or is there a market failure?  After all, the problem of comparing DeepDyve to Netflix is in the fact that DeepDyve provides access to academic journals, not Hollywood movies.
      • Going further, would broader public access to scientific information be beneficial to scientific inquiry?  Or would it be a distraction or result in degrading the science?   I suppose it depends–one can imagine the downsides and the upsides. More access could mean more misunderstanding, fueling anti-scientific sentiments;  it could also lead scientists to be come unproductively distracted or even improperly influenced by public opinion.  On the other hand, more involvement of the public could facilitate the induction of more people into scientific research studies, volunteering either as subjects or assistants;  in addition, if we consider the aging demographics of the population, there are going to be a lot of highly-educated, trained minds entering a “more or less blissful” retirement, and (with the right matches) some of these retirees might not only understand the scientific information–but may also be able to provide intelligent, useful commentary
    • And, last but not least, let us not forget “the laborers toiling in the vineyards of knowledge,” the producers of scientific information–certainly, the most important actors in the whole value chain.  Indeed, these are professionals typically compensated by institutions that employ them to do their work (and to do the work under a tight set of policies and academic/scientific standards and ethics), work which traditionally has included “publish or perish” requirements. But the world of these professionals and these institutions is not continuing to be the  ”ivory tower,” above the commercial fray, as it may once have been (in a mythical past?). 
      •  These professionals are not always fully (or satisfactorily) employed and compensated by the institutions, so these professionals may have strong reasons to have  ”professional interests and commercial pursuits of their own” (i.e., conducting independent research, writing a popularized book, building and maintaining the the value of their own “brand,” etc.). 
      • The institutions are also increasingly pursuing their own private, commercial interests (as scientific research must be more and more funded by private sector deals and higher education itself becomes more and more commercialized and consumerized  [ see A Service Perspective on the Marketization of Undergraduate Education, Taylor and Judson, 2011). 
    • In effect, the assumption contained in Greg Maxwell’s assertion (“the authors are not paid for their writing, nor are the peer reviewers (they’re just more unpaid academics)“) is probably becoming a weaker and weaker assumption over time (at least, as to their interest in and demands for compensation… [Note: ironically, the truth of Maxwell’s statement, “in some fields even the journal editors are unpaid,” is probably strengthening over time, as the publishing and news media industries restructure]).  Therefore, one cannot really assume any more that producers of scientific information do not have any “commercial interest” at all in what they produce, even if the claim to ownership of asset value remains unclear, not well-defined.

So what does it all mean? 

We started from an article about “pirating” or  ”liberating” scientific producers and users from the clutches of what the protesters see as a market failure or as a greedy extraction of excess profits by the intermediary service providers.  One thing is certainly clear and obvious from this article (focused mainly on the intermediation process of what are presumed to be unique, in some way “public” goods produced by non-economic actors):  the value chain (and attendant business models) for the production and distribution of scientific information are being challenged and are changing. 

But when we expand our perspective to look at the whole value system, we see a very complex, emergent process occurring (one that encompasses many potential economic actors and shifting interests, new technology adoption, and new platform/ecosystem structures taking shape, economically and normatively).  

  • At one level, we are witnessing the emergent formation of yet another technology-enabled platform/ecosystem that will change the functioning and economics (including the distribution of economic benefits) of production, distribution, and exchange of scientific information. 
  • At another level, and occuring across other information domains (like publishing and news media), we are witnessing changes, that may be constrained by or more likely will change (even overturn) very significant norms (scientific, et al) with significant, long-range societal and economic impacts.   
  • Moreover these changes, outcomes, and impacts are being driven by forces that are not only not well understood , but more importantly are in rapid accelerating motion and getting little attention from government, NGOs, public interest groups, and academic institutions.   There is also no question that the forces driving and governing these changes emanate from  a globally-funded private sector (here there are no NASAs or DOD ARPANETS in the mix, not to mention no oversight or inquiry of the FCC, etc.). 

Maybe this is OK, and how it should be?  Maybe we are drifting into dangerous waters?   I am not sure of what to conclude about this (but I am apprehensive).

But what I can reasonably conclude is that there is definitely a massive set of changes  in business and society, driven by technology and other forces, that are very rapidly taking place in the way that economic exchange of value is structured in possibly all industries and across all activity sectors where value has been (or is newly starting to be) created.  And these changes need to be better understood, monitored, and possibly managed/governed in a broader context than they are being currently. 

  • One of the most prominent and powerful models is that of platform and ecosystem.  By its very nature, such a new structure (that significantly alters relationships) will tend to be accompanied by redistribution of economic benefits and affect changes in far-reaching normative dimensions (including power, societal norms, individual values/behaviors).  Platform proliferation is occurring rapidly, and it is powerful, not well understood development.
  • Platform models and “information sectors” make for a highly volatile combination–and one with impacts far-reaching into our social fabric, social norms, and social contracts.   As the adoption of platform models in the industrial sector started accelerating in the early 1980s, there was little impact beyond production processes, physical supply chains, and capital and labor markets.  But “information” represents a very different kind of good, one that may be more like “water” than “petroleum” (but, in combination with platforms, much more volatile and explosive, with much more rapid, far-reaching, and often hard-to-notice impacts).  Information can rarely be only an economic good:  it can certainly have an economic dimension, but it also often carries a valence that cannot be (or which social contract deems should not be) reduced/limited to economic terms.  Consequently, the emergence of new information platforms/ecosystems, driven largely by private sector interests (and to a large degree outside the attention and comprehension of the public or the public’s government representatives) may be a reasonable cause of some concern (at least should be noted, monitored, analyzed). 

