Knowledge Intensive Business Services: Post-Pandemic New Normal

Knowledge Intensive Business Services: Post-Pandemic New Normal

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So today, Professor Ian Miles from  Alliance Management Business School   and Professor David Doloreux from HEC Montreal  will discuss their views on post-pandemic new   normal of knowledge intensive business services.  Well as we all have experienced, the pandemic   has pushed organizations to be dependent upon  remote working. Well while some sectors have   easily adjusted to such changes, some sectors  such as knowledge intensive business services,   that had heavy reliance on in-person interactions  with clients, must have faced greater challenges,   so as we are now seeing the light at the end of  the tunnel (fingers crossed) uh it is timely to   discuss how this sector would capitalize on  their pushed remote working experience for   post-pandemic engagements. So it is likely that  this sector may adopt a hybrid model of working,   but we know very little about  how this model would look like   and its impact on organizational innovation  and sustainability as well as on organizational   interactions with clients and wider ecosystem.  So today's debate will address these points.   So with this opening remark, now I would  like to invite Professor David Doloreux   to discuss his views on post-pandemic new normal  for knowledge intensive business services.  

He will offer a broader view of the sector,  followed up with some general predictions   on the post-pandemic new normal. Okay, over to  you David. Thank you very much and thank you   very much for the invitation. I will just share  my PowerPoint, oh let's see if it's working. Perfect, it's working, David. It's working? So  okay I just have two computers just let me sure  

if I'm not - okay good so thank you very much for  the invitation, so today what I would like to do   or share it's to share my view about as I say  in the title some speculative reflection because   as uh not like unlike Ian I haven't started to do  any empirical work on the possible consequences   application of of COVID-19, we just launched a  survey on R&D capabilites in Montreal that we   start to address some of the question about  pandemic actually and the application of uh   COVID-19 under uh the the their new business  strategy, so so today I would like to just   raise some of the biggest reflection based on my  own interpretation of of the crisis, so let me,   so what I would like to do today with you uh  it's to go briefly to set up this scene so to go   to to to briefly introduce you what we what we  know, what we mean by knowledge intensive business   services and what are their role and identity.  Uh then I will present some of the preliminary   results that uh that we that I have on the rate on  latest paper that we conduct a systematic review   of the literature on on innovation related topic  uh on on KIBS innovation and I will conclude and   discuss some of the issue relate to to what extent  COVID-19 will impact on KIBS innovation research.   So first what are KIBS? So let's start with a  very very simple question, but since the seminal   work of Miles in 1995 this question is still  debate so what are KIBS? KIBS are very specific   services or uh that involve economic activity  which are intended to result in the creation   accumulation and destination of knowledge. KIBS  sector constitute a service sector and include  

establishment and firm whose primary activity  depend on human capital knowledge and KIBS so KIBS   has very specific specific characteristic, first  knowledge is the most essential asset of KIBS,   KIBS almost exclusively consists on  transferring knowledge and skill to   client or user organization. KIBS will combine  different type of highly specialized knowledge   which will be both codify and tacit in order to  protect to develop problems specific solution.   Another characteristic of KIBS like the production  of knowledge intensive services will require   frequent interaction and close collaboration  between KIBS and their clients or KIBS and   their other organization and finally kids act as  an intermediary between the client knowledge base,   especially the client tacit knowledge base, and  the pool of codified knowledge through increasing   the exchange of otherwise disconnect pool of  knowledge. In the literature again so in the   seminal work of Miles there's several scholar  who has tried to classify different type of   KIBS so we can identify three broad classes  of KIBS: the first one that are dealing with   social and professional services which can  be which are called professional uh KIBS,   those dealing with science and technology are  are those that that are called technological KIBS   and those dealing with creative continents are  creative KIBS and you can see on the over here   the different type of services belonging to these  different type of KIBS. KIBS also supply different   type of business services and technological  related services to clients and users.  

These services comprise as identify on the  overhead different services relate to research and   development, management consulting, information,  communication services, human resource,   employment, legal services, accounting, financing  and marketing and so on. So let's move now on the   role and identity of KIBS I think and it's maybe  I'm biased here or not because I I'm biased but   I don't want to make any favor to you but I  think this is the best code that you can find   to identify the role and identity of KIBS. Miles  stress that KIBS are doing what KIBS are doing   is locating, developing, combining and applying  various type of generic knowledge about technology   and applications to the local and specific  problem issue and context of their client,   so basically what that what this mean is that KIBS  by the nature of their equity are interactive,   they are located at the centre of interacting  learning system involving knowledge creation,   knowledge sharing and knowledge diffusion  with their client and other organization.  

In other words, KIBS are provider  of technological and professional   knowledge to other industrial sector  and are of course supporting knowledge   base upon which knowledge and all  other firm and industry are built. If we move on also on the role of identity of  KIBS, we can see over the last 15 years that KIBS   industry and and the different KIBS sub-sector  are among the most dynamic segments of the service   sector in the OECD country since the mid-80s and  is one of the most rapidly growing sector in the   north American economy. This expansion of course  has completely increased the importance of service   and innovation for a long-term economy-driven  transformation of regional and national economy.   Business services and in particularly knowledge  intensive ones are crucial in both trends and   consequently interest in the research of  knowledge intensive business have recently   become very important subject of study. You can  see here as an example when we look about this   table about the KIBS and employment growth the  importance of employment growth in KIBS and the   different region of Quebec. What we  can see is over the last 10 years  

