'Services Science:' The next big thing in business schools?

Progressive American universities will need to create a new academic discipline, services sciences, management and engineering, to provide the necessary high-value, services-centric graduates of the future. "The world is becoming a services system," explains Jim Spohrer, director of IBM's Almaden Services Research. Spohrer spoke recently at a symposium sponsored by the W. P. Carey School of Business's Center for Services Leadership. To meet the needs of today's economy, Spohrer said, universities will need to adapt, bridging the academic and business silos to develop the knowledgeable services work force of the future.

The enormous and ever-growing importance of services is not only reshaping the global economy, it is on the verge of creating a new academic discipline — services sciences, management and engineering - and companies are mining the business and engineering school class rolls, looking for the next Sergey Brin (who co-founded Google).

Harrah's, LensCrafters, American Express, Siemens, Southwest Airlines, Mayo Clinic - these are but a few of the places where corporate leaders are teaming up with progressive business schools to fund research, establish fellowships and hustle interns, all with an eye on future growth and profits.

Wait a minute: Mayo Clinic? Boosting customer satisfaction by providing excellent service is logical for retailers like LensCrafters. But why invest scarce health-care dollars in catering to customers - in this case, patients - given that their choice of providers usually is set by employers? Because employers — along with the government, the biggest employer of all — are health care's client base. And employers want their money's worth, just like any other customer.

For Mayo, it is more than customer service, however. Providing excellent health care is about managing a service system that provides value to patients by keeping a sharp focus on service, health outcomes, safety and costs — all with the patient's best interest at heart. It is no easy task. Think of the last time you went to a medical lab to get blood drawn. How long did you wait for a phlebotomist to perform a three-minute procedure - a half hour, 45 minutes? Basic service operations models of staggered staffing might ameliorate the problem.

"The world is becoming a services system," explains Jim Spohrer, director of IBM's Almaden Services Research.

"Over half of IBM's revenues come from services." And the percentage is growing. Spohrer noted that IBM is an active member of the Center for Services Leadership, a research organization based at Arizona State University's W. P. Carey School of Business. Founded 20 years ago, the Center for Services Leadership is an internationally recognized source of research and education on developing competitive edge by satisfying customers and competing through service(s), says Mary Jo Bitner, professor and academic director.

Services innovation is becoming a science, Bitner asserts, with research-based best practices on everything from customer retention to value-added products, technology-delivered service innovations, and service supply chains. The center is a mother lode of information for businesses striving to get a jump on their competition by focusing on services sciences, a field Spohrer describes as "probably as big as computer science. It's the next frontier of innovation, the global challenge of our time."

Spohrer and colleague Paul Maglio started the IBM Almaden Research Center services initiative two and a half years ago, after determining businesses and national economies must inevitably depend on services as a growth mechanism. "Government needs to make systematic approaches to service innovation a priority because gross domestic product growth depends on it. Businesses must do the same because revenue and profit growth depend on it," Spohrer told a group of academic leaders gathered ASU.

Spohrer and his peers increasingly rely on university graduates trained by the likes of ASU's services leadership faculty to innovate and identify new opportunities. In fact, he insists that it's "academics who need to bridge the discipline silos" to conduct trans disciplinary research and develop graduates with cross-functional skills needed in a service economy.

As evidence, he points to historical economic data tracking the shift in revenue-producing industries. In 1800, roughly 90 percent of the U.S. labor force was employed in agriculture and related fields. Employment profiles changed as manufacturing grew with technological advances.

"Seventy to 80 percent of the labor force as well as GDP in our economy now is services," he continues. Formerly a patent-holding research guru at Apple Computer, Spohrer boasts a deep background in speech recognition, artificial intelligence and online learning. His particular interest nowadays, though, is the warp-speed evolution of society and technology, manifested in services.

The ubiquitous nature and expanding importance of services is reflected even in the U.S. Department of Labor's prediction that "employment of customer-service representatives" - the front-line troops - "is expected to grow faster than the average for all occupations through the year 2012. Other growth occupations are in highly skilled knowledge worker categories and health care — all services jobs.

The most agile companies increasingly use services to distinguish themselves in highly competitive industries where there is little difference between products, Bitner notes. IBM Global Services also is aiming at the big players in providing B2B services on demand in transportation, health care and electronics, all increasingly competitive fields. The firm partners with other IT heavyweights including Cisco Systems, Oracle and SAP because "information services is the fastest-growing sector, especially business-to-business," Spohrer notes.

Then he posed a question to the ASU audience: why does IBM or any other business care about service innovation? Easy: because if they don't, American businesses will fall behind developing countries like China that are rapidly growing their share of the services marketplace.

Consider this: China, representing 21 percent of the world's work force, has fostered an almost 200 percent growth in services in the last 25 years. And India, with 17 percent of the world's work force, reports a 28 percent growth in services over the same time period. In comparison, the U.S., with 4.8 percent of the world's work force, saw services grow 21 percent. "Some developing countries are almost skipping manufacturing and going directly into services," Spohrer says.

That's why he calls IBM "more of a service company that uses IT to transform clients businesses" than the computer manufacturer and vendor originally known as International Business Machines. It's also why Spohrer plans to continue collaborating with schools like ASU.

Progressive American universities with strong degree programs in science and engineering, business and what he calls "organizational theory" will need to provide the high-value, services-centric graduates of the future, he adds. To do that, universities will need to adapt, bridging the academic and business silos to develop the knowledgeable services work force of the future. B2B services need Renaissance professionals or service scientists who can fluently speak the languages of technology, business and social-organizational change.