And the journey continues…

I ended one of my previous posts by saying that the greatest strength of human kind is our ability to collaborate in ways that well exceeds the understanding of a single individual. Just think of the complexity that characterizes the information-driven modern day society filled with a vast range of continually changing technologies. In order to achieve such complexity of knowledge, humans have had to specialize, that is, to develop specific skills and competences for different individuals and exchange these specialized skills with others. In other words, our knowledge is specialized, yet collective by nature.

How can knowledge by simultaneously specialized and collective by nature? With the first glimpse, it might seem that knowledge resides within a single individual. However, if you think how your knowledge has accumulated over the time, you cannot explain its emergence without accounting for a vast number of people with whom you have interacted over the years – your parents, siblings, relatives, friends, teachers, colleagues and various random acquaintances. In other words, you represent a unique combination of collective knowledge and to make the best use of that knowledge you need to further make it collective by integrating it with the specialized knowledge of others.

In my own journey of accumulating and integrating knowledge, I have had the pleasure to learn from and work with numerous brilliant people across the globe. For the past six years VTT has been my home base from which I have visited other research teams and organizations. Next year I will have the opportunity to enjoy yet another inspiring research environment and new colleagues as the next phase on my journey will take me to the CTF service research center at Karlstad University.

I wish everyone Merry Christmas and success in knowledge integration for the Year 2015!

The scope of collaborative innovation – co-design vs. co-creation of value

Collaboration is the corner stone of success of the ‘human enterprise’ and in today’s world you can’t help stumbling on concepts such as co-creation, co-production and co-design that highlight the importance of collaboration especially when talking about innovation. Hence, it seems that with the help of these ‘co-concepts’ the notion of innovation is finally truly breaking free from the narrow conceptualization that trapped it into the dusky corners of companies’ R&D labs for so many decades. This development is great and should be encourage in all means possible. Unfortunately, it does seem, however, the broader notion of ‘collaborative innovation’ is somewhat held back due to the ambiguity and vagueness of the ‘co-concepts’ used to describe and explain the phenomenon. In other words, all of these concepts have slightly different meanings and scopes due to the differences of their disciplinary origins and underlying worldviews. As a consequence the concepts are sometimes mixed up and used in a confusing manner in both academia and practice.

In this post, I aim to shed some light in the difference of the scope of collaborative innovation when discussed in the context of 1. creating an offering of a company and 2. creating value in service ecosystems.

Usually, co-design refers to the time before a launch of a new offering, in which different stakeholders (especially potential beneficiaries) are involved in the innovation activities of a firm (or a governmental organization etc.). Co-design refers to the process and tools that enable the collaborative engagement of actors (designers and non-designers) in different roles during a design process of a company offering [1, 2]. The research streams relating to co-design highlight the importance of the user and point out that companies should pay more attention to their customers/users of their offering and involve them into the innovation process. However, they often still reflect a company-centric worldview as it is the company, who owns and defines the development process. It produces the offering to the customers, who are involved in those phases of the development that the company finds useful for itself.

Value co-creation on the other hand is a much broader process that can include also the above mentioned phase and actors, but that mainly refers to the systemic effort extending over time and place in which various resources are applied, exchanged, integrated and used by numerous actors in order to create value. Therefore, S-D logic distinguishes between co-production – collaborative creation of a company’s offering – and value co-creation – all encompassing, complex and dynamic process in which actor-determined value-in-context is created. In other words, co-production is seen as a component of co-creation of value [3], which represents the joint activities of the firm and the customer (or other actors) in the creation of a firm output [4]. It can occur through shared innovativeness, co-design or shared production of related products and it can occur with any parties in the value network [5].

While in co-production “customer involvement” is optional, in value co-creation it is unavoidable as there is no value co-creation without a beneficiary (e.g. a customer) determining contextual value through use.

The above text is related to a paper by Pirjo Friedrich and Kaisa Koskela-Huotari presented in CO-CREATE conference in June 2013 at Helsinki.

References:

[1]  Sanders E. & Stappers, P.J. (2008) Co-creation and the new landscapes of design. CoDesign, 4(1), 5-18.
[2] Mattelmäki, T. & Sleeswijk Visser, F. (2011) Lost in Co-X: interpretations of co-design and co-creation. In IASDR2011, The 4th World Conference on Design Research, Delft, the Netherlands.
[3] Vargo, S.L. & Lusch, R.F. (2008) Service-dominant logic: continuing the evolution. Journal of the Academy of Marketing Science 36, 1-10.
[4] Vargo, S. L. (2008) Customer integration and value creation: paradigmatic traps and perspectives. Journal of Service Research, 11(2), 211-215.
[5] Lusch, R.F. & Vargo, S.L. (2006) Service-dominant logic: reactions, reflections and refinements. Marketing Theory, 6(3), 281-288.
 