the grow is is the grow is is is significant when  you we observe that 34 the the the employment in   KIBS at grow of 34 34.6 percent in the entire  province of Quebec over the last ten years.   What is even more interesting from a geographical  perspective is that even if Montreal concentrate   more than 25 percent of the total employment  of KIBS, the highest grow, the highest grow   the highest grow region in terms of KIBS  and employment are those region outside   the metropolitan area and but located within  one hour from Montreal and we can just see the   uh the grow over the last 10 years of the  the s3 region which is about one hour from   Montreal which you see the number 76.7 you see  the region of Montreal, Monterrey sorry which is   the growth 42.7 and Capital National 49.8. We also  noticed also another a new trend over the last 10   years of the importance of grow is the importance  of employment growth of KIBS in peripheral and   reward region. You can see here the number the  percentage of grow over the last ten years in   in the in the small peripheral and rural  region of Basel around and also now and now oh I can go quickly over that so so when we  look specifically about the role and identity of   KIBS, uh particular interest has  been shown to what they're also   of three specific role. The first one is KIBS  defined as a knowledge facilitator and vector,  

okay KIBS as I just uh I just described  perform multiple services activity,   however one of their main contributions  will be to provide to their client with   innovation support in that context. KIBS will  act as a facilitator of innovation, KIBS also   is a very interactive player which means that  KIBS will be engaged in collaboration and   and uh and firm will use KIBS as knowledge as  knowledge shows to help them for their innovation   activities so KIBS are also defined as carrier  of innovation and finally KIBS can be described   as as a source of service innovation  as innovator in their own right   just like manufacturing, KIBS can be internally  innovative and introduce innovative strategy   uh kids and the firm itself asked will introduce  they will make sure that they have the right   condition and element that will help to develop  the capacity to introduce or significantly improve   new services, new organizational practice or  new marketing method or already existing one. So if we move on to the third part of my  presentation, uh we conduct a systematic   review of the literature. When we conduct this  about KIBS and innovation, when we conduct this   this systematic review, the  data we use for this review   did not really reflect on the COVID crisis  because the article include in the review   were those published between 2001 and two thousand  and 2019, so this review allowed us to systematic   to systematically analyze uh the different study  and the different team tackle on their under the   generic uh the under under the uh the work of  innovation and and and KIBS. So here the figure  

just show actually the the review the flow diagram  about how uh we identified the different uh   article and we the the review is based on the  analysis of 90 uh article that deals directly with   innovation and KIBS. Let's move on, so based on  the review and coding machine we develop a coding   machine that we code a different article along  different different dimensions, we distinguish six   different research stream of KIBS innovation  research. The first research stream   is about the specific factor that influence  innovation, so in this specific research stream we   can find four categories of study: those dealing  specifically with innovation output, those dealing   with innovation strategy, so trying to understand  the mode of innovation characterizing KIBS,   a third category of this study concerned the the  different internal factor that will impact or that   will have an effect on innovation that include  especially especially sorry R&D and human capital   and a fourth group of study under the  specific factor in firms innovation   are the external factors so there are studies that  look specifically on intellectual property right   and cooperative behaviour. The second uh research  stream consists of study that try to understand   how knowledge is managed which in KIBS turn and  how managed strategies are adopted and developed   by KIBS. The third research stream concerned  work on open innovation and in this specific   research stream most of the work focus on two  things: one is to understand the cooperative   pattern of KIBS and their impact on innovation  and the second group of work concerned the   scope and depth of knowledge shows that  they try to apply a causal and Larson   breadth and depth of knowledge source in  order to understand how does this impact of   KIBS innovation. The fourth research stream  concerned the use of KIBS in the innovation  

process, so these study deal with three different  topics: the first one is the contribution of KIBS   and user innovation activity, so basically this  study tried to understand how the use of KIBS   impact on the innovation of innovation activity  of KIBS user. The second category group of study   concerned the mechanisms that govern interaction  between KIBS and their user. Here the study   focused more focus on specifically the role of  trust, the role of proximity and in the role of   face to face in delivering these different  delivering different services to KIBS user.   And the third group of study concerns the role  of geographical proximity uh sorry concern yeah   the role of geographical proximity location of  KIBS use. Here this kind of study mainly done by  

myself and Richard Shermer we tried to understand  the geography of the use of KIBS services. The   fifth the sorry the fifth research stream concerns  the geography of KIBS innovation. In this study,   we find two type of study, the first one we  tried to understand the location determinant   of KIBS in different regional and national  contexts and on the other the second group   of study concerned the impact of agglomeration  economy of KIBS innovation. And the last one,   the last research stream concern  internationalization. This research   stream has the less has the less number of  article dealing with this specific topic,   essentially the uh the the the article dealing  with internationalization and KIBS innovation   try to understand the driver and determinant  of KIBS internationalisation and export   activity. Surprisingly among all these study  review there are very few that has been dealing  

with digital service production and delivery  and its its in its implication for innovation,   the division of labor innovation and  KIBS organizational and sustainability,   so the the the the webinar today deal with a very  very important and under-researched topic in KIBS   research at least in KIBS in the uh at least in  KIBS innovation research. So if we move on now to   the core of the uh the the the presentation and  the the webinar, so the key question now that   arose from uh from the researchers how COVID-19  will affect the macro picture let alone the micro   level in other words how KIBS innovate and what  new challenges and changing pattern in their   business model and environment will be affected by  both post COVID - sorry there's a mistake - world.   Of course there's the lazy answer to that question  and the lazy answer will be that finally there's   no answer to this question because we don't know  yet what would be the post pandemic situation   because we're still dealing with the  situation at the moment and we're not   even, though we see the light at the end of the  tunnel, we're still not managing the end of we're   still into this crisis and so we don't know how  it will affect innovation and business model.   However, as academic we have to sometime to  figure out about how to to not to speculate   but to try to provide some tentative answer based  on previous research and even if we don't know,   we can certainly pretend that we know  something that will may be different in   the possible implication of this new reality but  we don't know specifically specifically which one   because there's up today to my uh to my knowledge  there's with the exception of uh Ian's study   who will present some preliminary data in his  presentation, there's no study that have dealt   specifically with the application of COVID-19 on  business innovation model in in KIBS industry. So I would like to share with you some five  observations based on my understanding of   the possible implication of covid on KIBS  innovation. So the first and f uh the first   my first observation concern the uh you  know innovation in KIBS we can see or we can   observe that covid will have we can have  some positive implications for KIBS.  

