This document discusses how service-based business models are disrupting traditional industries. It notes that the largest taxi, media, retail, and accommodation companies own few or no physical assets. Something interesting is happening - digital platforms are allowing new types of businesses to thrive without owning the core assets or creating content themselves. The document then examines how different economic logics (industrial, information, generative) shape business challenges, management approaches, and organizational forms over time as technologies change. It argues we are moving from products as physical goods to platforms and experiences, and from value captured upfront to ongoing "procrastinated binding" of customers. Actors now include people, things, data and algorithms in a complex socio-material reality

1. center for design + innovation
cD+i
digital innovation, reversed
semiotics and generative
economics:
how is service eating up the world?
Youngjin Yoo
Harry A. Cochran Professor in MIS
Temple University
WBS Distinguished Research Environment Professor
Warwick Business School
Service Systems Forum 2015

2. “Uber, the world’s largest taxi
company, owns no vehicles.
Facebook, the world’s most popular
media owner, creates no content.
Alibaba, the most valuable retailer,
has no inventory. And Airbnb, the
world’s largest accommodation
provider, owns no real estate.
Something interesting is
happening.” (Tech Crunch, March
3, 2015)

3. center for design + innovation
cD+i

4. © copyright, youngjin yoocenter for design + innovation
cD+i
2.0

5. center for design + innovation
cD+i
three logics of
economics

6. © copyright, youngjin yoocenter for design + innovation
cD+i
2.1

7. center for design + innovation
cD+i
industrial
economics

8. the age of
physical machine

9. center for design + innovation
cD+i
automation

10. center for design + innovation
cD+i
capital intensive
asset

11. center for design + innovation
cD+i
managerial challenge
maximizing asset
utilization

12. center for design + innovation
cD+i
vertical integration
diversification

13. center for design + innovation
cD+i
managerial logic
economy of size and scale

14. center for design + innovation
cD+i
organizational forms
m-form hierarchy

15. center for design + innovation
cD+i
management tools
scientific management

16. © copyright, youngjin yoocenter for design + innovation
cD+i
2.2

17. information
economics

18. the age of
smart machine

19. information as
by-product
(production, distribution, and use)

20. center for design + innovation
cD+i
managerial challenge
complexity
information overload

21. center for design + innovation
cD+i
management logic
modularization (design rules)
horizontal coordination

22. center for design + innovation
cD+i
organizational forms
network of distributed org.

23. center for design + innovation
cD+i
management tools
outsourcing
virtualization

24. © copyright, youngjin yoocenter for design + innovation
cD+i
2.3

25. generative
economics

26. © copyright, youngjin yoocenter for design + innovation
cD+i
the age of
generative machine

27. center for design + innovation
cD+i
digital technology

28. center for design + innovation
cD+i
separation of
form & function
(universal machine of von Neumann computing architecture)

29. center for design + innovation
cD+i
separation of
contents & media
(universal network of Claude Shannon)

30. center for design + innovation
cD+i
walled garden of products
hardware
network
-­‐
distribu1on
contents
so3ware
TV phone book music
hardware
network
-­‐
distribu1on
contents
so3ware
hardware
network
-­‐
distribu1on
contents
so3ware
hardware
network
-­‐
distribu1on
contents
so3ware

31. center for design + innovation
cD+i
re-configuration of
new products
network -
distribution
hardware
software
contents
network -
distribution
hardware
software
contents
network -
distribution
hardware
software
contents
network -
distribution
hardware
software
contents

32. highly evolutionary
products that produce
user-generated trace data

33. center for design + innovation
cD+i
technology constantly
evolves beyond the
original design

34. center for design + innovation
cD+i
managerial challenge
deconstruction of products
reconfiguration of value system
convergence

35. center for design + innovation
cD+i
managerial logic
mutation
recombination
open innovation

36. center for design + innovation
cD+i
organizational forms
ecosystem of open
platform

37. 3.0

38. reversed semiotics

39. reference vs referent

40. information as
representation
of the real

41. center for design + innovation
cD+i
information as the
genetic materials
of the real

42. 4 types of
reversed semiotics

43. center for design + innovation
cD+i
which one is real?

44. center for design + innovation
cD+i
which one is real?

45. center for design + innovation
cD+i
which one is real?

46. center for design + innovation
cD+i
which one is real?

47. center for design + innovation
cD+i
physical goods as avatar
of “real” digital products

48. flipping the value
economic proposition

49. information economics:
dissimulate
immaterial representation
non-rivalry of consumption

50. generative economics:
simulate
metabolism of information
generative recombination

51. center for design + innovation
cD+i
industrial
economics
information
economics
generative
economics
strategic use of
information as by product
strategic use of
information as simulacra
deconstruction of
traditional organizations
deconstruction of traditional
industrial systems
products
noun
platform
verb
things experiences
creativity generativity
craftsmanship procrastinated binding

52. 3.1

53. what is a firm?

54. what is a product?

55. Center for Design
cD+iTransforming ideas into actions
and Innovation

56. Center for Design
cD+iTransforming ideas into actions
and Innovation

57. Center for Design
cD+iTransforming ideas into actions
and Innovation

58. center for design + innovation
cD+i
rawmaterials
products&services
activities technology knowledge
a firm: a classic model

59. marriage of
form and function

60. to render service

61. designer’s struggle
with material

62. domestication of
materials

63. product vs. service

64. product as a fossil of activities
frozen in time and space
through production value chain

65. product as a performative
enactment of a network of activities
at the point of consumption

66. liquidation of product
product as a delivery platform of
contents and service activities

67. center for design + innovation
cD+i
procrastinated
binding
“value is created after the product was purchased”

68. center for design + innovation
cD+i
resolution of transactions
“creating Moor’s law in physical world to reduce frictions
in economic transactions”

69. power shift

70. musicians are poorer
than ever before!

71. 3.2

72. center for design + innovation
cD+i
Internet of
things
Mobile
Internet
Big Data
Analytics
Cloud Service
Quad Core of Computed Experience
place
time
things peopleexperiences
atoms bits
B2BB2C
(c) Youngjin Yoo, 2014

73. characteristics of hybrid
sociomaterial world
• digitally enabled complex socio-technical
phenomena
• no central governing body or design rules
• evolve beyond the original designers
• non-linear emergent behaviors
• leaves large-scale digital trace data

74. Actor
à Action

75. Actors
à Action

76. Actors
à Actions

77. design decision
live algorithmic
disposable permanent

78. big data with an
evolutionary ontology

79. the rise of
algorithmic reality

80. forget about
B2B and BC2

81. think about
A2C and A2A
Inspired by Karl Lang @ Baruch College

82. 6.0

83. concluding thoughts

84. seeking new theories on
[sociomaterial, computed,
algorithmic, generative, or digital, but
definitely not just social or technical]
reality

85. beginning with a
hybrid agency
actors
matter
data
algorithms

86. thank you