The Matrix and other paradigms

“Unfortunately, no one can be told what the Matrix is. You have to see it for yourself.” Morpheus

One of my all-time favourite movies is The Matrix. I still remember very vividly the moment when I saw the movie for the first time. I was 15 years old and visiting my relatives in London. I remember being so blown away by it. The trick for me was not the innovative visual effects – though they probably added to the experience – but the story of the Matrix. Could there really exits something so totally blinding that it masks our ability to see how things ‘really’ are? And how was somebody even able to come up with a story like this?

During the last couple of years, I have on several occasions thought of the movie in relation to my research without really been able to articulate why. Last week, when I was reading the first couple of pages of the new book ‘Service-dominant logic: Premises, Perspectives and Possibilities’, it finally hit me why I like the movie so much. It is because The Matrix tells a story similar to paradigmatic change. In the movie the Matrix works basically the same way than a belief system or an institutional logic that is so taken-for-granted that it loses its enabling abilities and becomes overly constraining as we cannot ‘see’ it anymore (if we ever did). In other words, it becomes us. In the scientific community such institutional logics are called as paradigms – and one of these paradigms is referred as the goods-dominant (G-D) logic by Vargo and Lusch.

The G-D paradigm narrows our view on exchange by focusing our attention to units of outputs and manufacturer-centricity [1]. It has long dominated the academia in business and management studies and through education influenced how business is conducted in practice and then through empirical findings been confirmed again by the academia (in other words it is performative by its nature). It is so deeply ingrained in our thinking that it is hard to challenge as we cannot really even acknowledge it. It also guides us to be preoccupied by what Kuhn would call as ‘normal science’ [2].

Fortunately the means for paradigm change are built in the normal science itself through the element of arbitrariness. This means that even in the case of prevailing paradigm there is never only one single and coherent logic shared by all – instead institutional logics are numerous and heterogeneous [3]. As the different logics interact and conflict with one another, they will adapt and change – inevitable these changes will also reach the paradigmatic level of thought and trigger a revolution called a paradigm shift.

In my earlier post, I described parts of my own (r)evolution as a researcher. There was something that I was seeing in my research that was conflicting with the conventional literature on innovation and this made me look for different answers. My search paid off and I was offered with the greatest opportunity of my life.

I chose the red pill and it brought me to Hawaii. Now I am ready to see just how deep the rabbit-hole goes.

References:
[1] Lusch, R.F. and Vargo, S.L. (2014) Service-Dominant Logic: Premises, Perspectives, Possibilities. Cambridge University Press.
[2] Kuhn, T.S. (1962) The Structure of Scientific Revolutions. University of Chicago Press, Chicago.
[3] Thornton, P.H., Ocasio, W. and Lounsbury, M. (2012), The Institutional Logics Perspective: A New Approach to Culture, Structure and Process, Oxford University Press, Oxford.

Why value co-creation?

In this post I want to elaborate a point I made in the end of my previous “Going beyond ‘producers’ and ‘consumers’” post about the co-created nature of value. Why does service-dominant (S-D) logic talk about value co-creation and not about value creation?

In the traditional company-centric notion of value and value creation, value is measured by monetary terms and is something that companies create through production [1]. In this logic value is seen as something that can be embedded into company outputs such as products to make them desirable by the customers. The customers must purchase the products in order to consume the value (hence value is ‘destroyed’ while products are used).

S-D logic abandons the conventional logic and instead, introduces the notion of value-in-context [2], in which the customer becomes an active participant into the process of value creation. Value-in-context eliminates the company’s sole right for value creation by arguing that value actually emerges in the context of the customer when the provided service (applied resources) is integrated with other resources to achieve a wanted outcome. Hence, value is always uniquely perceived by a service beneficiary and it unfolds over time. For example this text has no value on its own when it just exists in our blog. It only becomes valuable when you read it and (if) my thoughts are connected with yours.

Based on this some have actually come to the conclusion that it is only the customer who should be called as a value creator, while the company is left with the role of a value facilitator [3].

This argument is, however, missing a crucial point. Service-for-service exchange is always reciprocal by nature meaning that both the customer and the company are simultaneously service providers and service beneficiaries. In other words, both customers and companies can be seen as resource integrating actors engaged in service provision and value co-creation both for themselves and others [2]. This actor-to-actor (A2A) perspective is fundamental to the S-D logic worldview. It is also critical, if we really want to understand the complexity of the world (and business).