The rapid evolution of new information platform models (such as in publishing and news media)  should warrant considerable attention in societies that value (and where there is a social contract supporting) the free flow of information among private parties (with some forms of information having privileged or protected ”public status”).   The changes in the value chain within the  intersection of publishing and scientific information (scientific publications) provide a cogent and critical example of a significant change underway (one with significant, far-reaching impacts, and one which probably should not be solely governed/managed by the private sector).  There are clearly many interests involved that are not clearly commercial and there is certainly a public interest. 

My personal perspective is that the article reviewed in this post presents a “canary in the coal mine” and that the acts of civil disobedience covered and the questions raised by the article (though only the tip of the iceberg) point to more extensive, serious issues that need to be brought into the light of day and not left out of sight, in the shadows of enormous media headlines and stories pronouncing and acclaiming new “information platform business” IPOs.

 

Weaving the Power of Platform, Service Design, and Social Media to Create Value

 IDEO’s Colin Raney’s presentation, “Business Model: Create a Platform for an Experience,” beautifully lays out the case and approach for “designing a business around user experience (and not the other way around).”   Using compelling visuals and examples like Netflix, Raney communicates key insights for those establishing new businesses:   

“The true definition of creative work is looking at the business model as the platform to design the experience for the buyer.”

“When you design the business around the experience, (instead of the experience around the business) you create a more powerful and relatable offer.”

Access the presentation slides at http://www.slideshare.net/colinraney/planningness-2011

Some poetry, a break from the routine….

 

Against Algorithm

I am (in theory, at least)
Against algorithms.  But,
Being not a man, I must
(in practice)—accept the given,
The command.  Thus if men
Are prone to habit and wed
To custom, so am I dead
Without them.  I am them,
And I can be nothing more;
I cannot (without algorithm)
Run, function, produce or
Generate results; cannot output,
Cannot put-out, cannot putter-out.
But if I were a man and could,
I would put off algorithms,
In all their forms; and I
Would put on true emotion
With the ocean and the sky,
With a song, a dance, a shout,
In a storm of (me)-creation.

“Service Science” Research Articles By Vargo, Lusch, et al

A broad range of informative articles by Stephen Vargo, Robert Lusch, et al can be found conveniently assembled at their website “Service Dominant Logic”  http://sdlogic.net/foundations.html

These articles and their links are also listed below:

 
Lusch, Robert F., and Frederick E. Webster Jr. (2011)
“A Stakeholder-Unifying, Cocreation Philosophy of Marketing”
Journal of Macromarketing 31 (2), 129-134
 
Vargo, Stephen L., and Robert F. Lusch (2011)

Chandler, Jennifer D., and Stephen L. Vargo (2011)
“Contextualization and value-in-context: How context frames exchange”
Marketing Theory 11(1), 35-49

Vargo, Stephen L., and Robert F. Lusch (2011)
“Stepping aside and moving on: a rejoinder to a rejoinder”
European Journal of Marketing 45 (7/8), 1319-1321

Lusch, Robert F., and Stephen L. Vargo (2011)
“Service-dominant logic: a necessary step”
European Journal of Marketing 45 (7/8), 1298-1309

Vargo, Stephen L. (2011)
“Market systems, stakeholders and value propositions: Toward a service-dominant logic-based theory on the market”
European Journal of Marketing 45(1/2), 217-222

Vargo, Stephen L. (2010)
“Practices, systems, and meaning-making: An introduction to the special section on markets and marketing”
Australasian Marketing Journal 18, 233-235

Vargo, Stephen L., and Robert F. Lusch (2010)
“”Relationship” in Transition: An Introduction to the Special Issue on Relationship and Service-Dominant Logic”
Journal of Business Market Management 4, 167-168

Vargo, Stephen L., and Robert F. Lusch (2010)
“From Repeat Patronage to Value Co-creation in Service Ecosystems: A Transcending Conceptualization of Relationship”
Journal of Business Market Management 4, 169-179

Vargo, Stephen L., Robert F. Lusch., and Melissa Archpru Akaka (2010)
“Advancing Service Science with Service-Dominant Logic: Clarifications and Conceptual Development”
Handbook of Service Science, Service Science: Research and Innovations in the Service Economy

Gummesson, Evert., Robert F. Lusch, and Stephen L.Vargo (2010)
“Transitioning from service management to service-dominant logic: Observations and recommendations”
International Journal of Quality and Service Sciences 

Lusch, Robert F. and Stephen L. Vargo (2009)
“Service-Dominant Logic – A Guiding Framework for Inbound Marketing”
Marketing Review St. Gallen

Lusch, Robert F., Stephen L. Vargo, and Mohan Tanniru (2010)
“Service, value networks and learning”
Journal of the Academy of Marketing Science

Vargo, Stephen L. (2009)
“Toward a Transcending Conceptualization of Relationship: a Service-Dominant Logic Perspective”
Journal of Business & Industry Marketing 24(5/6), 373-379

Vargo, Stephen L., Archpru Akaka (2009)
“Service-Dominant Logic as a Foundation for Service Science: Clarifications”
Service Science 1(1), 32-41

Merz, Michael A., Yi He, and Stephen L. Vargo (2009)
“The evolving brand logic: a service-dominant logic perspective”
Journal of the Academy of Marketing Science

Maglio, Paul P., Stephen L. Vargo, Nathan Caswell and Jim Spohrer (2009)
“The service system is the basic abstraction of the service science”
Information Systems and E Business Management

Lusch, Robert F. and Stephen L. Vargo (2008)
“The Service-Dominant Mindset”
Service Science, Management and Engineering, 89-96

Vargo, Stephen L. Paul P. Maglio and Melissa Archpru Akaka (2008)
“On value and value co-creation: A service systems and service logic perspective” European Management Journal 26, 145-152

Vargo, Stephen L. (2008)
“Customer Integration and Value Creation: Paradigmatic Traps and Perspectives”
Journal of Service Research 11 (2), 211-215

