The Hunt for Leading Indicators

© 2009 IBM Corporation

The Hunt for Leading IndicatorsModeling the Co-creation of Value in Complex IT Service Engagements

Susan U. Stucky, representing work with Melissa Cefkin, Yolanda Rankin, and Ben Shaw at IBM Research-Almaden,

SMART Workshop @ ServiceWave 2010, Ghent, Belgium

13 December 2010

© 2010 IBM Corporation2 Apr 10, 2023

Agenda

The Hunt for Leading Indicators in the Value Co-creation Process

Motivation

Example

Emerging model: ontology and dynamics

Leading IndicatorsWhy Where to look What kinds of data are needed (and available)What kinds of analytics make sense

Discussion

SMART Workshop


Motivation

Theoretical

“The fundamental axiom of service science is that the purpose of the service system is win-win value co-creation with other service systems. Service systems are all social systems (systems made up of people interacting) interpreted through the lens of value co-creation. Value co-creation is the purpose of a service system.”*

Practical

Value co-creation in complex BtoB IT service engagements can take months or years, involve hundreds if not thousands of people, as well vast numbers of other resources. Not much is known about how value-co-creation actually happens in the course of service engagements. Both a better understanding and ways of systematically monitoring, measuring and managing value co-creation dynamically.

*Source:SSME Course at IBM-Almaden/Jim Spohrer


Call center work is not easy

. .

We relate the tale of a successful IT service engagement…

There is a great deal

to know... . .

Call center work is not easy

. .

..and hundreds of people to deal with each day

. .

Fresh problems arise with each new introduction

. .

People are not happy . .There is much turnover . .


…the tale continues

bi-weekly meetings over demonstrations and prototypes

. .

We can improve the way call centers operate!

. .33 additional features co-

constructed, agreed and added to the formal requirements

. .

68 (35+33 add’l) features implemented and delivered

. .

Client Provider

35 feature requirements for a custom software

application

. .

Increasing collective intelligence and promoting harmonious

operation

. .


Let’s take a look:

We saw in this story:

– The original value promised was delivered

– Additional, unanticipated value was co-constructed

– This co-construction contributed value to both client and provider

Things don’t always work out so well…


Just as successes unfold, so do breakdowns

Value propositions are not realized due to unanticipated interactional work.

The problem solved turns out to be the wrong one

Value co-constructed by client and provider is left lying on the table

An idea that looks great on paper founders in the execution (e.g. access rights, intellectual property rights…).

The provider actualizes the value proposition, but the situation has changed.


Ontology (from Spohrer and Maglio, 2009)

Ecology

Entities

Resources– People– Technology– Organizations– Shared Information

Interactions

Value Proposition Based Interactions

Governance Mechanism Based Interactions

Outcomes

Stakeholders

Measures– Quality– Productivity– Compliance– Sustainable innovation

Access Rights


Positing two loosely-coupled subsystems

Governing: where value is realized

Actualizing: where value is created

• Entities (configurations of types of resources specified)

• Value-Prop based exchanges between entities• Governance-based interactions (configurations of roles)

• Access rights are specified

• Measure = transaction cost

• Represented as a network of entities

• Interactions among instances of resources

• Sets of interactions rated as positive or negative

• Outputs of interactions

• Measure: cost of interaction

• Represented as sets of interactions with outputs

© 2010 IBM Corporation10

Apr 10, 2023

DynamicsG

over

ning

Actu

alizi

ng

P IT O

P IT O

Provider Client

pp tc

tp pc

tp tc

resource (type)

resource (actual instance)

binding relation

interaction

entity

Governance

Actualization

Interactions


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Fulfilled

instantiation acknowledgement

expected state actual state

Proposed

(unfolding over time)Actualization

Gov

erni

ngAc

tual

izing

unfolding as expectedleads to realization of

anticipated value

Service Actualization

Val

ue

Rea

liza

tion

straightforward emergent

noye

s (no problemo)

case

3

case

2case

1

or, if expectations align and value-increasing patterns prevail, realization of additional value from emergent “seeds”

Value realization in service engagements

au

tho

riza

tion

rea

liza

tion

P IT O

P IT O

Provider Client

P IT O

P IT O

Provider Client

commoditization


Apr 10, 2023

unanticipated interactional work

unaccounted-for coordination costs

the situation changes

co-constructed value is left lying on the table

the wrong problem is chosen to solve

obstacles over access rights, intellectual property

Breakdowns in service engagements

instantiation acknowledgementActualization(unfolding over time)

X

X

X

Fulfilledexpected state actual state

Proposed

P IT O

P IT O

Provider Client

P IT O

P IT O

Provider Client

Gov

erni

ngAc

tual

izing

Service Actualization

Val

ue

Rea

liza

tion

straightforward emergent

noye

s (no problemo)

case

3

case

2case

1


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Leading indicators of value co-creation

Need to better manage the co-creation of value process– Value co-creation in complex BtoB IT service engagements is exceedingly complex and

unpredictable– Current governance mechanisms are an insufficient guarantee in the face of

externalities– Many measures of service quality are lagging indicators – measures after the fact and

cannot provide early warning

Leading indicators can predict short term trends that point to change before the whole system changes—in effect providing an early warning system

– Identify patterns that can indicate trouble ahead or opportunities to increase value for better decision-making

– Identify additional factors to improve contracts

Source: If applicable, describe source origin

IBM Presentation Template Full Version


Apr 10, 2023

On the trail of leading indicators for value co-creation

Claim 1: Value co-creation can be usefully understood to take place in two loosely coupled systems, governing and actualizing, that can come out of alignment over time detect misalignments

Claim 2: Value-co-creation can be understood as related but separable processes: actualization of value and realization of value. Detect whether co-created value is actualized and acknowledged by the co-producers

Claim 3: Service actualization (aka delivery) takes place through interaction among actual, particular, resources over time Track changes from the proposed, expected state, as service actualization unfolds

– Are there more resources involved than instantiated? – Are there different resources than were instantiated?– Are there more interactions among resources than expected? – Are they taking longer than expected. – Is the quality of those interactions changing?

Claim 3: Access rights (as defined contractually) constrain configurations of resource that are instantiated Track changes in the proposed configurations as service actualization unfolds– Are changes made in the access rights during actualization?– Are these changes reflected back in the governing system?


Apr 10, 2023

Data, Analytics, and Indicators

Exploratory Analytics

Latent Semantic Analysis

Network Discovery

Login Data

Social network Analysis

Unstructured text mining

Indicators

Changes in quality of interaction among resources

Changes in quantity of interactions among resources

Changes in Access Rights

Data

Interactions among resources

As specified in the contractual agreement

As they occur during actualization

Login/use of IT

Roles of people

Entity Map


Apr 10, 2023

Thank You and Discussion


Apr 10, 2023

Value created (from coconut shells) in unanticipated ways


Apr 10, 2023

The overall process

time

Client Engagement

pp pc

pp tc

pp ic

Transition

pp pc

pp tc

tp pc

tp tc

prp pc

Delivery

pp pc

tp ic

Procurement (C)

Opportunity Mgmt (P)

pp pc

ip pc

Tran

sact

iona

lIn

tera

ctio

nal

The Hunt for Leading Indicators

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