Tuesday, December 15, 2009
A long-needed definition:
MANUCENTRIC - assuming that the models and logic of manufacturing industrry, or parts thereof (typically high-tech sectors), apply with very little qualification to the service activities that are found in service sectors and more widely across the economy.
Thus: R&D is a good indicator of innovation input, patents of innovation output, for example.
MANUCENTRIC - assuming that the models and logic of manufacturing industrry, or parts thereof (typically high-tech sectors), apply with very little qualification to the service activities that are found in service sectors and more widely across the economy.
Thus: R&D is a good indicator of innovation input, patents of innovation output, for example.
Labels: service logic
Thursday, December 10, 2009
Knowledge Intensive Service Systems
Towards a Working Definition Ian Miles, December 2009
What are Services?
The term “service” is ambiguous, and not just because it is both a noun and verb, each of which have several meanings. Even putting to one side the religious and (animal) sexual meanings, there is much scope for confusion. A service may be a product (as compared to a good – though often when people speak of “products” they mean only goods). Or it may be the process of production or the organisations that accomplish this process (as compared to manufacturing and manufacturing industries). We also talk about service activities, service occupations, service relationships, service journeys, service philosophy, and much else.
We could see service activities are being activities that involve: “doing things” rather than “making things”. Services are effecting transformations (or sometimes stopping transformations) and their products are thus largely intangible (more on this below). Additionally, these “things” are transformations that are of value. An economic relationship between service provider and user is implied - or perhaps a para-economic one [as in informal economies where services are performed in the household, as voluntary activity, etc. ]. This economic relationship need not imply payment between service supplier and user:: many services are in-house, many are free complementary services, sometimes the supplier and user is the same party, sometimes they are both virtual agents rather than human beings.
Some definitions that follow from this:
Service Firms: these are firms whose main business is directly producing services (rather than goods with which users can produce their own services, or other goods).
Service Sectors: these are the sectors of the economy whose firms or other organisations are more in the business of doing things than of making things.
Service Sectors: these are the sectors of the economy whose firms or other organisations are more in the business of doing things than of making things.
Of course, there are many things that can be done, and many transformations that can be made. One way of thinking about this is to differentiate transformations into those involving (mainly) changes in the state of physical artefacts; changes in the state of symbols; and changes in the state of people. (Environments and built landscapes are more like physical artefacts, or at any rate the transformations involved are largely physical and chemical ones, though biological ones may also be involved; some services to do with animals e.g. veterinary services, are rather like some services dealing with people. Colleagues have differentiated between information and knowledge services in a productive way.) This three-way distinction is a helpful starting point, not least because the technology trajectories associated with the three groups are very distinctive. But many services overlap – is education about symbol-processing or people-processing? – the answer is both. Statistical frameworks have a slightly different way of going about classifying service sectors, worth reproducing here to remind us of the range of activities involved.
How can we define service sectors statistically?
Service sectors are defined in standard industrial classifications as NACE sections G to O:
- Hotels and Restaurants (HORECA)
- Transport, Storage
- Financial Intermediation
- Real estate, Renting, Business Activities
- Wholesale & Retail Trade; Repair of Motor Vehicles, Motorcycles and Personal & Household Goods
- Public Administration and Defence; Compulsory Social Security
- Education
- Health and Social Work
- Other Community, Social and Personal Service Activities
What is a service system?
This terminology is also ambiguous, and users of the term have various takes on it. A rather good first stab is that a service system is “a configuration of people, technologies, and other resources that interact with other service systems to create mutual value.” (SSMENet). There is a recursive element here, but it is not evident that the interaction with other systems is a necessary part of this definition. Creation of value coincides with the discussion above – service systems are organisations of entities that produce services (transformations).
Wikipedia has some useful discussion of the concept, though this is not a case of many hands making lucid work. “One recent definition of a service system is a value coproduction configuration of people, technology, internal and external service systems connected via value propositions, and shared information (language, laws, measures, etc.).” There is a recursive element here too, but the points about people and technology, and the interconnectedness of systems, are well-taken. Wikipedia goes on: “A system is an organized set of objects which process inputs into outputs that achieve an organizational purpose and meet the need of users [Wikipedia says “customers”] through the use of human, physical, and informatic enablers in a sociological and physical environment (adapted from Nadler 1981; Checkland 1981).”