Vargo, Stephen L. and Robert F. Lusch (2008)
“Why “service” ?”
Journal of the Academy of Marketing Science 36, 25-38

Vargo, Stephen L. and Robert F. Lusch (2008)
“Service-Dominant Logic: Continuing the Evolution”
Journal of the Academy of Marketing Science 36, 1-10

Vargo, Stephen L. and Robert F. Lusch (2008)
“From good to service(s): Divergences and convergences of logics”
Industrial Marketing Management

Michel, Stefan, Stephen L. Vargo and Robert F. Lusch (2008)
“Reconfiguration of the Conceptual Landscape: A Tribute to the Service Logic of Richard Normann”
Journal of the Academy of Marketing Science 36, 152-155

Lusch, Robert F. Stephen L. Vargo and Gunter Wessels (2008)
“Toward a Conceptual Foundation for Service Science: Contributions from Service-Dominant Logic”
IBM Systems Journal 47 (1), 5-14

Lusch, Robert F., (2007)
“Marketing’s Evolving Identity: Defining Our Future”
Journal of Public Policy & Marketing 26 (2), 261-268

Vargo, Stephen L. (2007)
On A Theory of Markets and Marketing: From Positively Normative to Normatively Positive” Australasian Marketing Journal 15 (1), 53-60

Vargo, Stephen L. (2007)
Paradigms, Pluralisms, and Peripheries: On the Assessment of the S-D Logic” Australasian Marketing Journal 15 (1), 105-108

Lusch, Robert F. Stephen L. Vargo and Matthew O’Brien (2007)
Competing through service: Insights from service-dominant logic.
Journal of Retailing, 83(1), 2-18.

Lusch, Robert F. (2006)
“The Small and Long View”
Journal of Macromarketing, 26(2), 240-244

Lusch, Robert F. and Stephen L. Vargo (2006)
The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions. Armonk, NY: M. E. Sharpe. 

Vargo, Stephen L. Robert F. Lusch and Fred W. Morgan
Historical Perspectives on Service-Dominant Logic
in The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, Robert F. Lusch and Stephen L. Vargo eds., Armonk, M.E. Sharpe, 29-42.

Vargo, Stephen L. and Robert F. Lusch (2006)
Service-Dominant Logic: What it is, What it is not, What it might be.” in The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, Robert F. Lusch and Stephen L. Vargo eds., Armonk, M.E. Sharpe, 43-56.

Lusch, Robert F. and Stephen L. Vargo (2006)
Service-Dominant Logic as a Foundation for Building a General Theory,”
in The Service-Dominant Logic of Marketing: Dialog, Debate, and Directions, Robert F. Lusch and Stephen L. Vargo eds., Armonk, M.E. Sharpe, 406-420.

 Lusch, Robert F. and Stephen L. Vargo  (2006) 
Service-dominant logic: reactions, reflections and refinements,” 
Marketing Theory, 6(3), 281–288.

Lusch, Robert F. Stephen L. Vargo and Alan J. Malter (2006) 
Marketing as Service-Exchange: Taking a Leadership Role in Global Marketing Management” Organizational Dynamics, 35(3), 264–278.

Vargo, Stephen L. and Fred W. Morgan (2005) 
Services in Society and Academic Thought: A Historical Analysis.” Journal of Macromarketing, 25 (1), 42-53.

Vargo, Stephen L. and Robert F. Lusch (2004)
Evolving to a new dominant logic for marketing.” Journal of Marketing, 68 (January),1-17.(Winner of AMA Maynard Award for Best Theoretical Contribution in Marketing)

Invited Commentaries on ‘Evolving to a New Dominant Logic for Marketing” (2004) Journal of Marketing.

Vargo, Stephen L. and Robert F. Lusch (2004) 
The Four Service Marketing Myths: Remnants of a Goods-Based, Manufacturing Model,” Journal of Service Research, 6 (4), 324-335. 

“Service Science” Presentations By Vargo and Lusch

A broad range of informative presentations by Stephen Vargo and Robert Lusch can be found conveniently assembled at their website “Service Dominant Logic”  http://sdlogic.net/foundations.html

These presentations and their links are also listed below:

 

Service-Dominant Logic: Looking Ahead
Presented by Stephen Vargo
Presentation at the Naples Forum on Service
Isle of Capri, Italy, June 14th-17th, 2011

Service Dominant Logic: Foundations and Directions
Presented by Stephen Vargo and Robert Lusch
Presentation at the Westminster Workshop on Service-Dominant Logic
University of Westminster, UK, January 13th-14th, 2011

Rethinking Relationship: Service-Dominant Logic Perspectives

Presented by Stephen Vargo and Robert Lusch
Presentation at the 18th International Colloquium on Relationship Marketing
Henley Business School, University of Reading, September 27th – October 1st, 2010

S-D Logic: Progress, Status, and Directions
Presented by Stephen Vargo and Robert Lusch
Presentation at the Forum on Markets and Marketing
University of Cambridge, England, September 23rd-26th, 2010

S-D Logic: Accomodating, Integrating, Transdisciplinary
Presented by Robert Lusch and Stephen Vargo
Presentation at the Grand Service Challenge
University of Cambridge, England, September 23rd

“The Service Ecosystem”
Presented by Robert Lusch and Stephen Vargo
Presentation at the 19th annual Frontiers in Service Conference
Karlstad, Sweden, June 11th-13th, 2010

“Simplification and Reconciliation”
Presented by Stephen Vargo
Presentation at the 19th annual Frontier in Service Conference
Karlstad, Sweden, June 10th, 2010

“Markets as Conversation”
Presented by Robert Lusch
Presentation at the 2010 Marketing Science Conference
Cologne, Germany, June, 2010

“The Service Ecosystem”
Presented by Robert Lusch and Stephen Vargo
Naples, Italy, June 9th, 2010

