Last week I wrote about the workshop I recently attended in IBM’s Almaden Research Lab on The Co-Evolution of Future Technologies, Skills, Jobs, and Quality-of-Life. In particular, I discussed the talk on the IT-based transformation of services given by John Zysman, professor of political science at UC Berkeley and co-director of the Berkeley Roundtable on the International Economy.
Professor Zysman key premise is that the service transformation we are going through is truly an Algorithmic Revolution, that is, the ability to formalize and codify the activities underlying services, express them as computable algorithms and capture them in software. Given the major advances in the power and costs of information technologies, many more such service activities are now amenable to be transformed into algorithms and embodied in software. This is profoundly changing the nature of business and just about all other institutions in society, as they increasingly turn to IT-based services to add value to their offerings.
Over the past several years I have given a number of seminars on technology and innovation in services. It has been a tough subject to teach. Services, along with their creation and consumption, have been difficult to define. So, like many others, I have discussed services and their attributes in contrast to what they are not - physical products that are generally manufactured in factories. But, while such a definition of services and the service sector of the economy may have worked well in the past, it does not work so well now.
One of the major consequences of the IT-based transformation of services is the blurring of the lines between manufactured products and products delivered as services, as well as between the industrial and service sectors of the economy. The distinction between products and services blurs, as physical products are increasingly embedded into service-based solutions, where the clients pay for the services they receive, not the products embodied in the solutions. The traditional boundaries between the industrial and service sectors of the economy have been breaking down.