The Wikipedia discussion goes on to discuss nine interlinked classes of objects that feature in systems, and to note how these can have distinctive features to do with the role of users in services; these are tabulated below.
System Feature | Service System Characteristics: User role |
“Users [Wikipedia says “customers”] - those benefiting from the system (or otherwise affected by it); | - as initiator and receiver of the service (e.g., the “customer” is characterized as looking for novelty, reliability - or both); |
Goals - aims, purposes or central meaning of the system and the organizations; | - as setting the primary objectives for the design and operation of the service (e.g., the service should an Internet shopper to configure the product variant he wishes to purchase); |
Inputs - physical, human, financial, or information entities to be processed by the system; | - as a client upon whom the service is to be performed (e.g., a patient coming for treatment); |
Outputs - physical, informational or human entities after processing by the system; | - as a client upon whom a service has been performed (e.g., the patient after treatment); |
Processes - transformations for obtaining outputs from inputs; | - as a participant in the process (e.g., an Internet sales transaction incorporates a dialogue facility between a customer and a sales agent); |
Human Enablers - human resources owning and/or operating the system; | - as a resource in the process (e.g., an Internet sales transaction involves the customer as an independent agent); |
Physical Enablers - physical resources which aid in operating the system; | - as providing a resource to the process (e.g., an Internet shopper uses his [or her] own computer to access the vendor site); |
Informatic Enablers - information and knowledge resources supporting the system; | - as applying his [or her] own knowledge to the process (e.g., an Internet shopper uses his [or her] own know-how regarding the product to configure the model he wishes to buy); |
Environment - physical, economic, technological, social, ecological or legal factors influencing the system | - as setting constraints or standards for acceptable service levels (e.g., an Internet shopper demands 24-hour availability of a dialogue facility).” |
This particular definition stresses the scope for an interactive role of service users/clients in service design, production, delivery and of course consumption – we note that these categories may blur together in the case of some services. It is certainly the case that many large-scale and most human-oriented service systems do feature much of this interaction. If we took a smaller service system then this might be less apparent (e.g. the automatic signalling between a GPS receiver and the three satellites it identifies). But the broad account above, while in need of some tidying, elaboration, and qualification, makes a starting point for systematic analysis of – service systems.
What are Knowledge-Intensive Services?
One standard approach to knowledge-intensivity is to assess the extent to which the activity is being produced by workers (who are capable of) deploying considerable knowledge and understanding in the service work. This is usually assessed in terms of levels of educational attainment. And educational attainment is usually assessed (for purposes of international comparison) in terms of three classes only, with the highest being University graduate or equivalent. Around half of Europe ’s service economy is considered as knowledge-intensive. Recalling the sectors mentioned earlier, G (HORECA), H (Transport, Storage), K (Trade and Repair) and L (Public Administration and Defence; Compulsory Social Security), are generally seen as NOT knowledge-intensive, while I (Financial Intermediation), J (Real estate, Renting, Business Activities), M (Education) and N (Health and Social Work) are knowledge-intensive.
Eurostat’s definition of KIS features the following categories (with NACE codes in parentheses):
Knowledge-intensive high-technology services
• Post and telecommunications [64 ]
• Computer and related activities [72]
• Research and development [73 ]
Knowledge-intensive market services (excl. financial intermediation and high-tech services)
• Water transport [61]
• Air transport [62]
• Real estate activities [70]
• Renting of machinery & equipment without operator & of personal & household goods [71]
• Other business activities [74]
Knowledge-intensive financial services
• Financial intermediation ( except insurance and pension funding [65,]
• Insurance and pension funding, except compulsory social security [66]
• Activities auxiliary to financial intermediation [67]
Other knowledge-intensive services
• Education [80]
• Health and social work [85]
• Recreational, cultural and sporting activities [92]
(This leaves as Less-knowledge-intensive market services: trade, repair hotel and restaurant services, land transport, travel agencies, etc. and Other less-knowledge-intensive services: Public administration and defence; compulsory social security, Sewage and refuse disposal, sanitation and similar activities, etc.)