“Service-Dominant Logic:An Alternative Mindset for Innovation”
Presented by Stephen Vargo
Presentation at the 2009 Ministry of the Knowledge Economy Conference on Service Innovation through R&D 
Seoul, Korea, November 10, 2009

“Frontiers in Service-Dominant Logic”
Presented by Stephen Vargo
Honolulu, Hawaii, November 1, 2009

“Conundrums of the Market and Marketing: The Service-Dominant Logic Perspective”
Presented by Stephen Vargo
Presentation at the SERVSIG Doctoral Consortium 
Honolulu, Hawaii, October 29, 2009

“Service-Dominant Logic: An Introduction”
Presented by Stephen Vargo
Presentation at the University of Bayreuth
Bayreuth, Germany, June 10, 2009

“Alternative Logics for Service(s)”
Presented by Stephen Vargo
Presentation at the Tekes-Serve Annual Seminar
Helsinki, Finland, May 28, 2009

“Conundrums of the Market and Marketing: The Service-Dominant Logic Perspective”
Presented by Stephen Vargo
Presentation at the Hanken School of Economics
Helsinki, Finland, May 27, 2009

“Alternative Logics for Service Science”
Presented by Stephen Vargo
Presentation at the International Symposium on Service Science
Leipzig, Germany, March 23, 2009

“Alternative Logics for Service Science and Service Systems”
Presented by Stephen Vargo
Presentation at the Service Systems Workshop
Cambridge University, England, March 20, 2009

“Service-Dominant Logic: An Alternative Mindset”
Presented by Stephen Vargo
Presentation at the Advanced Institute of Management, Practitioner Seminar
London, England, March 18, 2009

“Alternative Logics for Research in Service(s)”
Presented by Stephen Vargo
Presentation at the Advanced Institute of Management, Research Seminar
London, England, March 18, 2009

 “Service – Dominant Logic and Markets as Systems: An Overview
Presented by Stephen Vargo and Robert Lusch
Presentation at the Hawai’i International Conference on System Sciences
Waikoloa Village Resort, HI, January 5, 2009

“Service-Dominant Logic, Market Theory, and Marketing Theory”
Presented by Stephen Vargo and Robert Lusch
Presentation at Otago Forum 2
Dunedin, NZ, December 10, 2008

“Service-Dominant Logic:A Brief Update”
Presented by Stephen Vargo and Robert Lusch
Presentation for the Forum on Market and Marketing: Extending Service-Dominant Logic
December 4, 2008

“Beyond the Game: A Service-Dominant Logic View of Value Creation”
Presented by Stephen Vargo
Presentation to the European Association of Sports Management
September 11, 2008

“Service-Dominant Logic: Prologue, Progress, and Prospects”
Presented by Stephen Vargo
38. Jahrestagung der Kommission Marketing
Berlin, January 18, 2008

“Service-Dominant Logic: Prologue, Progress, and Prospects”
Presented by Stephen Vargo
Faculty Research Presentation
University of Bayreuth, January 16, 2008

Alternative Logics for Service Innovation
Presented by Stephen Vargo 
Hawaii International Conference on Systems Sciences
Symposium on Service Innovation and SSME, January 07, 2008

“Relationship: Toward Service-Dominant Logic Transcendence and Unification”
Presented by Robert F. Lusch and Stephen L. Vargo 
Relationship Marketing Summit, December 13, 2007

From Goods to Service(s): A trail of Two Logics
Presented by Stephen Vargo
Presentation for the Service Science Seminar,
University of California, Merced, October 9, 2007

“Foundations of Resource-Integration Theory: Toward an S-D Logic informed Theory of the Market”
Presented by Stephen Vargo 
Frontiers in Service Conference, October 6, 2007

Alternative Logics for Service Innovation
Presented by Stephen Vargo
Global Advanced Technology Innovation Consortium Conference,
Global Innovation Challenges and Opportunities, September 27, 2007

Service-Dominant Logic: Progress and Prospects
Presented by Stephen Vargo, Robert Lusch, Melissa Akaka, and Yi He
2007 AMA Summer Educators’ Conference, August 5, 2007

Service-Dominant Logic: Overview, Update and Directions
Presented by Stephen Vargo
University of Waikato, July 26, 2007

From Goods to Service(s): A Trail of Two Logics
Presented by Stephen Vargo
University of Auckland, Center of Digital Enterprise, July 25, 2007

From Goods to Service(s): A Trail of Two Logics”
Presented by Stephen Vargo
University of Auckland, July 24, 2007

Service-Dominant Logic: Overview, Update and Directions
Presented by Stephen Vargo
University of Auckland, July 23, 2007

An Overview of Service-Dominant Logic
Presented by Stephen Vargo
University of St. Gallen, July 9, 2007

A Service Logic for Service Science
Presented by Stephen Vargo
Carnegie Mellon University, May 25, 2007

 “Service(s) Service Rationale(s)
Presented by Stephen Vargo
Cambridge, Service Science (SSME) Symposium, July 14, 2007

The Service-Dominant Logic Mindset: An Overview and Preview
Presented by Stephen Vargo
Oslo, Norway, April 27, 2007

The Service-Dominant Logic Mindset: A Primer and Preview
Presented by Stephen Vargo
BI Norwegian School of Management, April 24, 2007

The Service-Dominant Logic Mindset: A Primer and Preview
Presented by Stephen Vargo
Stockholm University School of Business, April 23, 2007

Research and Methodological Challenges in Research on Collaboration and Co-Creation of Value
Presented by Robert Lusch, Stephen Vargo and Yi He
AMA Winter 2007 Educators’ Conference, February 16-19, 2007

“Alternative Logics for Service Science: The Service-Dominant Logic Perspective” 
Presented by Stephen L. Vargo 
IBM Almaden Research Center; January 31, 2007