We can see that there will be an evolution of  demand and KIBS can play a role in this evolution,   for instance for example the health sector will  certainly experience an increase in demand for   example for vaccine, for new treatment and for  various health protection to solve the pandemic.   Second example, the lockdown of social  distancing measure also leads to increased   demand for digital tool for work, for instance  work from own application uh works exchange in   terms of virtual meetings too, research and  the provision of virtual services and in such   cases KIBS can play a key role. Second point is  that the COVID-19 will have greater opportunity   relate to the transformation of digital  technology and tools, big data analytics and AI   of course the um this observation is quite  interesting because with the the wider uptake of   the digital technology application as well as the  big data and AI tool during the COVID-19 crisis   may result in specific uh in any sorry in an  increase for instance of in the digital innovation   that will be growing demand of course for  a digital application and this as I say uh   will help from EL services  or to virtual conferencing   and different and different tool and so forth  in order to uh to allow this new uh activity   to operate. Uh there will be more activity and  collaboration that will may be held virtually,   so KIBS may provide and contribute and  support the tool and the services necessary to   these activities to perform and to  perform this activity in an efficient way. However, these new opportunities for this evolution could be also impact by  the market uncertainty and the decrease in   demand. Of course the impact of covid on the  supply of business innovation are primarily   due to the implementation or lockdown of social  distancing measure which could result in a lock   productive and research facility, reduce of course  the productivity, reduce the productivity of   worker and also limit the opportunity for  the worker to connect with others, okay.  

The uh my second observation relates to open  innovation or the way KIBS will interact   with uh external organization, clients and uh and  other organizations. First observation could first   application relate to customer relationship. Uh  KIBS, for instance, with their project business   model will have expect to lost some of their  consultant loss of their worker therefore in   this time of crisis they could instead have built  to have a better long-term relationship with their   current client and deliver more how can I say  productize project and deliver project remotely,   so based on this new situation, some KIBS will  even try to standardize or projectize their   project knowledge their project knowledge sorry  and try to shift into platform business model   in order to continue to maintaining these customer  relationships but also in order to delivering   the project and the services remotely.   The other observation about the interaction is  about collaboration. Of course COVID-19 have  

challenged global collaboration, demonstrate  its importance, now we can with the of course   with the extensive restriction of traveling  and in-person and in-person interaction,   of course the covid-19 has to some extent  interrupt the mobility of human resource   to interact, to exchange and to to explain and to  see each other in order to uh to to to exchange uh   knowledge and to discuss about different projects.  Of course some team or some KIBS officially   utilise digital tools and continue their join  point despite this important con important uh   important contrast, but a key question that  emerged is about the geography of these and   the importance of geography of KIBS collaboration  interaction with client and users and the extent   to which - I don't have answer now - the the  answer to which digital tool can compensate   for the absence of face-to-face interaction. If I  move on on the impact of KIBS sectoral difference,   we can also observe or we can the COVID-19 sorry  crisis may result in a widening gap between P-KIBS   and T-KIBS and C-KIBS, creative KIBS, why? Because  these KIBS, these different KIBS do not benefit at   the same level from the digital tools and some of  these KIBS will have more will be more uh will be   positive impact but this increase about the use  of these digital tools whereas other may be more   uh more more affect by this negative impact of  decreases that those tries to during the pandemic.   I can say for experience the creative KIBS has  been severely impact, at least in the case of   Quebec and in the case of Canada, I can just give  you an example, my wife my wife is working in the   event and advertising industry and the 13th of  March 2020 everything stopped, her contract for   the entire year stopping in two hours that  every our customer just stopped the contract,   so there was not much going on. Of course there  was new activity related to promote new events   online but it's of course some of these sectors  have suffered uh by the COVID-19 crisis.   At the same time the dynamics of some KIBS  and the demand for a certain product may   help sustain new innovation activity beyond  the pandemic and also support the wider in   ecosystem in dealing with the crisis. For instance  the demand for digital services may not only offer  

opportunities for digital company or T-KIBS but  also for P-KIBS to offer innovative services   that satisfy or that will satisfy new demand, so  now our key question is to understand about his   for P-KIBS we will observe post-pandemic  a new shift towards digital innovation.   So I don't know if I have two or three  more minutes, this is the, okay this is why   Muthu I see you, so I have two - that's fine.  Okay give me five more minutes and then uh   I will go quickly on the next quickly on the next  one. So the fourth the fourth um observation is  

about the geography of KIBS innovation, so we have  to rethink the homology between the usual place   of work and the location of economic activity  of course. Uh latest work of Richard Shermer   showed that actually KIBS are highly affected  by this shift toward working working at home,   which is constantly higher in in  in services as compared to other   sector, so if KIBS add up a more vibrant model  that means in person or remote working then it   will become clear even to casual observer that  economic activity does not necessarily occur   as a usual place of business is that does that  mean that this it's the death of distance,   so this question that's remain it's it's that  is this activity removed from other occurrence   other location? If this is the case, which  reason, place location will benefit the   most of this transition or this post COVID  uh uh or this post this post COVID venture   and my last observation before I go to the  conclusion it's the importance of being there   and this raises an important question knowing  that the issue of trust is significant to   understand how KIBS function, how KIBS operate  and how KIBS transfer knowledge to their client,   so trust with clients are very important,  so now one question that remain   is how trust can be developed without face-to-face  interaction or frequent interaction with client.   Another question that's remain open is like  what dimension of trust are important and   which step on the delivery process which step of  the daily process trust will remain important? So to conclude my uh I still have two more slides,   so they're still very open question that could be  the base of research agenda in the near future.   The first one of course as a geographer, I'm  biased, is how to geo-localize innovation in KIBS.   Do we geo localized innovation and KIBS from  home, from the office, from the headquarter,   from the cafe, where the highly skilled worker  work, from the transport network where when he's   traveling, so this is an interesting question in  terms of the the geography of KIBS innovation is   to understand where we should now geolocalize  innovation. The second question is how do KIBS   innovate without face-to-face and frequent  interaction with client and ecosystem actor.  

