Service Week 2016

Cambridge Service Week 2016 was held from 5-12 October 2016. It was a series of events hosted by the Cambridge Service Alliance to bring together leading academics, industrialists and policy-makers to address the evolving challenges facing service education, research, practice and policy. Details for individual events are below.

Academic Conference - 5-6 October 2016
Industry Day Conference - 11 October 2016
Partners Day - 12 October 2016

Industry Conference - Tuesday 11 October 2016

Growing your service business in an age of digital disruption.

This year our Industry conference focused on 'Growing your service business in an age of digital disruption'. It was held during Cambridge Service Week 2016, on Tuesday 11 October 2016, Moller Centre, Cambridge, UK.

Digital disruption, the internet of things and big data analytics all mean the rules of the game have changed. Firms are looking for new digitally enabled business models that deliver customised solutions in response. Whether its smart health services, smart transport solutions or guaranteeing uptime, availability and output from complex equipment, the underlying themes are the same.

Find out what our keynote speakers spoke about below - with copies of their presentations, as well as Podcast Interviews given during the day.

Speakers

Per Stjernqvist, Trackunit A/S IOT and Data Intelligence: Enabling Risk Management and Service Business Growth Per Stjernqvist is considered to be one of the worlds most experienced people in the art of turning machine data (IoT) into services and solutions. Creating innovative customer value propositions based on interviews, observations and trends in customer behavior is his “trademark”. 7 years at Volvo Truck Corporation and 18 years at Volvo Construction Equipment as Managing Director and global developer of services and solutions. Teacher and researcher at Copenhagen Business School he has lately joined the Goldman Sachs owned company Trackunit A/S in Denmark as VP Servitization & Solutions. Per Stjernqvist holds board positions in large service and solution companies. At the conference, Per introduced Trackunit and traceability solutions, giving details about how Trackunit minimises risk in leasing and operating businesses. He also discussed the how Trackunit created and scaled their business model. Extract from a podcast interview with Per: “When you enter a new area where nobody has been before, you cannot up front come up with a perfect solution, you need to test, test, test, and fail during that process. Software development and services, you need to develop at a different pace and allow yourself to fail, which is not always the case with a prototype of a hard product or machine. It is much cheaper to fail with software, and you can fail many times because the costs will be low. The pace of change we see is exploding, but we are seeing so many retrofit solutions. It will be a standard option that every machine that leaves the factory in the future will be fitted with Telematics and the costs will be low.” Listen to the Podcast Interview with Per: [transcript of Podcast recording]
Brian Holliday, Siemens plc 'Design, make and service in a digital world - A Siemens perspective on Industry 4.0' Brian Holliday is Managing Director for Siemens Digital Factory which serves the manufacturing and infrastructure sectors in the UK, Ireland and Nigeria. He is a member of the Executive Management Board for Siemens plc and Chairman of Siemens Industry Software UK. He is Chairman of the Electronic Systems Council (ESCO) which represents the interests of the UK electronic systems sector. He is a Supervisory Board member for the High Value Manufacturing Catapult which seeks to stimulate growth through innovation in manufacturing. He is also a main board member for the EEF, the Manufacturers’ Organisation which provides vital business support, training and governmental representation for the sector. A Chartered Engineer and Fellow of the Institution of Engineering and Technology. Brian started his career as an apprentice with Texas Instruments. He read Computer Systems at Cardiff University before joining Siemens, the global leader in electrification, automation and digitalization in 1993. He attained his Executive MBA at Manchester Business School in 2000 and in 2014 became a graduate of the CBI’s Leadership Programme. At the conference, Brian discussed the industrial digital transformation impacting design, manufacturing and service as well as Industry 4.0 and the ideas it has introduced. Brian went on to discuss Siemens' digital factory concept and their journey to date, and how they are making data work better for their service organisation. Extract from a podcast interview with Brian: “From an engineering perspective, you used to have serial processes which were linear, but now, with the digital twin, you are building a complex model collaboratively. You have got people working at the same time on the same data in a collaborative product management sense and by painting a rich and complex picture of the device you are able to view it and bring it to life. You can isolate its characteristics and think about the materials or the suppliers, or you might test it in ways virtually that simply wouldn’t have been possible with earlier methods. You can virtually prototype your products so you can get much closer to having a near to market product designed and built from those virtual models. The digital twin concept is also valid when you take it into the plant. As manufacturers, we have to think about the best way to lay out the factory, and we will need to look at a number of scenarios, but now we can digitise the factory and the data into the model and run these before committing to changes. The