Abstract:
The basic model argues that Digital Connections Scaling (DCS) of customers, providers and/or resources is a fundamental way to reduce service cycle time and transaction cost, and thereby to improve service quality and productivity.
Digitisation makes entities connectable, and scaling decreases the marginal cost for the customer and the provider to cocreate new values.
Three types of economies of DCS are postulated: the accumulation effect, the networking effect and the ecosystem effect on facilitating value propositions and cocreation.
The paper also presents enterprise engineering principles, new micro-economic production functions, and an extended cyber-infrastructure model to substantriate DCS.
The Problem of Scaling in Service and Service-Led Economy:
Service is a well-defined concept in economics; however, service science is not.
The paper is an attempt towards service science. Thus, to facilitate our discussion, we first delineate the title. Service is co-creation of value between the customer and the provider.
Quality is a measure of value from a customer stakeholder perspective, and productivity is a measure of value from a provider stakeholder perspective.
We define the problem of improving service quality and productivity, for the purpose of our analysis, as equivalent to the problem of increasing value co-creation outcomes over the complete life-cycle of populations of customer and provider interactions.
Therefore, Digital Connections Scaling (DCS) studies how the connection of the stakeholder populations and resource populations by digital means may prove to be the new foundations of the increase in value outcomes.
The basic proposition of the model is that digitisation reduces the cycle time and the transaction cost of connection for service systems and service co-creation, and scaling these connections decreases the marginal cost for new value propositions and new value co-creations, as well as the average cost for individual services.
It follows that DCS increases value outcomes, improves service quality and productivity, and ultimately enhances the utility of service to the customer and the profit of service to the provider.
On this basis, the scientific studies of DCS, such as the digitisation (for resources), the connection (for co-creation and systems), and the scaling (for value propositions and outcomes), provides a substantiation for a service science.
In particular, the understanding of digital connections makes service scaling a concrete subject of scientific study.
At present, many practitioners are calling for a new science to guide their efforts to systematically innovate and improve service quality and productivity.
These practitioners see existing academic disciplines as knowledge silos, each with something important to contribute, but nonetheless with only a piece of the puzzle.
The most successful sciences (physics, chemistry, and biology) all provide models at the appropriate level of abstraction to deal with the phenomena (entities, interactions, and outcomes) relevant to their emergent layer of the complex systems that exist in the world.
Economics and anthropology come closest.
However, judgement of value from a customer perspective involves psychology and marketing.
Measurement of value from a provider perspective involves computer science, management of information systems, industrial and systems engineering, operations disciplines, and more.
The new service science is envisioned to integrate these knowledge silos and fill in gaps with new basic results.
The DCS model sheds light on the nature of the service science, concerning especially scaling.
Scaling was first made a science by Industrial Revolution.
The story of the Industrial Revolution is the story of establishing an investment roadmap for solving the scaling problem for manufactured products, factory supply, and wholesale and retail distribution.
Improving quality and productivity through standardisation, specialisation, and scale economics has continued to this day, and resulted in increased material wealth in a
Remark: Requirements for Research and Education:
The paper provides a case for a new service science, in support of the on-going industrial calls for SSME.
The DCS model is proposed as a mechanism to explain the evolution of populations of service systems, via digitisation, communication, and collaboration scaling phases.
DCS can improve service quality and productivity via ongoing value proposition changes (standardisation and innovation).
These changes result from more appropriate information about resources being put into a digital form, and more value co-creating connections between appropriate service systems. The DCS model is a synthesis of previous results in the field and emerging industrial evidence.
It contributes an analysis (Section 1) that leads to a theory of service scaling (Section 2) and a set of implementation methods at the level of enterprise engineering, cyber-infrastructure, and micro-economical principles (Sections 3–5).
These results need further studies, both empirical and theoretical, to verify, modify, or expand its propositions, such as the accumulation effect, networking effect, and ecosystem effect of scaling.
The model may open particular possibilities for the study of the new service science, since it recognises the pivotal roles of digital connections and their scaling for the improvement of service quality and productivity.
In this context, the large-scale challenges of Computer Science, Industrial and System Engineering, and Management and Economics constitute some core, disciplinary research requirements for the new science.
The DCS model also creates a need for more research to specify the mechanism by which value propositions standardise and are innovated.
We submit that the new service science is needed to study the New Economy characterised by a new mode of production using technology-based cyberspace, hence it is both synthetic across traditional disciplines and unique in its own right, with its own definitive characteristics.
The large-scale nature and population orientation of service system design illustrate this point.
Therefore, the emerging service science discipline should be considered an interdisciplinary field with its own identity.
That is, it should embody a collection of core results from a number of disciplines, plus its own unique results, all unified under a cohesive framework, adherent to scientific principles that apply to new layers of emergent complexity as complex systems evolve.
Ultimately, new doctoral programs will be required to anchor the new field, as the sustaining force of research and education for the emerging science.
The doctoral research will likely feature new requirements and new structure, such as a problem-centric, industry-pull approach that actively involves industry in the educational process.
Therefore, new paradigms of academia – industry collaboration seem to be necessary, too.
Exploratory and forward looking research problems resulted from the industry-academia collaboration will help define the new doctoral programs.
The doctoral programs can then cascade into masters programs and undergraduate programs both in the new discipline and in traditional disciplines as required.