As I say and as most of the work show, trust is  important, being there is important and firm by   being in certain location benefit of those  aggravation economy but not having access   to those agglomeration economy and externality,  how do KIBS will benefit of these uh different   elements? Third question is like what are the  dynamic identification of hybrid model and more   digital services production on KIBS innovation?  As I say we know little about these specific   dimension of KIBS business model, so more of  course more research is required to better   understand the hybrid model and to what extent  this event model impact on KIBS innovation and and   and KIBS performance. And the last one is of  course what's the geography of this connection,   can we see a a different original or special  pattern of these kind of hybrid model? You   know will this even model concern more than the  most dynamic firm which often are concentrated   and located the most dynamic region, but what  happens what will happen for the other region   who may have difficulty to implement these kind  of hybrid model? Okay and to conclude and sorry   if I take uh uh too much time, does COVID-19 has  changed the rules of the game in KIBS innovation   research? There's three possible scenario that  needs of course to be temporarily analyzed. Of   course we can see this as a revolution, uh so  if we see this as a revolution so we will expect   that COVID-19 has radically modified innovation  and business model in KIBS, I'm not quite sure   that what we're facing now are dealing with it's  a revolution. We can see it as a booster, you know   so COVID-19 in such case as accelerated processing  and practice that were already in place, hybrid   model and digital service innovation, for example,  or we can see this as a weak game changer:   without denying the impact of COVID-19 on KIBS  innovation and business model, these change are   rather incremental or minor and have a weak impact  on KIBS practice and product, so to to answer   the the to the question whether COVID-19 and post  change certainly yes but I cannot provide specific   answer to this question since more work has to be  done in order to understand actually how KIBS has   cope and deal with COVID-19. Thank you very much  and I apologize if I have taken too much time. Thank you very much, David and and you  set the scene very nicely by introducing   the key characteristics of KIBS as well as  linking that with the potential hybrid models   to ask very specific questions. This is amazing.  I think now this will offer a Professor Ian Miles  

to perhaps respond to these key questions,  especially because Professor Ian Miles has   done specific research on KIBS in the context of  COVID-19. So we are very much uh looking forward   to hearing from Ian about perhaps the responses  to the questions you raised and more broadly what   would be the post-pandemic new normal for KIBS, so  Professor Ian Miles, the floor is opened for you.   Thanks very much Dr De Silva, um I'm very happy  to be here um it's uh difficult to follow that   uh great presentation from David uh and taking  us off into realms I know very little about like   the geography issues which are obviously really  really interesting ones to push you further. Um   okay let me try to get my content going, um so  PowerPoint slideshow, here we go. Um so I I have   had to look at KIBS and the crisis, the pandemic-  hello my picture seems to have gone again. Um  

we still share yes we hear you, we see  you as well as we see your slides. Okay   good, uh for some reason I can't see my slides  now, they've disappeared for me, um but I what   I will do is um turn um to the uh slideshow  itself and then I guess I can watch that. Okay   so here we go, can you still see my  slides? Yes. Right, excellent well um   I was engaged with Russian colleagues on  a series of studies of KIBS where we've   mostly been working on secondary  data on published official statistics   and we couldn't help but realize that the agenda  was changing very much as a result of the crisis   and I was also confronting this through a  knowledge transfer partnership that I've been   involved with, where we were looking at and  assisting digitalization processes in a very   innovative legal services firm um and the pandemic  struck and we could see how this was affecting   the innovation process that we were part of  in that firm um so in order to look at this I   first of all would like to suggest  a very very general framework.   There are three different sort of elements of  what I will call the corona crisis, the pandemic:   there's this sort of epidemiology, the  virus, the diseases the virus causes,   they're spreading the population and there and  that has some impact in its own right. Um you know   suddenly um people start wanting to buy uh all  sorts of medicines, for example, as a result of   this um there are policy responses, um government  actions, especially with regard to health services   but also restrictions on travel and  insistence on social distancing and the like   and then there are the socio-economic  impacts of that firm's seizing business,   being unable to pay debts, people out of work  or unable to pay rents, things of this sort   um and these are all these three elements of the  corona crisis are shaping business conditions,   um they'll be shaping the pattern of demand for  goods and services, they'll be shaping the ways in   which businesses can carry out their work, their  production, their delivery of goods and services,   their coordination of activities across  the supply chain, um so it's very simple,   simple framework but um I find it quite quite a  helpful one and if we think about the case of KIBS   then you know we can see in terms of the patterns  of demand the picture is very very mixed um   overall. The statistics that are currently  available put put together you know all of the  