digital twin concept is exciting, whether it is the product, the factory or the service you are offering. For design, make and service the digital twin is genuinely exciting.” “I think there are a number of models where we can take technology, look at what the customer is doing, and wrap it up as a service that means we can make progress. It is because we have a reasonable understanding of what the technology can do in an industrial application for them. The CSA Seven Critical Success Factors, have been helpful to us because they have been derived from industrial experience and I can see that they are up to date in their thinking. The CSA has considered a number of the practical challenges that you would have encountered in servitising your business, and for companies like ours, which largely have a product they wish to sell but increasingly needing to differentiate themselves through service, what the CSFs highlight is that you have to think about assessing your market and your internal readiness and creating the right culture and structures. Then you have to ensure you have the resources to do it. These are all key if you want to avoid the bumps in the road ahead.” Listen to the Podcast Interview with Brian Holliday: [transcript of the full podcast interview]
Fred Jones, Uber ‘Disruptive Service Business Models: Experiences and Lessons from Uber’ Fred is currently the General Manager for Uber, UK&I Expansion. He is responsible for starting and growing operations across multiple cities in the UK and Ireland outside London. Previously, Fred was the UK Lead for Accenture’s Corporate Strategy and Value Analysis team supporting sales, strategic insight and client relationship development at priority clients. Fred has been an advisor to a number of early stage tech start-ups and social enterprises. He provides hands-on support to Founders helping them to develop high-growth business models, executable strategies and compelling business plans as part of Seed, Angel and Series A funding rounds. Outside of work, Fred has been a guest lecturer at the University of Bath, School of Management. At the conference, Fred introduced Uber and the Uber business model. He focused on the importance of platforms and markets, and outlined the importance of creating a seamless customer experience and reducing barriers to entry. Fred also discussed the issues around scaling service businesses across multiple cities and geographies. Extract from a podcast interview with Fred: “Ultimately we have built a logistics platform. We want to give our customers and our consumers what they want when they want it. You can get a ride with us at the touch of a button. Now with UberEATS you can get restaurant food delivered to you in a matter of minutes. UberRUSH helps with last mile logistics for small businesses. You can see how we can take the concept of Uber much more broadly. We often have a bit of fun, and one of our stunts is UberIceCream. Because we are a market place we work really hard on keeping our partner drivers efficient, so the busier they are the more they can make and it makes the service more affordable to lots of riders, and the more affordable it is the more people will use it and the busier our drivers will be. It is an advantage to both the customers and the partner drivers. “If you speak to any private hire and taxi driver they will tell you the thing they fear most is dead mileage, sitting around and doing nothing, not making money or driving a long distance to pick up a fare. By working really hard to reduce that dead mileage and dead time by keeping our drivers busier on the platform that is where we can get the real benefit, at the margins. That is where we focus much of our attention and engineering effort.” Listen to the Podcast Interview with Fred Jones: [Transcript of Podcast Interview]
Veronica Martinez and Andy Neely Cambridge Service Alliance 'Scaling Up Your Service Business' Dr Veronica Martinez is a Senior Research Associate in the Cambridge Service Alliance, at the University of Cambridge. Veronica is the lead on the Making and Sustaining the Shift to Services project. Her major research expertise revolves around the fields of strategy and service performance, value creation, performance measurement systems and operations management. She has worked with the international organisations such as Daimler-Chrysler and COMIMSA. Professor Andy Neely is Head of the Institute of Manufacturing and the Founding Director of the Cambridge Service Alliance and the Royal Academy of Engineering Professor of Complex Services. He is widely recognised for his work on the servitization of manufacturing, as well as his work on performance measurement and management. At the conference, Veronica and Andy discussed the Alliance's research into scaling up services. She outlined the importance of scaling up services for your business as well as challenging the types of exploration. She outlined the driers for scaling up services and discussed the role of digital disruption in scaling up your services. Extract from a podcast interview with Veronica: “What we observe in our research at the Alliance is that organisations are taking a more pro-active part in the piloting and scaling up of their businesses. This is important. How do you build the leadership and team in order to create and enable the scale up of your services? People like to have the pointers and see what they can do better in order to scale up. There has been no literature or tools developed to scale up services. At the Alliance we are one of the first in the World to develop methodologies to help companies to scale up their services with our Seven Critical Success Factors.” Listen to the Podcast Interview with Veronica Martinez: [Transcript of Podcast Interview]

****************

Round Table Discussions: Applying the Lessons to your Business

During breakout sessions at the industry day conference, the delegates discussed the learnings of the day and how they can be applied in their own company. Delegates valued the insights provided by other companies about how they run and transform their service offerings, along with insights from a top academic research centre. Delegates also reported valuing learning about novel business models and the many different technologies that were mentioned during the day, including impressive uses of sensor technologies.

When it comes to service operations and design there are many challenges and unanswered questions. Dr Veronica Martinez addressed one of the key questions about defining leadership, and how to scale up services, as well as the challenges associated with it. This touches on the subject of how to disrupt your 2230 own business model, by changing the value proposition - not only once, but by repeating the process constantly. It is expected that data impacts services greatly, so this requires a digital and cultural transformation to accommodate and reflect this. At the same time organisations are internally changing, and also using the wider business ecosystem to change the value proposition. In this context, a new challenge arising is the thought of gamifying the user experience.

Data

Is Data the new Oil? What real value will data bring to our companies? Data is now readily available. However, deriving intelligent properties from the data is challenging for most organisations. It is meaningless to have data available without its analysis leading to business actions, which ultimately create value for the company and its stakeholders.

To do so, new education and leadership culture is needed. An era of digital transformation requires different business skills than were needed a decade ago, which applies to all levels in an 2245 organisation. Data needs to be understood and be used in order to sustain a competitive advantage of the company. Exemplified by Uber and Trackunit the companies showcased how data can be used to help organisations to understand and further develop their competitive advantage in the market.

With regard to assets, and the data derived from sensors, we can now consider that we are effectively entering an age where we can define that a service failure is due to a lack of data integration. Many companies are turning ‘digital’, and towards the Internet of Things, in order to achieve a seamless information flow from their assets and to integrate services offerings and business models.

The question arose about whether or not data can be seen as the key enabler to service transitions. Creating value propositions, based on the evidence that data can provide, may create benefits for all involved in the service delivery. The biggest barrier for the use of data is associated with data ownership. It was suggested that data ownership discussions should focus more on the benefits of sharing data and the humanisation of data (e.g. detecting trends). Nonetheless, from a law and protection point of view the question remains, ‘what happens to ownership of data?’

Developing new value proposition

The description used by a manufacturing company investing in services is: ‘investing money is being in the service market, having a product is the foot in the door of the customer!’ However, when developing novel and strategic services offerings, the expectations for financial returns are high. For managers, it is complex to define benefits upfront, as well as defining if the service value proposition is a success from the outset. Hence, a different approach is needed within 2279 organisations to develop new value propositions. There were questions raised about ‘how do we define benefits upfront?’ and, ‘how do we define the organisation that is enabled to do so?’. Examples in discussion were about ‘which direction to take as an organisation?’, and ‘What is the relationship between availability of services, e.g. spare parts and assets and cost?’. Organisations would like to develop availability cheaply, but need to know what it is and how to define it legally, as well as how to organise it strategically.

Another interesting discussion point was around how to improve the current value proposition. The example discussed was how Uber not only constantly disrupts itself, but also other traditional market models. The implications of this do not often get discussed. A wider question posed was ‘how should we deal with the people we are disrupting?’, and hence, ‘how should we retain wealth in the society, as well as with the people and workforce?’

Business model innovation

Businesses like Tesla and Netflix do not worry as much about intellectual property, which allows them to innovate faster. They focus on the business model and the speed of innovation. More traditional firms view innovation with their existing business in mind, as well targets / KPI’s etc. It was observed that for many traditional businesses it is easier to just offer products. This can be the case even where competitive issues drive firms down the services path and they need to increase value based on market expectations.

2271 The question that remains to be answered, is ‘how we market new services that are interrupting the businesses?’. For example, ‘how do we own and market a self-driving car, when the experience of driving is taken out of the equation?’

In the same way as with business models, we need to work closer with the customers to address their needs better and reconsider the organisations' offerings. This includes defining and trying different types of co-creation, and building strong B2B relationships, allowing delivery of a better service.