There are some anomalies here – telecommunications is in sector H for instance, and Public Administration and Defence features unusually high levels of medium-skilled people. But the main challenge to this approach is that so many activities are knowledge-intensive by this standard. Perhaps this just confirms that we live in a knowledge economy. But there are some service sectors which have much higher levels of graduates in the workforce than most others, and these are education, health, and the KIBS – knowledge-intensive business services. Setting a higher bar to determining which sectors – i.e. which broad sets of core service transformation – are knowledge-intensive would focus just on these.
What are Knowledge-Intensive Business Services?
Business Services are services that are sold to (or undertaken within) firms and other organisations in the formal economy to support their business processes. There is a broader notion of business–related services that includes telecommunications, finance and transport, but these services are also supplied to consumers.
Business Services are services that are sold to (or undertaken within) firms and other organisations in the formal economy to support their business processes. There is a broader notion of business–related services that includes telecommunications, finance and transport, but these services are also supplied to consumers.
In sectoral terms, NACE section J covers Real estate, Renting, and Business Services. A more detailed look at this gives us an elaborate subclassification.
The services in NACE-1 70 and 71 concern real estate and equipment renting, which are not usually considered to be KIBS. The main KIBS sectors are usually seen as NACE 72-74:.
72,1 Hardware consultancy
72,21 Publishing of software
72,22 Other software consultancy and supply
72,3 Data processing
72,4 Database activities
72,5 Maintenance and repair of office, accounting and computing machinery
72,6 Other computer related activities
73,1 Research and experimental development on natural sciences and engineering
73,2 Research and experimental development on social sciences and humanities
74,11 Legal activities
74,12 Accounting, book-keeping and auditing activities; tax consultancy
74,13 Market research and public opinion polling
74,14 Business and management consultancy activities
74,15 Management activities of holding companies
74,2 Architectural and engineering activities and related technical consultancy
74,3 Technical testing and analysis
74,4 Advertising
There are other services in the 74’s that should be excluded, in all probability, as not being KIBS, or containing a low proportion of KIBS firms (based on their workforce skills):
74,5 Labour recruitment and provision of personnel;
74,6 Investigation and security activities;
74,7 Industrial cleaning;
74,81 Photographic activities;
74,82 Packaging activities;
74,85 Secretarial and translation activities (some of these may be KIBS);
74,86 Call centre activities;
74,87 Other business activities n.e.c. (some of these may be KIBS)..
Researchers commonly differentiate between P-KIBS (traditional professional services such as accountancy and law), and T-KIBS (technology-related services such as computer services and engineering services). Jones and Miles (2009), drawing on the body of recent literature on creative industries (much of which focuses on their producing “creative content”), introduced a third category–C-KIBS, “creative” business services,. The outstanding example in NACE72-74 is advertising. Elements of other KIBS – such as industrial design, architecture, perhaps marketing – also involve substantial production of creative content. Activities that are not in the NACE Business Services group – like graphic design and specialised broadcast production and librarianship for businesses – actually appear in NACE section O.
But the list above covers a good selection of KIS that are oriented to business, and the only sectors featuring such high shares of graduates in their workforce are the public services of education and health. It may be that these form a narrow set of KIS sectors (and transformative activities), while a wider set would encompass the four Eurostat groups listed earlier.
This gives us:
Narrow definition of KISS – those service systems whose main outputs (?or the main transformations that are undertaken by them?) are the sorts of output identified with TKIBS, PKIBS and CKIBS, and with health and education services.
Broad definition of KISS – those service systems whose main outputs (?or the main transformations that are undertaken by them?) are those identified with Eurostat’s groups - Knowledge-intensive high-technology services; Knowledge-intensive market services; Knowledge-intensive financial services; and Other knowledge-intensive services.
Further Notes
It is easy to extend these notes in several directions:
- differentiating between knowledge-intensive and knowledge-driven activities (the latter may not require many knowledgeable workers, as long as the activities are highly coordinated by information systems).
- Demonstrating that educational attainment measures correlate well in terms of discriminating across sectors with data on characteristics of workforce activity like problem-solving and other reported experience implying on-the-job knowledge of different depths.
- Other ways of differentiation between services related to consumer-intensity, standardisation vs. specialisation, etc.
Labels: Knowledge-intensive service systems