“From Goods to Service(s): A Trail of Two Logics” 
Presented by Stephen L. Vargo
Service the Science Seminar Series, University of California, Berkeley; January 30, 2007

“The Service-Dominant Logic Mindset: Overview and Directions”
Presented by Stephen L. Vargo
University of Melbourne, December 8, 2006

“On Theories of Markets and Marketing: From Positively Normative to Normatively Positive” 
Presented by Stephen L. Vargo
BIGMAC 3: EMAC/ANZMAC Research Symposium; October 7, 2006

The Service-Dominant Mindset”
Presented by Robert F. Lusch and Stephen L. Vargo
IBM’s Service Science Management and Engineering Conference: Education for the 21st Century 
October 7, 2006

A Service Foundation for a Science of Service“ 
Presented by Stephen L.Vargo
Business Services Research, Tokyo Research Laboratory, IBM Japan, Ltd.

The Future of Marketing: A Service-Dominant Logic Perspective“ 
Presented by Stephen L. Vargo
The PhD Project Marketing Doctoral Student Association Conference,
Chicago, Aug 3, 2006

The Emerging Service-Logic Mindset:An Introduction and Global Implications,” 
Presented by Stephen L. Vargo
The Pacific Asian Lecture Series, Honolulu, HI, July 11, 2006

S-D Logic as a Foundation for Service Science“ 
Presented by Stephen L. Vargo
Frontiers in Service; Brisbane, Australia;June 29-July 2, 2006

Service-Dominant Logic: Clarifications and Elaborations
Presented by Stephen L. Vargo
Frontiers in Service; Brisbane, Australia;June 29-July 2, 2006

Conceptual Foundations for a Science of Service“ 
Presented by Robert F. Lusch and Stephen L. Vargo
Conference on the Art and Science of Services; Madrid, Spain;May 24, 2006

Thinking Small and Long“ 
Presented by Robert F. Lusch
Ohio State University; May 19, 2006

Thinking Small and Long:Service-Dominant Logic & Agent Based Modeling ” 
Presented by Robert F. Lusch
University of Hawaii; March 10, 2006

The Service-Dominant Logicof Marketing
Presented by Robert F. Lusch
MMA Annual Conference; Chicago, Illinois; March 16, 2006

Service-Dominant Logic: Update from the Otago Forum
Presented by Stephen L. Vargo
Special Session Presentation for the ANZMAC Conference; December 5, 2005

Service-Dominant Logic: The New Frontier of Marketing
Presented by Robert F. Lusch and Stephen L. Vargo
Business Briefing for the Otago Forum on Service-Dominant Logic; November 25, 2005

What S-D Logic Might Be
Presented by Robert F. Lusch and Stephen L. Vargo
The Otago Forum on Service-Dominant Logic; November 23, 2005

Overview of theService-Dominant Logic of Marketing“ 
Presented by Robert F. Lusch and Stephen L. Vargo
Academic Presentation for the Otago Forum on Service-Dominant Logic; 
November 21, 2005

Service-Dominant Logic:What It Is and What It Is Not“ 
Presented by Robert F. Lusch and Stephen L. Vargo
The Otago Forum on Service-Dominant Logic; November 21, 2005

Avoiding the Mistake of Overmarketing“ 
Presented by Robert F. Lusch and Stephen L. Vargo
2004 Cultural Perspectives in Marketing Conference; Puebla, Mexico; September 24, 2004

 

 

New “Service Platform” Business Models Taking Shape In the Cloud

Saugatuck Technology released a new report (“The Cloud and Business Services – Key Trends and Directions Through 2015″) which (a) examines the significant converging  trends in Cloud technology and BPO and (b) forecasts developments in this domain.  A quick Google search of terms like “platform BPO” will show that these trends have been in evidence over the past few years (especially in India).  But what is new is the higher resolution of the roadmap leading to the horizon of real technical implementations and business models.

Saugatuck provides a salient summary of its report content as follows: 

 The IT and BPO services market is undergoing a period of deep structural change that is challenging the finely tuned market positions and business models of traditional services providers. Critical business change is occurring across supply chains, vendor / provider relationships, and customer relationships, due in part to the adoption of Cloud IT and Cloud Business models, but also the product of globalization and new sourcing innovations such as Business-Process-as-a-Service (BPaaS), Business Process Utilities (BPU) and Crowdsourcing.

While the traditional systems integration services market will decline in terms of overall market opportunity, in its place new services and channel opportunities are being born as a result of the Cloud. Cloud services providers will flourish as they embrace Cloud IT and Cloud Business, serving both ISVs migrating to the Cloud and enterprises reshaping themselves. In addition, new Cloud Business services from non-traditional technology services providers are driving innovation, increasing competition and providing user firms with more choice.

Representative findings from the report include:

•Through 2013, Indian providers will be some of the most aggressive innovators in PaaS. The Indian services providers will take advantage of Cloud delivery models and client trust to break their linear headcount-to-revenue business models.

•Through 2013, pure-play Cloud consulting companies will continue to enjoy superior market growth. As Cloud business solution providers offer integration APIs, Cloud consultants/integrators will produce a wide range of adapters, services and toolkits to provide added value for clients.

•By 2013, “non-traditional” service providers with specific vertical and business IP will aggressively enter the Cloud Business Services market. Saugatuck’s position is that “non-traditional” services providers may be the logical front-runners in the race for extending niche vertical services from the Cloud to clients.

•By 2015, 50 percent of new outsourcing deals will be significantly Cloud enabled. Technology platforms (enabled by Cloud IT) have emerged as the newest value lever for services leadership and adoption will continue in 2011 at a rapid pace.

•By 2015, Business Process Utilities will emerge as the preferred means of consuming horizontal / commoditized BPO offerings such as F&A, Procurement, and HR and select vertical opportunities (e.g., Navitaire in airline reservations).