Understanding your business ecosystem

There was an acknowledgement that, in the new world of services, the relationship with people is key to new business. This does not only mean to customers, but also to partners and suppliers. It means, using the ecosystem to innovate and to join and 2226 orchestrate what people do. One example referred to Uber including the driver of the car and his needs in the service process definition. Rightly so, as the driver has a central role in their business model. So the design of services needs to consider all stakeholders not only through their lifetime, but also in the product design phase. For example, ‘how do you get diesel on and off a ship when it is needed during its lifetime?’, ‘who is filling the tanks?’ etc. Extending this, there is a part of understanding the company and customer culture as well. So, one of the challenges seen was to understand how to capture changes in configuration from customers to reflect value proposition and process.

Company internal challenges

Within the internal structures of companies one of the biggest challenges seen is that most organisations do not have a try and fail culture, which was seen as necessary for the successful development of a service. There is the a need for leadership that helps the organisation transform, sets the vision, and leads the team. The answer to this may be to have a transformational director or executive that delivers on a set service strategy, and can work against any cultural challenges. This feeds from a team that is enthusiastic about service delivery and has a service mindset.

One area that was discussed, was that of how to deal with investors of companies. Specifically, how to communicate to them about progress and process, as well as on the potential cannibalisation of the product business, due to an increase in the service business. Traditional companies, like Siemens, experience more difficulties to 2244 replicate and to scale up. Whereas, for start-up companies, like Uber, this is easier as they are more flexible and more 'digital'. Traditional companies are more complex and rigid than Uber. Joint venture arrangements may be one solution. Often, though, the main challenge is how to change the mindsets of people. They have different employees and different customers with different acceptance of digital business and digital offerings. For customers, it is important to demonstrate the business case, and demonstrate the success. For employees, it is important to change the engineering mindset and to find out about the methodology, e.g. try and fail, designed thinking, customer based thinking, etc.

Risk

Risk is seen differently in service organisations than it is in product firms. An interesting observation from the groups, was that a product firm has a lot more upfront costs when new products are being developed, and hence more risk than service firms. However, when it comes to services, product firms seem to be less inclined to invest and take on risk. At the same time, there are not many facts around companies that have grown services faster in recent years and it is unclear what they have done differently in order to succeed. Participants also felt that when it comes to taking on risk, people 2224 seem to do things 'the old way' versus 'the new way' in service businesses. This is problematic; as without taking risks, it is difficult to develop services, and without failure it is difficult to succeed. To this end, instead of not being allowed to fail we should have more tolerance of failure. During the discussions there was also a general view that big companies handle risks, decisions, treat failure, differently than in smaller companies. For example, in a start-up company a new process would not be seen as 'breaking the rules' or taking risks, as they are just starting up. In older organisations this can be seen as very different. Everything seems to be connected and interlinked. So one good question is, ‘how can you train the leadership to handle the risk?’.

Gamification of services

One newer theme of discussion was the topic of gamification of assets and their use. For example, building a competition out of operating diggers and machinery within the quarry in the most effective way. Operators make it a game to be good at efficient use or if gamification goes wrong, make it a game to be bad. The incentivisation used by some of the company was that people can work towards a CV or better job postings if they are good. There are always more popular sites to work than others, for example, with less commuting time or not to go to the smelly landfill site for work when operating machinery. Organisations can use gamification as a means of monitoring performance in equipment, and improve the quality of the handling, if applied successfully. However, the question remains as to how you transfer this into other industries, or is this a success in other industries. Can you use gamification in Industry 4.0 / smart factories?

Overall the ‘Cambridge Service Alliance – Industry Day’ was well received and delegates took away learnings and actions for their next day in their organisation.

Partners Day - Wednesday 12 October 2016

New Insights from the Cambridge Service Alliance

An executive workshop with the Cambridge Service Alliance. This executive workshop provided new insights and practical tools for those concerned with developing innovative solutions and delivering them through ecosystems. The workshop drew on research completed by members of the Cambridge Service Alliance, who presented exploitable tools and techniques that attendees can use in their businesses.

Academic Conference - 5 - 6 October 2016

On the 5-6 October, the Cambridge Service Alliance hosted an academic conference with key academic experts from around the world. The theme was 'Services in an Age of Digital Disruption'. Click here, or on the image, to view the abstracts presented during the two day event.

Service Week 2016