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The Information and Services Economy a.k.a. Business Architecture and Services Science. IS210, Week 6 Profs Bob Glushko & Anno Saxenian UC Berkeley School of Information Fall 2006. A new dominant logic for marketing. Marketing in the goods economy: financial optimization and the 4 P’s
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IS210, Week 6
Profs Bob Glushko & Anno Saxenian
UC Berkeley School of Information
Intangible resources are key
Customers co-create value
Role of the enterprise
Sony’s miniaturization capabilities
Citicorp’s operating system for 24/7 operation
3M sticky tape competence => “post-it” notes, coated abrasives, magnetic tape, photo film, pressure-sensitive tape… (substrates, adhesives, coatings.. .)
What do modern economic organizations need to do?
Organizational options: Devolve decision-making authority and access to relevant information within corporation, focus on core competences/products
Maintain ownership of assets but decentralize internally;
Spin-off units to market, focus assets on core competences;
Result is less a hierarchy than a federation or network
Governance options in a network
Arms-length, market relationships between units– discrete transactions, maximizes autonomy, no trust
Hybrid relationships of co-production, co-design—”learning by monitoring” with “studied trust”
Institutionalization of continuous, joint conversation about common goals as well as apportionment of gains and losses => mutual experimentation and definition of roles
Ownership relationships between units— blind trust, maximizes control
“The model of business organization shapes need to exchange information across organizational boundaries.” Bob Glushko, Document Engineering
“The story of the sciences in the twentieth Century in one of a steady loss of certainty. Much of what was real and machine-like and objective and determinate at the start of the century, by mid-century was a phantom, unpredictable, subjective, and indeterminate.”
W. Brian Arthur “The End of Certainty in Economics” Einstein Meets Magritte Conference, 1994
English and Scottish enlightenment, 18th c.
All nature is but Art* unknown to Thee
All Chance, Direction, which thou canst not see
All Discord, Harmony, not understood
All partial Evil, universal Good:
And, spite of Pride, in erring Reason’s spite
One truth is clear, “Whatever IS, is RIGHT”
Alexander Pope An Essay on Man, 1733
*Art: artifice, technique, or mechanism
Economic man (subject) needs to operate on well-defined Problems (object) to make orderly, predictive theory possible. And well defined Problems should have well-defined Solutions. The solutions are building blocks for next aggregated level of theory.
Complexity economics as non-equilibrium theory (vs. standard economics seeks static patterns in behavioral equilibrium) with nonlinearities and positive feedbacks: multiple equilibria, increasing returns, importance of small events.
The El Farol Bar Problem
Out-of-equilibrium theory of the economy: economy as process-dependent, organic, always evolving