uh professional technical and scientific services  uh which is KIBS, not all KIBS but most KIBS   um and we see uh a sudden drop of in demand for  them um 2019, 2020 um a measure of recovery but   a huge drop at least three times the drop that we  saw during the great recession of 2009. Um uh and   as David said you know sectorally, advertising  were immediately very badly hit um but um   the drop in demand for KIBS wasn't unusual, many  sections of the economy actually experienced a   far worse drop, we're very close to the  in the UK the drop for KIBS is very much   in line with the drop for the whole economy.  Um and we know that some KIBS sectors   have suddenly become winners, um they've  had vastly increased demand and um where   there are share prices involved share prices  have been shooting up for some of these firms and more generally um KIBS are in the business  of providing solutions to business problems for   their clients and certainly their clients have  got a heap of new business problems have emerged   on them as a result of the corona crisis um so  that raises um the question of well what are   these new problems and how it keeps confronting  them and in particular there's a question which   I've only scratched the surface of - if they're  confronting new problems, they might need to have   new competencies. How do they acquire these  new competences? Suddenly in order to do this okay and then in terms of their own processes,  um KIBS uh well they do face the problem that   you know they actually very dependent upon expert  knowledge in some of the KIBS sectors at least   there are senior people around whom teams work and   some of those senior people may have  themselves been incapacitated by illness,   more generally there's disruption of travel,  some KIBS sectors are very travel intensive,   consultants pride themselves on being the most  highly traveled of all industries, for example,   um there's disruption of face-to-face encounters,  which affects how they conduct their business um   both in terms of client relations and how  they conduct their business internally   um and for some KIBS um we don't think of this  as the main um but some KIBS actually depend   very much upon physical technologies, physical  facilities, infrastructures and things like that   like some KIBS run laboratories, for example,  um how laboratories work is something um that's   proved very problematic in the pandemic. Some  laboratories have shut altogether, um some have   already robotized quite a lot of their activities  so they can continue doing that, many will have   had to institute some extra hygiene measures  um if they can continue working like installing   screens between workers or taking in turns to  use apparatus and to disinfect the apparatus   between use, all of these sorts of things going  on um so what I'll do very quickly is just take us   through some of the different sorts of KIBS um and  their activities and as David said you know we can   divide kids up roughly into those based upon more  technological knowledge so it's based on more   social and professional knowledge and those based  on more cultural and creative knowledge, P-KIBS,   T-KIBS, C-KIBS, for example we can identify  them with particular statistical categories   um as you delve into it you find that there's been  some divergence between the European NACE system   and the north American NACES system and some of  that divergence um creates all sorts of problems   like one particular problem the information what  I call the information data processing sector um   in the European NACE system um that is mainly a  business service but in the American data that   will include a lot of services that are more  consumer services and like Google, for example,   um so maybe the maybe the just definitional  challenges are coming back again   in a big way but in general I don't think it's so  difficult to identify the KIBS sectors these are   almost entirely sectors dominated in the US in  the United States at the least by private firms um   who the bulk of whose business you know  well over 70 percent of whose business   share of business is directed towards other  organizations, not towards final consumption.   Um some of those other organizations of the public  sector as well as private businesses, they're   sectors of the economy where the share of the  labour force which has qualifications such as   academic degrees um is exceptionally high,  um the only sector that I think is higher is   universities, in fact, higher education education  in general, medical services also have very uh   very expert weighted in their workforces, other  sectors of the economy much less so, next one   down is telecoms and finance um you have to go  a long way down. Okay so some firms experience  

increasing demand um these firms may also have  increa ever experienced problems but um one   of the smaller sectors but one which statisticians  have pulled out because policymakers are very   interested in it for innovation reasons is the  sector of research and development services. Um   oh I've gone back, I've gone uh on the slide,  yeah um research and development services and   uh while there are research and development  services actually active in all fields,   uh where there's any interesting  and commercially strategic knowledge   frontier and there are two that are particularly  important here and one is biotech firms,   many of these are service firms, some involve a  bit of manufacturing and some of the service firms   want to go to manufacturing. Moderna, for example,  has become a big vaccine manufacturer spun off,   well not spun off, started independently of their  universities by Harvard professors and so on um   and we see firms like Biontech in fact uh well  Biontech in particular um we all know that   develops a coronavirus vaccine um Facutec is  associated with Oxford and Astra Zeneca but has   stepped back a bit from this particular activity.  Synergen University of Southampton spinoff  

developing technologies for rapid development of  anti-viral agencies uh to into the human lungs,   for example, there are many many firms,  you'll be amazed how many firms are active   uh in in in this industry at  least I was amazed let me say   um these firms are obviously engaged in a great  deal of rapid innovation um in developing medical   treatments and developing new techniques um  such as techniques involving gene editing and   gene modification and things like that  in order to create new biotech products but there's another important industry here  as well, the clinical trials industry, what is   typically called contract research organizations  although you know you would think that would be   a wider term than that um so these this is the  industry that's developed independent of the   main pharma firms which also do this um to conduct  clinical trials and what is happening right now of   course is a huge number of clinical trials going  on and that's just a few of the firms involved in   this sector often big transnational firms um uh  engaged in these activities um and um you know   clearly very, very important players and you know  when the dust is settled we will um be learning   a lot more I think about the different sorts of  knowledge and the operationalized and demanded by   people doing different sorts of clinical trials.  Um obviously some of the problems that the Astra   Zeneca Oxford vaccine have encountered were due  to them adopting clinical trial procedures um   that didn't quite follow those which the standard  pharma industry has long developed. Um these firms   are ones where which encounter problems to do with  physical facilities, laboratories, um or running   clinical trials while maintaining social  distancing, um and if you go on their websites,   you will practically on all of them find some  sort of statement about how they are handling   these issues, how they have basically innovated  their processes to deal with these issues. and then the other major winners in terms  of firms have experience a great deal of   demand of course are those supplying digital  services and allowing uh the rest of us to   undertake this transition towards doing  what we're doing right now, using Team,   using Skype, using Zoom and all of  these other tools and techniques   and there's a great upsurge in use of these  techniques. Of course there's been the appearance   of new firms, there's been heavy competitive  pressure on existing firms and again you can   sort of follow in the industry press in magazines  like Computer Weekly and the like um about how the   companies active in this area are responding in  terms of uh introducing new services, in terms of   um trying to ensure that they're keeping up  with their competitors in this area and so a big   increase in demand challenges from that because  they've had to scale up considerably to deal with   that increased demand um uh and and tighter  competitive pressures in this field and then less more under the radar um we can see a great  deal of activity going on in quite a lot of other   KIBS sectors in order to help their customers deal  with the problems that they're confronting as a   result of the crisis and and in particular design  services that can help support the redesign of   buildings, of hospitals, of probably of equipment  and facilities as well um to support hygiene,   to support social distancing, for example um being  involved in the work with the legal services firm,   we could see suddenly there's a lot of buzz going  on about what was going to be happening in the   areas of litigation around uh the pandemic,  um occupational health and safety issues,   insurance issues, all sorts of things of  this order um are going to come into play   and what we see immediately on the um web pages  of these companies and one of the bits of work   I did with my Russian colleagues was looking at  some web major web pages um a professional clips   um they're starting to uh basically um provide  free information to clients about how they can   deal with regulations, how they can deal with  new challenges, um how they can for example um   uh advise their customers about furlough  schemes and things of this sort,   so clearly putting marketing themselves um  as experts in these areas um as part of a a   strategy of confronting the new sorts of business  problems that appear in this field um and then um   in particular in the UK um we can see the use of  this by politicians but apart from in politics we   know that many uh firms are re-branding themselves  or um creating messages of their own around   um uh compliance with or sometimes evasion  of um regulations uh about social distancing,   about keeping safe, about washing hands, all  sorts of things of that order um those of us   living in Britain will no doubt be aware of  some of the scandals that have arisen around certain political leaders' use of certain KIBS who  specialize in market research and public relations   to help promote their messages um and even  inform their policies about dealing with   the corona crisis. So that was some  thinking about um issues and patterns  

of demand and I think I've only touched on  the surface of the new sorts of demands that   will be encountered or are being encountered  indeed by um customers of KIBS and that   that those KIBS are um striving to deal with and  striving to demonstrate their ability to deal with   because these are potentially very fruitful  areas for them to be working in the future. So now I'd like to just very very briefly  um take up again the things that uh David   discussed about some of the challenges that KIBS  themselves face um in dealing with um uh the um especially the regulatory issues  that have come up around the   corona crisis and um let's focus just on this  issue of face-to-face uh interaction, um which   is in the past been extremely important uh for  trust building as David said, trust building goes   well beyond the sorts of things that we  normally do effectively using video conferences,   there's all sorts of things like meeting over  lunch, meeting over a drink, watching other   people's non-verbal cues and things of this sort  that play an important role in trust building   and - nope uh have you have I lost my my  slideshow? Um no, Ian, we can see. Ah,   suddenly I've lost it but maybe that's  just because I've okay here we go again. There are two there are two two important issues  to the disruption of face-to-face interactions,   it seems to me, and one is on how  KIBS conduct their work internally   um because very often KIBS work in teams,  they're very often they're project based   organizations who work together in  teams built around particular projects and the teams have to communicate and they  have to share all sorts of insights about   the projects they're working on and the team  working is typically a very important way   in which knowledge is managed in the organization   and in which newer and junior staff members are  brought into the organization, are socialized,   are trained, learn the methods  of practice, gain the expertise,   um look get the know-how and the know-who  within the organization um and those things can   some of them can fairly readily be moved online  but some of them are of course very difficult to   do so because online meetings typically are under  time pressure, social constraints of various sorts   which face-to-face interactions aren't. There  may be some advantages to this, um some sorts of  

social interaction may be harder to move into the  online environment and some of the more oppressive   sorts of things may be harder to move online,  yeah but many of the uh more informal bits of   knowledge management are problematic there and  we know there are famous cases of some kids that   have long employed uh social media, internal  sort of in-house social media as ways of um   encouraging this informal knowledge interchange.  And then the second issue is the interaction   between KIBS and clients um and David put a  lot of focus on this, KIBS as problem solvers   for their clients. Interaction with the client  um typically, not always, but typically takes   place several times and often many times in the  course of the project and when you're hearing   the initial client's presentation of the problem,  you're discussing what the problem actually is,   you're working out possible solutions for it,  you're deciding which solution to try to go with,   you have a trial, you go further with that  solution, you implement it fully, you do a   proper evaluation of it, it can be a very lengthy  process um in some sectors. Um another case in the   advertising uh industry where people have broken  down this process in a workbook um and they have   14 or 18 different steps uh that are involved in  the course of providing the service to the client   um and this can be extremely important,  I think it should not necessarily be   overstated although we know that KIBS are  one of the most if not the most customized   uh parts of the private sector of the economy.  When we do survey studies, it looks like you know   as I said the data in the results  here we did a survey of uh   American and British firms recently upon us  to sell us and others and um we asked firms   you know what share of your output is one-off  services, partly customized, heavily customized,   completely standardized services, um and only 20%  of the firms said that most of their output was   one-off services and as many as 50% said  most of our output is standardized services.  