Thus, S-D logic further broadens our view on value co-creation by arguing that service-for-service exchange does not occur in dyadic relationships (between two actors), but in larger ecosystems of value co-creating actors [4]. This means that when trying to achieve a certain outcome you never integrate resource from only one source (e.g. one company). Instead, a huge number of actors, scattered over time and space, are participating in the joint process of value co-creation.

If the idea of value co-creation has not convinced you yet – think of this very moment. In order for you to be able to read my blog post, you need to have a laptop or some other device equipped with an internet connection, some way of finding my text (e.g. Google) and the ability to read (just to name a few things). Can you imagine how many people’s effort has been needed to make this moment of (potential) value co-creation possible? I can’t. The greatest strength of human kind is to be able to collaborate in ways that well exceeds the understanding of a single individual.

References:

[1] Vargo, S.L. & Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.

[2] Chandler, J.D. & Vargo, S.L. (2011) Contextualization: Network Intersections, Value-in-Context, and the Co-Creation of Markets, Marketing Theory, 11(1), 35-49.

[3] Grönroos, C. (2011) Value co-creation in service logic: A critical analysis. Marketing Theory, 11(3), 279-301.

[4] Vargo, S.L. & Lusch, R.F. (2011) It’s all B2B…and beyond: Toward a systems perspective of the market. Industrial Marketing Management 40, 181-187.

Going beyond ‘producers’ and ‘consumers’

Categorization is an important tool in the human sense making process. We often tend to look at the world around us and study things and phenomena by trying to understand how they differ from each other. To a point this is a very good practice – it enables us to organize the chaos around us. However, there is no ‘one best way’ to categorize. Hence, as our understanding of the world and of ourselves grows, we need to reframe the categories we use for interpreting the world. This is when the challenge arises. The ‘traditional’ categories are so deeply ingrained in us that they become more of a constraining force than an enabling one. They hinder our ability to see things in a new way.

One of the aims of service-dominant (S-D) logic [1] is to make us to see beyond the traditional categorizations that constrain our understanding of marketing and business in general. It does this by offering concepts that transcend the conventional categories we use in our everyday lives. One of these is the concept of service – applying your skills and knowledge for the benefit of another – that overcomes the separation of products and services (for more information see my previous post). This time, however, I’m going to focus on another conventional categorization – that of dividing the world into ‘producers’ and ‘consumers’.

If exaggerating a little – and a little really is enough – the traditional story goes like this: the world of business consists of ‘producers’, who make things of necessity and value, and of ‘consumers’ who buy and consume these things and then come back to ask for more. In other words, the ‘producer’ is seen as a creator of value and the ‘consumer’ as a destroyer of value [2] (or at least as a very passive participant of whatever is going on).

Instead of this imbalanced and one-directional logic of business and value creation, S-D logic suggests that all actors, such as individual people (me) or groups of people like households (my family), companies (my employer, grocery store, cell phone manufacturer), etc. actually are doing fundamentally the same thing: engaging in exchange to create value for themselves [3]. This is done through offering service – the application of my knowledge and skills for somebody else – in order to receive service – application of other person’s knowledge and skills for my benefit – in return. In the modern world this direct service-for-service exchange is often masked by money (the right for service) as the service that I can provide is not what the person or persons, whose service I would need, really want. Instead, I work (provide service) for a company, who pays me money by which I can acquire service from somebody else. It is this thick soup of service-for-service exchanges that creates the complex systems of interconnected actors that co-create value together. Why co-create? Because, whether we want it or not, none of us could do it all by ourselves.

References:

[1] Vargo, S.L. & Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.

[2] Vargo, S.L. & Lusch, R.F. (2011) It’s all B2B…and beyond: Toward a systems perspective of the market. Industrial Marketing Management 40, 181-187

[3] Vargo, S.L. & Lusch, R.F. (2008) Service-Dominant Logic: Continuing the Evolution. Journal of the Academy of Marketing Science 36, 1-10.

Northern Service Day 2014 – saman tien lähes 250 ilmoittautunutta

Muutamassa viikossa 30.1.2014 järjestettävä järjestyksessään toinen Northern Service Day -tapahtuma on jälleen herättänyt suurta kiinnostusta – tilaisuuteen on ilmoittautunut lähes 250 osallistujaa yli 130 yrityksestä – ja ilmoittautuminen jouduttiin sulkemaan etuajassa. Mikäli et vielä ole varannut paikkaasi tapahtumaan ja olet kiinnostunut peruutuspaikoista, laita sähköpostia osoitteeseen teija.jarvinen(at)vtt.fi.

