Tuesday, 10 February 2009

Service Innovation Part 2b: Clusters revisited

Oops, I didn't write a word on this blog for almost two weeks now. This way this is more a column than a blog.

And it seems I'm not the only one. Colleague blogger Samuel Driessen seems to be quilty of the same sin. Is it our location (Netherlands), it is the economy, Obama politics, shared employer, the weather? No clue, but in my case my unhappyness with my previous blog clearly added to the delay. For a while however I couldn't figure out what was wrong with it, but last weekend I found out where the bug was.

The title was OK, economic clusters. But somewere halfway I changed the subject to transactions and transfers as economic entities. So where did the cluster part go? Well, nowhere, so here it is. Finally.

The point I was trying to make by citing the Araujo/Spring article was basically that products are not transactional in economics terms when they are not accompanied with or even covered in some form or services such as warrenties, retailing, installation, insurance, after-sales services, etc. And when combined both physical and non-physical products can be well described as transactionable goods. So far, so good.

But, economists clearly classify the insurance, retail, installation and construction industries as services industries leaving only manufacturing and agriculture as product industries. Hence the rapid growth of the services percentage in the GNP figures. Araujo and Spring offer another alternative by focussing on the transactionality of the economic entity thereby effectively realising that a car with warrenties,and a dealer network becomes a transactionalable entity just like 8Mbit ADSL for one month from Vodafone. So Goods Rule!

But what to make of this example - a little story ....

I already told about my visit to the Frontiers of Services conference in San Fransisco last year. One day I was listening to a lecture by Walter Ganz from Fraunhofer Institute in Germany and he asked the following question: suppose BMW decides to outsource its canteen to Sodexho, what will happen to the services share of the economy? Before the outsourcing the canteen is figured into the numbers of the manufacturing industry, and afterwards it is in the catering industry which is accounted as services! Meanwhile, Walter stated rightly, nothing changed!

These two points (goods rule! and nothing changes through outsourcing) are the key reasons I believe we should stop accounting our economy by sectors:
  1. By looking at the transactionabililty of an economic activity we can overcome the difficulties associated with the product/services dichotomy. Instead we can focus on transactionable goods and transferable services. This will largely blur away the strict sectoral boundaries between OEM manufacturers and retailers, between insurance/banks and ICT companies and between architects and the building industry. It think it would be fairly easy (but still a formidable task) to break our economical statistics into transactionable goods and transferable services. If we could break down the revenues and profits of the current sectors into these two numbers a lot of the confusion raised by the product/service classification will be cleared.
  2. If we would to the same thing Dave Snowden suggests to do for narrative and clusters the activities of organisational entities on a wide range of opposing scales (for example efficiency focussed operational versus freaky controlled managerial) we would obtain a multidimensional dataset in which clusters of similar economic patterns (for example maintenance, selling, displaying, giving advice, helping achieve, counselling) will appear that were previously spread over multiple industries. It will also turn out that the same activity will be part of multiple clusters when displayed using different axes. And indeed, work done on a factoryline is both a production activity and a way to have social interaction with colleagues. This way we will enable ourselves to have multiple perspectives of the same activity which will also greatly enhance our understanding of what is really going on in our economy.
Well, I guess this one is covered, finally.

No comments: