Ha Long Bay, Vietnam, at night — 2014
It should come as no surprise that I am an airplane geek. Two of my hobbies are reading about aviation news and trends in general, and deconstructing design decisions for particular historical aircraft. I preach to my students that they should look to WWII for examples of rapid design innovation on both sides of that war, as they show how far, how fast one can come (the war started slightly post-biplane, and ended with the jet age) with a given Authority-based expert structure.
But anyone that works in the industry knows that in this day and age, the airplane itself is the tip of the iceberg. Commercial aircraft components are sourced across the globe, with the Big Two — Boeing and Airbus — serving primarily as system integrators. Fuselages come from Italy, electronics from France, and even engine parts come from China. There’s ongoing debate inside the industry, especially in the aftermath of the Boeing 787, how much critical technology should be kept in-house for maximum profitability and predictability in production, as aircraft orders from the airlines go out ten years or further for a particular model.
Inevitably, once we back away from the romance of particular aircraft configurations (blended, flying wings anyone?) aircraft are basically a system of moving people from Point A to Point B. And as the industry evolves, it will be forced to confront what others in heavy industry are starting to move towards. More evolution is coming. And the future is in what are called Product Service Systems. What is a Product Service System? In a nutshell, it’s buying a service — or really an experience, like getting from Point A to Point B, from a company, or network of integrated companies, instead of a particular item.
I learned about Product Service Systems (PSS) about eight years ago from my colleague Tim McAloone, a professor of sustainability at the DTU — the Technical University of Denmark. Tim was doing research in PSS mostly because of the sustainability aspects. It’s very difficult to manage lifecycle of all the various parts of a given product without essentially popping up another level above the product you make and asking ‘what exactly is this product providing to a customer as far as larger utility?’
An easy example might be instead of supplying a copier to an office, what one might do is provide a reproduction service. Everyone needs copies, be they digital, paper or otherwise. In the case of paper copies, a PSS that worked providing this service would then be in charge of where the paper came from, how it was processed into copies, as well as the final recycling/disposal of the copies used by the organization. This allows entire lifecycle modification for hitting environmental/sustainability goals, instead of optimizing only one aspect of an operation.
But this concept doesn’t come easy, especially to Authoritarian and Legalistic hierarchies, and their fragmented thinking models. Just as a local example, I attempted to get our local middle school to adopt such a model regarding photo copies for their own operation, and have it managed by a student club in order to teach about sustainability. I was met by utter puzzlement from the local teachers who wanted to teach kids about the environment. Though well-meaning, the only thing they could comprehend was having kids who cared about the environment don latex gloves and sort garbage for recycling. No wonder we have problems with disempowerment amongst our young people for innovative solutions to environmental issues!
The advantages of PSS regarding sustainability have been well-documented. But there’s another thing that’s happening in the world. And that’s the effect of broad-scale digital connection and Big Data. Both these things offer new insights into how to provide end-result services and experiences.
One can see this happen on your own computer, with travel websites. Expedia offers the ability to book everything from traditional hotels, flights and such to vacation rentals. There’s a natural expansion to every branch of your travel experience. John Deere is rapidly moving into Smart/Connected/Whatever! Farming, where the service being sold is plowed ground that you participate in. Though the idea may have started in an academic venue, centered around sustainability, it is spreading out in the commercial sector even without sustainability as the explicitly stated goal.
As I mentioned before, when it comes to air travel, the tip of the iceberg is the airplane. Air travel itself is a complex, interconnected PSS involved with getting any given person from where they are to where they want to go. As these services become more digitally linked, driven by the emergent dynamics of the need, they become a de facto system that drives profits across the network. It makes this article in Aviation Week and Space Technology, titled ‘Getting Positioned for Digital Disruption’, by aerospace analyst Michael Goldberg of the Bain Group particularly timely. Whether one is prepared or not, these elements of systems integration are becoming naturally emergent, as we evolve through the availability of greater and greater amounts of information. And as that information becomes available, lower-level firms are seizing the opportunities provided to connect the dots, often just between two components or classes of information.