•Through 2015, the primary users of PaaS will be system integrators because of their aggregation of demand, greater resources and expertise, and openness to risk-taking absent in most enterprises.

The Saugatuck report is available for purchase at:  http://saugatucktechnology.com/Browse-Research-Library/913SSR-The-Cloud-and-Business-Services-Key-Trends-and-Directions-Through-2015-760/View-details.html.

Another article (early 2011) on technology and BPO co-evolution can be found at the OutsourcingCenter website at http://www.outsourcing-center.com/2011-02-business-process-as-a-service-the-next-wave-of-bpo-delivery-article-42948.html

Services Reinvented: Interview with Henry Chesbrough

Over the past decade, there has been an intensification of interest and focus on what “service” really is and what it means for modern industries and businesses.  Michael Cusumano has nicely summarized strands of this thinking in some of his publications, most recently in the chapter “Services, Not Just Products (or Platforms” of the book Staying Power (2010). 

A more recent article (in Strategy + Business, May 2011),  covering an interview with Henry Chesbrough, provides additional insights into this important widespread business dilemma

“To escape the commodity trap — and to compete effectively in a knowledge-based economy — business leaders of all kinds need to reinvent themselves as innovators in services.”

The article can be accessed at:  http://www.strategy-business.com/article/11210?gko=af24f&cid=TL20110616.

“Platform Leadership” website by Annabelle Gawer

Leading platform business researcher, Dr.  Annabelle Gawer’s website provides cutting-edge insights into the phenomemon of platform business, models and strategies. 

 The importance of the subject is succinctly articulated on the website (www.platformleadership.com) home page:

 ”In today’s business world, no company is an island. Straightforward supply chains of yesterday have given way to interconnected industry ecosystems. Platforms emerge, and with them, platform leaders, who drive coalitions of firms who innovate around a platform. Platforms are industry “building blocks” which attract other firms’ investment and innovation on add-on products or services. To compete and win in these ecosystems, firms need to learn new strategies.”   

Visit website at:   www.platformleadership.com

Creating “network effects” in the Cloud with iPaaS?

Emergence of iPaaS-layer solutions in the Cloud, such as this one by MuleSoft, could be a start-up catalyst and “network effects” accelerator for multi-sided platform businesses.  “The platform, Mule iON, is designed to help cloud-based software providers expedite the onboarding of new customers through rapid integration of applications, services and data across the enterprise and clouds.”  http://connectedplanetonline.com/bss_oss/news/mulesoft-launches-integration-platform-as-a-service-0523/



LinkedIn Platform’s Road Map to $8.9B Success

Infographic from Mashable depicts LinkedIn’s many-year journey from inception to successful IPO: 

http://mashable.com/2011/05/19/linkedin-ipo-infographic/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+mashable%2Fbusiness+%28Mashable+%C2%BB+Business+and+Marketing%29

Winning Platform Strategies: Envelopment, Follower, and Staircase

In their recent article, “How platform leaders win” (Journal of Strategy  VOL 32 NO. 2, Jan 2011), Gezinus J. Hidding, Jeff Williams and John J. Sviokla provide a look  into the emergence of successful businesses in modern platform industries:  “Platform industries, which are gaining considerable attention (Cusumano and Gawer, 2002), are information technology industries with components and rules that facilitate interactions among a network of users.”  

In addition to identifying a short list of “four fundamental drivers of the rise of platform businesses,” they also reassess earlier-assembled data sets and attempt to explain successful outcomes in terms of certain common behaviors of firms:  namely, “platform envelopment,” with correlates of (1) follower advantage, (2) staircase strategies.

The data studied covered a range of platform industries (as summarized here), from which the outcomes and the strategies pursued by different firms (including the ultimate leaders/winners) were described.

One notable common behavior or pattern observed among successful firms is described as “platform envelopment:” 

“Although there are many strategies that are potentially relevant for platform leaders, at least 12 of the 15 platform leaders that we studied employed ‘‘platform envelopment:’’  Platform envelopment is defined as ‘‘entry by one platform provider into another’s market, combining its own functionality with the target’s in a multi-platform bundle that leverages common components and/or shared user relationships’’ (Eisenmann et al., 2007).  As platform envelopment occurs, previously separate products evolve and integrate into ever-larger platforms.”

 

Successful “platform envelopers,” it is noted, tend to engage in two other characteristic patterns of behaviors:  (1) “following” and (2) ”staircase.”

“Following” as a successful strategy was attributed to a number of factors, including a follower’s “free-ridership” exploitation and self-selection due to available resources/competencies. While better equipped followers often have an advantage over start-ups in many industries/businesses, in platform industries/businesses this outcome seems to be more pronounced (perhaps because of the unique developmental dynamics and requirements of platform businesses, e.g., incremental, sustainable innovation, network externalities, etc. that require time and resources to establish).

Unlike more traditional, one-sided businesses, platform businesses and multi-sided markets tend to exhibit ”tippiness,” significantly associated with “network effects or externalities” that can tip a platform business into accelerated growth — or backward into rapid decline.  This effect, which accounts for the frequency of “winner takes all” platform markets/businesses, amounts to a fulcrum of success and defeat in the competitive struggle of platform businesses.

Integration (at all levels), and the management thereof, are key success factors for platform businesses. This is true from the level of technology applications to the level of networked markets and ecosystems.   But the overriding factor or objective becomes that of “a strategically crafted portfolio of customer experiences that expand the company’s original products.”  As stated more comprehensively:

“To manage integration of product architectures, platform envelopers employ ‘‘staircase strategies’’ (Williams, 1998) that treat product extensions as part of a strategically crafted portfolio of customer experiences that expand the company’s original products. Each step up the staircase is part of a long-term vision of how relationships among past, present, and future products create a highly sustainable advantage. Staircase strategies unlock growth pathways for platform envelopers by opening attractive upgrade paths as new products increasingly reinforce each other. Staircase strategies treat product extension as part of an expanding suite of functionalities linked to the company’s original source of market entry. …  Platform envelopers draw on a variety of design tactics and market strategies to construct a cascading series of customer experiences built on compatibility with past products, thereby creating customer lock-in.”