Um so the more standardized you are, well perhaps  the less face-to-face interaction you need to be   having um it may be a matter of we are provided  with the firm's um data and we process the firm's   data and return it in a process form back to  the firm and that can all be done digitally um and David sort of talked  about the move to platforms   and I think what we often see when people  talk about minor degrees of customization   is that they have a platform and customers  are encouraged to choose elements of the   service they want from that platform  from a series of modules on the platform what we see- Sorry to disturb you, this is a really interesting  flow of arguments and predictions but will it be   possible for you to wrap up in about maybe two  minutes? Yep I'll I'll just about wind up now.   Thank you so much. No problem, um just two things:  one piece of evidence we have is that this is the   UK NACE KIBS classification, except  the computer services which are here,   um uh we see that this is one of the sectors which  is most um during the corona crisis most went over   to um uh homeworking. The information services  sector was the sector that went over most heavily   and when people in KIBS asked about um when  people across the economy are asked about   are you planning to use homeworking as a regular  method in the future now um they're also among the   highest sectors so over 40 percent of the  KIBS firms sampled in the UK this year um   were saying that uh they will plan to use a  great deal more homework in their future, so just   so I I anticipate that we're going to get  there so just to say on the basis of the um uh study that I did with a study that I've been  doing in the insurance firm in the law firm and   my um understanding of uh what's going on on the  basis of reviewing literature and things like that   is that the immediate impact of the corona crisis  has been that a lot of ongoing digitalization   has been frozen um because the firms have had to  put all of their effort into converting themselves   to this remote working model, so  digitalization of communications,   digitalization of existing operations without  really changing those operations, all that much   has become the norm. We digitize our meetings,  we have the same meetings that we used to have   but we digitalize them um maybe a lot more work  for people. We move a lot of things to the cloud,   we use cloud services and the like um and some  of the more advanced things were stalled and   partly they're still because it's harder to do  the innovation when you're in a social distance   setting, um it's harder to roll out something  new and have it evaluated and things like that   but on my assumption would be that what we are  likely to see in the future is both a resumption   of those past efforts to create more digital  um AI and data analytics and the like   applications within campus processes and  a process of learning about what we can do   uh using online communications instead of  conventional face-to-face communications   um and those of you that do service research  will know the Barrous model, Barrous   um basically proposed that people apply new  information technology to their processes   and then they learn that they can do new things,  they don't have to just apply to their existing   processes and they can introduce new services and  I think that sort of picture is something that's   likely to happen very much as well um so the  picture is liable to differ across different   sorts of um I think we probably will see a bit  of a melange of David's three scenarios as well   but I would anticipate that we will  see a big upsurge of innovation um   in coming years as we move away from the  forced rapid innovation associated with the   immediate crisis and people are able to  take stock and consider how far they've   learned new things which should inform the way  they go about digitalizing their businesses.  

Okay sorry to take too long off, I'll  finish at this point uh and uh um uh hopefully I haven't gone on so  long there's no time for discussion.   No problem, this is super interesting and really  great reflective thoughts around what will be the   post-pandemic new normal for KIBS and thank you so  much. So I think we have overrun by three minutes   but that's absolutely fine so and again we have  a very rich audience comprising a people from   universities, businesses, policy makers as well as  intermediaries so I I I'm just wondering I whether   we should first go for the word of thanks and then  perhaps then we could stay here if if the audience   could stay with us we could have a conversation so  I've uh because some of them might have to leave   as well but I I think what we have here is a very  rich material for us to take home and think more   broadly because this will definitely influence  the decision taken by KIBS as well. So I uh with  

this note, I would like to invite Professor Suma  Athreye from Essex Business School to deliver the   word of thanks, but we will keep the floor open  so that we could actively engage in conversation   uh to those who can stay with us, over to you  Suma, thank you so much again Ian and David. Uh Suma you are on mute. Yeah so let me echo Muthu's words uh a lot of  material um very interesting set of conjectures   in about what's going to happen in the future  with KIBS. I just want to thank both of you for  

taking time, especially Professor Doloreux because  uh David am I pronouncing the name right? I hope   um because you were going to go off on holiday as  well so uh thank you for taking the time out and   uh speaking to us and as Muthu says, you know,  we do this word of thanks but I hope that there   will be a discussion now um from the audience  and questions and answers so thanks very much   to both of you for for coming and spending your  time and sharing your thoughts thanks very much. Thank you very much. If that is okay with David  and Ian we will have a little bit of a discussion,   because we have very rich audience  here uh with us today. Is that okay   David and Ian? Okay thank you so much so, if the  floor is open for any questions, suggestions,   views around this amazing and very insightful  information and discussion we have just had. Um can I start with something Ian?  

Uh so you know I I found uh the  the discussion of the various uh   factors that would influence the KIBS growth quite  interesting but I could not understand whether   you know which do you think is  going to have the greatest impact,   so of the three types of KIBS sectors,  which is likely to be the most   adversely affected by covid and which is likely to  be the most beneficially affected by government? So given that covid has implied social distancing,  inability to meet face to face, people have tried   to work around it but you know there are still  uh there are still some constraints so which   do you think is going to gain from this set of  circumstances and which do you think will lose? Well an immediate thing is you know the  information technology related services uh have   gained - yeah and they're also hiring - yeah and  yeah I think I think they will continue to gain   um uh exactly what that means though in terms of  the preponderance of big firms and smaller firms   and things like this uh I I'm rather reluctant  to say. There's a sector where there has been   a a great deal of um um what  was the word oligopolization um operating systems and platforms  and things like that um   and I I doubt that that is going  to be challenged unless we get some   in the past I suspected we would see a new  challenger from China but um right now that   doesn't seem to be geopolitically very likely um  the uh however all KIBS have a very very long tail   um and uh I think in in um this instance  we're liable to see a fairly rapid   process of um consolidation of that tail of  lots of smaller actors merging or working   maybe maybe doing it in more informal networks but  working together because firstly demand is high   but secondly demand will be challenging for  them and they will need resources they don't   immediately have and if you think how do  you go about gaining new competencies,   um well - steal somebody else's staff I think  is done - yeah that's right recruiting people,   um training your own people, that's not so  popular, but uh it does um sending people   on video courses was happening a lot uh during the  pandemic um uh but also working networks you know,   subcontracting to KIBS um is actually uh a way  of doing this and I I would not be surprised if   we remember that you people used to talk a lot  about the virtual for the virtual organization   the virtual firm which is basically just a network  of businesses um I wouldn't be surprised if we see   quite a lot of that model uh coming into play  in the T-KIBS right other the other sectors um   I really don't know about the C-KIBS  I think they're so varied you know   the design services of all sorts you know  are going to have to adapt very rapidly,   that's going to be really challenging for  them, I think um I mean you can see a lot   of noise about this going on in the  architecture uh industry as well um so there you know there there will certainly be  demand I mean again you know we're going to sort   of futuristic speculation um but uh I don't think  the the pandemic is a passing thing, I think we uh   uh uh are going to have to build societies  that are more resilient against pandemics   because there are going to be future pandemics  and even um you know it's widely believed that   covid is going to be around for a long time  yeah and it's not like the flu, you know   20% or so of people have long covid, 20  percent of people have long-term health damage,   we have we're not going to be able  to say oh we'll just let that go   unlike the flu we will have to have um uh you know  much more hygiene uh built into our infrastructure   in the future. So um I anticipate all all of  the KIBS are providing inputs to that aspect of   daily life will be really working very working  flat out yes to accommodate that demand,   um David you you you have a partner that's in the  C-KIBS so uh you probably know about that aspect   of the industry but - Yeah what happened this  industry but I can only talk from what I have   experienced with my partner it's that it's  like those who has decide to go digitally,   who turn around very quickly, they they capture  most of the businesses during covid but now the   situation is completely the opposite, it's  like those who has transferred to virtual   event or or to try to to do things online are not  the one who can respond now to the new uh demand   because now things are moving back to normal  that means that they're creating more event,   they want to do an in-person event, so those  who has been transferring their model towards   uh virtual towards a virtual model are  not competing against about what demands   about the demand so this is quite interesting so  this is to some extent we're back to square one,   so those who has not responded has not modified  their business model are the one now or more com   or are more able are are are capable to respond  more quickly and more efficiently to the demand   so this is quite interesting to see so this  is why in my scenario when I say about being   a weak game changer, of course there's  the COVID has some clear implication and   some of the industry has been effect uh has  changed radically their business model, but   overall the key question is like are we uh is  this will really be a big game changer or we   will be back to normal, however we will need  as Ian you just raised we will need to adapt   to a more longer process where as covid is just  one among several other pandemics that we will uh   that we will uh but we will we will deal with  so that could be an interesting question about   this. I think now that one of the questions  is that the temporal dimension of the change,  

we haven't talked about this actually uh but  this could be quite an interesting dimension   to look at it actually about this kind of  temporary about the change in the change   of the business model or the  adaptation of the business model.   Good point and and and just one more thing  you took drew the issue of trust to the fore,   David and one thing that I see asserted  all the time in the trade press is that   uh that that is benefiting the established  KIBS firms in the crisis because clients   don't have the opportunity to develop trust in new  services, so they go to brands they know already.   I haven't seen evidence for this but I've seen  it claimed very frequently frequently. Yeah   I have one more question but I'll wait for  others to ask first.Thank you very much, Suma,  

I if you have a question you could unmute and  ask the question or you could raise your hand   uh yes Muhammad. Hello um thank you very much uh  for nice and insightful presentation of both of uh   David and uh Dr Ian um I I actually learned a lot  of things from the presentation and the question   is in the education sector um as David said about  the trust, how can we build of trust because   nowadays uh some countries they start with  online exams and take home exams and other things   so the basic question is how we can build trust  in educational sector and how can we overcome   uh this problem and what are the steps that  we need to take to to build up our trust in   especially the educational sector? Thank you so  much for your nice presentation and thank you for the organizers. Something uh for that  question itself uh when it comes to   trust I was just wondering should we have to  think about digital trust building mechanisms,   so because we are so used to the physical trust  building mechanisms, is it something called   digital trust building mechanisms and is that a  way in which we could still build trust digitally? There is an industry called trust services  which supports the financial sector on whether   creditors are trustworthy or not for example um  that's a long way away from educational services   of course um and also you know we know of  cases of that industry being abused itself um   uh and so we always you know there's no no  simple solutions but um the idea that we could   have uh systems that could at least provide  some level of verification um it is uh is not   impossible. Already there is a very wide use of  plagiarism detection in educational environments,   for example, that's a at university level um how  do you tell that somebody uh answering uh exam   questions or even taking part in a seminar  discussion um is really providing their own   inputs as opposed to ventriloquizing  inputs that are made by someone else? I I guess you know I don't like the sound of  this but you know there's there are a lot of   surveillance technologies being developed you know  technologies to tell whether somebody's speaking   the truth uh for example um I don't like that um  but I can imagine I don't know a lot of things I   don't like which I see being used by educational  establishments, among others, I can imagine that   sort of thing being used as well um uh David and  I both had the experience yesterday of being in an   educational setting where the student had to  show that there was no one in the room with them,   we didn't look under their desk! That that's higher education and I mean I  don't know if the question was specifically   about higher education, things are going  to be a lot harder when you're looking at   other levels of education of course and  I don't know what the answer is but I'm   one thing I can predict is there will  be a lot of innovation going on here. Yes uh thank you so much for the answer. Okay  that's brilliant, thank you, any other questions?

Hi Claudia. Hi hi good afternoon, just to say  thank you very much for - can you hear me?   We can hear you but if you could speak a little  bit louder that would be - Okay um yeah so   I'm trying to find the settings but I okay do you want me to put my headphones? That's  better, no no that's better, we can hear you. Fine   sorry just to say thank you for your presentations  which I found very very interesting and actually   my my point again is about this issue of trust  um I mean I'm not an expert on KIBS so I must   I must admit that at the start but I  wanted to

2021-07-10 13:13

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