Goldberg makes this point endorsing PSS in the context of another hot-button term of the day — digital disruption. As he says it, “The confluence of connectivity, big data and leaps in computing and software capabilities are disrupting old business models and enabling digital-savvy startups and other competitors to push into new markets.” That’s PSS.
For those that don’t want to give Aviation Week the click-through and sign up, Goldberg asks four questions regarding digital disruption that I’ve turned these into themes from my blog below. Since I’m all about not stealing content directly, you can go there if you want his language specifically– Aviation Week is worth the e-mail.
Summarized, these directly relate to the PSS explanation above.
- Is the customer no longer in love with the product, and in love with the service?
- Can someone outside provide part of your PSS?
- How do we retrain employees to utilize information from across the relational space?
- Can we use more traditional, Senge-style systems thinking to generate systems models that minimize investment risk?
Goldberg then offers four strategies. Placed in the language of Empathetic Evolution, these turn into descriptors for firms adapting to this change in the information landscape:
- They focus on information flow in their companies, and have a profound understanding of that information flow.
- They explore what they don’t know, and actively develop metacognition to know what they don’t know, and become aware of unknown unknowns.
- They expand their relational networks outside traditional sources to prevent Black Swans.
- And because I couldn’t say it better myself, here’s the final takeaway: “They recruit digital thinkers and create a culture of risk acceptance. New talent is required to compete in a digitized world. Top innovators will attract and hire new talent in part by creating a more open, collaborative and risk-taking culture.”
Goldberg couches it in terms of the technology, leaning heavily on the particular digital modality. It is an Aerospace virtual rag, after all. But those familiar with the Principles of Empathetic Evolution realize that it’s not just about computers or data. That’s been around for a long time.
It’s really about social structure inside, and across, a set of companies. It requires outcome-oriented, Performance-based Communities at a minimum. None of this can happen in the traditional Authoritarian/Legalistic social structure. Let’s pull Goldberg’s points apart individually so we can understand this more deeply.
- In a typical Authoritarian/Legalistic social structure, information is only supposed to flow either down through commands from the hierarchy, or up, because the knowledge workers at the bottom create something that the decision makers above them are supposed to aggregate. Without empathetic networks and duplex information flow, though, no one knows how many of the orders were understood, or received. And the individual fragmented knowledge creators at the bottom haven’t talked even to peer users of their discoveries, and have no idea whether the people above them even understood their conclusions.
- As we’ve discussed before, Authoritarians don’t like being told they don’t know stuff. It hurts their status, and this actively discourages metacognition. We can’t know what we don’t know, and need to learn, if we are fundamentally incurious.
- When it comes to expanding relational networks, in the eyes of the Legalistic Authoritarians, the only people worth talking to are the ones from perceived superior institutions, with fancier titles. That chokes off all the folks out there potentially swimming in seas of new ideas, as well as potential collaborators with whom discussions would generate truly disruptive creativity. Why pay attention to someone who doesn’t have a Nobel Prize? Why would the lunch lady have anything useful to say?
- Legalistic Authoritarians don’t believe in having worker bees talk to each other. We all know that given the opportunity, those worker bees are a bunch of shirkers and prone to talk about their kids’ last soccer tournament — not the thing they spend most of their lives doing and being educated to do!
All sarcasm aside, as an educator, this piece is a clarion call for what employees in the future are going to be required to do — and it’s all about sharing information across traditional and non-traditional boundaries. And if you want your company to survive in the long-term, it’s the same deep truth — except it takes time to develop and enshrine as your corporate culture.
What happens if your company doesn’t change? The emergent dynamics of information flow are already on the loose, and the change will happen anyway. It’s just that your company or institution won’t be a part of it. While spreading information used to require a more profound focus from the folks at the top, the Internet has changed the game. Information will flow in all directions, regardless of the wishes of the elite. And that will create the emergent behavior that leads, in the end, to PSS. Stay tuned.
Takeaway: Though it’s been around for a while, we’re on the cusp of seeing Product Service Systems, either loosely connected, or tightly connected, move to the fore. There’s no time like the present for evolving your own corporate, or academic social structure to deal with these inevitable changes. If you don’t, don’t be surprised if you’re left by the roadside of history.