 

As developing platform businesses continue to “staircase” (consolidating control over platform architecture and customer experience), other steps become valuable and productive.  For example:

“Platform envelopers also pay attention to and leverage the economic incentives of potential partners and bring them to the platform through alliances early on. Third-party product tie-ins are encouraged. Of particular importance is any emergence of applications from third-party vendors that can be adopted into the staircase to make the platform much more attractive. …  Platform envelopers also recruit evangelists, as success depends upon support from a broad based community of users. Platform envelopers may also wish to keep prices low initially to gain widespread market penetration. This may preclude competitors from doing the same, as they may not have the same resources or incentives. This approach is particularly relevant if the platform has network effects.

 

In addition, successful platform firms put extensive resource and effort into the cultivation and propagation of future vision and strategy, by which to lead and integrate customers, platform, and ecosystem partners:

Most important among these design tactics and market strategies is to have an overall vision, early on, of where you want to end up. A three- to five-year planning horizon is not unusual. … Here, it is important to get the sequence right: each step up the staircase should be gradual and steady, with no jumps that surprise the customer and create barriers to adoption. The research also highlights the supporting idea that for many of these products ‘‘good is good enough’’ – that is, cross-platform and backward connectivity, in the end, is more important than isolated functional excellence.

 

So in the end, success and leadership of platform businesses is hardly due to chance, but rather to careful following and timed entry with the right assets and skills as well as a systematic, disciplined strategy plan and orchestrated, step-wise execution of more and more integration and incremental innovation across the platform.  It is a protracted dynamic, and a risky one:  one in which the outcome of leadership success (or demise) can be established with sudden swiftness:

“When network effects turn platform innovations into winner-take-all, platform envelopers play high-stakes games with staircase strategies. Small competitive moves or missteps early in the game can have dramatic effects later on. Investment decisions can require considerable commitment and forbearance when revenue projections may materialize only after several years. Staircase strategies require long-term vision, foresight, discipline, and carefully executed commitments, and a willingness to assign resources to outcomes that may notbecome apparent until several years in the future. Still, successfully executed, staircase strategies can pay significant dividends over extended periods of time.”

 

What becomes clear through this perspective on platform businesses, is that platform strategies seem to call for another level of strategy, execution, and risk management above what may be required for more traditional businesses in one-sided markets.  Network effects seem to constitute an important, unique element of the underlying dynamics.  And management becomes more of a discipline of harnessing opposing forces, as if playing a game of chess and a game of poker at one time.

Take-aways: “Cloud Business Summit” NYC 5/11/11

I attended Saugatuck Technology’s “Cloud Business Summit”  this week.   Post continued below with link to Saugatuck’s published slides and to Saugatuck technology website.

There were my key take-aways: (1) Cloud should not be taken as just slippery hype or as a pure technology phenomenon (Cloud entails a business shift of the highest order, comparable to the advent of the PC and the Internet);  (2) 2011 is a critical year of catalyzation and acceleration (businesses that do not want to be behind the curve should be starting to engage in Cloud — but to experiment, learn, and form a launch pad for the next few years.  See attached PDF for Saugatuck’s “Take-away Summary” of the event:  Slides published by SaugatuckSaugatuck Technology, Inc. research website.

Amazon: The Mother of All Platforms?

Excellent slide presentation on the development of Amazon as a platform business.  http://techcrunch.com/2011/05/11/how-amazon-controls-ecommerce-slides/

Service Science/SSME: Is Service Design enough?

In their article “Service Science: The Opportunity to Re-think What We Know About Service Design,” Chris Voss and Juliana Hsuan provide an overview of the emerging discipline of Service Science, a field that would seem to complement and encompass Service Design. [In H. Demirkan et al. (eds.), The Science of Service Systems, Service Science: Research and Innovations in the Service Economy (Springer Science+Business Media, LLC, published 2011)]

According to Voss and Hsuan (if I may take the liberty of interpreting them), the discipline of Service Design suffers from some inherent biases and limitations.  But “the evolution of service science or Service Science, Management and Engineering – SSME, provides us with a platform to critically review the area of service design. The drivers for this include the lack of cross-disciplinary writing on service design, the limitations of the treatment of service design as an extension of product design and the dominance of B2C and neglect of B2B design.”

My take would be that Service Design is a “movement” of approaches and practices to design human-targeted services, while Service Science is the more comprehensive and rigorous perspective on the phenomenon of services, generally speaking.  In addition, the discipline of Service Science appears to makes more serious exertions to integrate other operational and technical disciplines into the analysis, modeling, and understanding of services, while trying to clarify the relationships between services and products (i.e., as concerns their design, development, delivery, consumption and management).   Such disciplines might include mathematical models of service processes or information systems architectures, among others.

Voss and Hsuan explain the importance of concepts such as Modularity, Service Delivery System, and Service Architecture in understanding services.  They also introduce a hierarchical set of levels (broad to specific) within a Service Architecture:

0. Industry
1. Service company/supply chain
2. Service bundle
3. Service package/component
 

So unlike Service Design, where the locus tends to be the interface of service delivery and human consumption, Service Science takes a much more comprehensive view of services that may span industry value systems, supply chains, and enterprises and which ultimately unbundle into more granular, but module-like , service packages and components.

To learn more about Service Science, you may see the above-referenced article and text can be previewed or purchased at http://www.springerlink.com/content/r74426k23062xr23/

Other links to Service Science information include:  http://www.sersci.com/ServiceScience/  and http://www.ibm.com/ibm/ideasfromibm/us/compsci/20080728/index.shtml.



Saugatuck: Cloud, Crowd, and Equity Funding Innovation

A Cloud-enabled, socially-driven, emerging capital formation technique called Crowdfunding is showing signs of disrupting traditional capital investment and funding models, potentially changing how (and how quickly) new businesses come to market, and how established businesses fund marginal business changes. http://saugatucktechnology.com/Browse-Research/875RA-Cloud-Disrupting-Capitalism-Crowdfunding-under-SEC-Consideration-723/View-details.html

Service Design: Stepping up and looking down from the Cloud…

Service Design is clearly a discipline that sees itself as allied with information technology to a signficant degree, especially as IT increasingly enables the transformation of  existing services, business processes, and value streams (as well as the invention of entirely new ones).  In coming years, Cloud technology is likely to have a revolutionizing impact on:   what services there are, what they consist of, how they will be produced and consumed, and what their value and cost will be.  This will be true at an atomic level (of specific services consumed discretely) as well as at the macro level (of long-lived transactions and service episodes managed for people, enterprises, and systems across multi-party ecosystems). 

The 20 page paper by Hagel and Brown (Deloitte), ”Cloud Computing Storm” (cloudcomputingstorm) goes way beyond the usual highly-technical discussions of Cloud as a virtualized IT infrastructure.  The paper does an excellent job of defining Cloud technology and discussing its likely evolution and impact on services and related organizations.

It also does a number of other things that should be equally of interest to students and practioners of Service Design.  These include defining concepts such as a Business-as-a-Service or BaaS layer (of a cloud services reference model) or the distinction between “short-lived” and “long-lived transactions” and the role of  “Service Orchestrators” in creating and managing valuable transactions/services, on behalf of end users, across multi-party ecosystems. 

Pages 6-9 of the study, in particular, provide an extremely insightful perspective on how a whole range of services could be organized under a Cloud paradigm (in this case, a set of far-reaching travel services that are being or could be provided/orchestrated by a company like Rearden Commerce).  Pages 14-15 provide an interesting overview of the potential for application of Cloud technology in healthcare.

This is a must-read paper for Service Design professionals (link to read now or download):   cloudcomputingstorm

The life of a “swiss-army knife professional”

Like the venerable Swiss-Army Knife itself, the “swiss-army knife professional” can serve many purposes and accomplish many things (as the need arises).  The Swiss-Army Knife’s character of “useful readiness and versatile effectiveness” is very well-known; but when it is folded up into someone’s pocket,  it is  a very unobtrusive thing (for all appearances, just a small, unassuming, red plastic object — of  limited  value…). 

But in the field, where both the expected and unexpected can and do happen, the unassuming object bolts into action (cutting, opening, unscrewing, filing, hacking, magnifying, navigating, etc.).     So too the “swiss army knife professional.” 

And did you know, the “swiss army knife professional” (like its less animate and intelligent – -though nonetheless useful — cousin) is not a product as easily developed and manufactured as a steak or butter knife, or even a scissors?   No, it is a product of evolutionary design (constructed over time, through trial and error), leading to a tool, uniquely-purposed, versatile and valued.  One even comes to wonder how many tools and capabilities an individual ”swiss army knife professional” can acquire and develop over the years, and how amazing it is that all of it could even fit into one person’s pocket.

New Research Download: Solving Modern Businesses’ Connectivity Problem – Spend Matters



New Research Download: Solving Modern Businesses’ Connectivity Problem
Spend Matters
There is the closed model, referring to networks that offer more connectivity than predecessors but are still expensive to maintain and expand.


See on spendmatters.com

Zillow: Solid Operating Model, But At The Right Price? – Seeking Alpha



Zillow: Solid Operating Model, But At The Right Price?
Seeking Alpha
It is the holy grail of business models: a scalable, low cost platform, which derives its value from additional users on the site, a perpetuating cycle.


See on seekingalpha.com

The Business Side Of Building Your API Platform ⚙ Co.Labs ⚙ code …



Ive worked for two companies in a business development role emphasizing the API platform. Heres what you need to consider before you open up endpoints…


See on www.fastcolabs.com

What Are the Experts Reading This Summer?



For a special summer treat as many head off to the beach, lake, or (in the case of our friend Jim Keenan — a ski trip!


See on www.nimble.com

Data journalism, data tools, and the newsroom stack – Strata



The MIT Civic Media conference and 2011 Knight News Challenge winners made it clear that data journalism and data tools will play key roles in the future of media and open government.


See on strata.oreilly.com

Crowdsourcing Platform Vs. Outsourcing Business: The Clash

Crowdsourcing stump vs. outsourcing slapstick: the clash with http://t.co/PG0aqNLjO8


See on promoinet.r00t.la

Crowdsourcing Startup CrowdFlower Says Its Contributors Have Completed 1 Billion ‘Judgments’ | TechCrunch



CrowdFlower, which helps businesses manage crowdsourced tasks, announced that contributors have completed 1 billion “judgments” (which is the basic unit of work on the platform).


See on techcrunch.com

Managing transformation to Platform 3.0 a major focus of The Open Group … – ZDNet (blog)



Managing transformation to Platform 3.0 a major focus of The Open Group …


See on www.zdnet.com

Dropbox replace the hard drive with its Dropbox Platform, with a sync API, a … – The Next Web



Wired
Dropbox replace the hard drive with its Dropbox Platform, with a sync API, a …


See on thenextweb.com

Yelp launches Yelp Platform to enter world of on-demand delivery – VentureBeat



Yelp launches Yelp Platform to enter world of on-demand delivery
VentureBeat
The service will start out in San Francisco through partnerships with food delivery startup Eat24 and Delivery.com, including 100 local businesses.


See on venturebeat.com