Meillä on siis tupa täynnä ja uskomattoman hieno palveluajattelun ilotulitus tiedossa tammikuussa! Mukana menossa muun muassa nämä mielenkiintoiset puhujat:

Lauri Antila, JOT Automation JOT:n paluu, episodi 6 tähtiyritysten kilpailussa. Amerikkalainen Frost & Sullivan palkitsi Oulunsalossa pääkonttoriaan pitävän JOT Automationin parhaasta arvontuottamisesta asiakkailleen. Lauri kertoo tilaisuudesta työstä, jota yrityksessä on tehty menestyksen saavuttamiseksi ja ylläpitämiseksi.

Aki Mursu, Kauppuri5 Superhero burgerilandiassa. Oulun ravintola-ala on hyvin kilpailtu. Kauppuri5 ravintola on kuitenkin yllättänyt suosiollaan. Aki kertoo yrittäjän näkökulmasta miten tähän on päästy, millaista visionäärisyyttä ja verkostoissa toimimisen taitoja tämä on yrittäjältä vaatinut.

Lauri Salovaara, FilmMe Oy Start-up rodeoratsastaja. FilmMessä on keksitty jotain hyvin lupavaa alalle, jossa teknologiaa ei ole perinteisesti hyödynnetty palvelutoiminnassa. Lauri kertoo tarinansa siitä, miten he ovat alusta asti toimineet rohkeasti verkostoissa ja aloittaneet palvelutuotteensa markkinoinnin jo ennen kuin tuote oli viimeiseen asti hiottu ja valmis.

Olli Löytynoja, BusinessOulu Oululaisessa yrittäjyydessä on uskomaton voimavara joka näkyy kekseliäisyytenä ja liikeideoina – valmiina maailman valloitukseen. Takana on menestystä josta opitaan koko ajan uutta. Maailmalla mennään sinne missä asiakkaat ja markkinat ovat. Olli on liiketoiminnan kehittämisen rautainen ammattilainen ja työskentelee BusinessOulun asiakkuuspäällikkönä. Olli kertoo erilaisista tavoista ja esimerkeistä paikallisissa ja kansainvälisissä verkostoissa, joissa pohjaa menestykselle työstetään.

Satu Miettinen, Lapin yliopisto Palvelumuotoilua tarvitaan! Satu on yksi palvelumuotoilun edelläkävijöistä Suomessa. Hänellä on erittäin laaja kokemus erilaisista tosielämän tapauksista, joissa palvelumuotoilua on sovellettu verkoistoissa toimimiseen. Yritysyhteistyön lisäksi Satu kehittää ja opettaa palvelumuotoilua niin kotimaassa kuin kansainvälisestikin.

Marja Toivonen, VTT Palveluinnovaatiolla maailmalle! Marja on yksi palveluinnovaatioiden rautaisimmista ammattilaisista Suomessa. Marja tuo Ouluun viimeisimmät terveiset maailmalta! Marjan oma tie lähti liikenteeseen Sirkan kylästä Lapista ja tällä hetkellä hän työskentelee professorina sekä VTT:llä että Aalto yliopistossa. Lisäksi hän toimii EU:n komissiossa korkean tason neuvonantajana.

Tammikuuta odotellessa blogimme toivottaa kaikille erittäin nautinnollista joulun aikaa!

Digitization makes ‘service’ visible

In one of my previous posts, I wrote how service-dominant (S-D) logic enables us to see that it’s really all about service, and also that what we are witnessing nowadays is not so much a services revolution but a service realization. How has the world changed then? And what is it that enables us to see service-for-service exchange more clearly today?

One of the main reasons for the service realization is the evolution of technology, and digitization in particular. In his book Richard Normann [1] talks about dematerilization, i.e. how digital technology is enabling the separation of knowledge and information from the constrains of the physical world. This does not of course mean that information will flow without any physical objects − on the contrary, complex infrastructure is needed but once the infrastructure is in place information is able, at least in principle, to travel with infinite speed and to exist everywhere in real time. Hence, the tremendous impact of technology is in its ability to loosen constraints and by doing so to increase density for value co-creation by making more resources available anytime and anywhere. In S-D logic’s terms digitization enables service (applying knowledge and skills for the benefit of others) to break free from the physical service vehicles that were needed before to support service provision [2].

So what does all this mean in practice? Last time I gave you an example of how, based on the traditional logic, me telling you my thoughts face-to-face or via a book changes the nature of my ‘offering’ from a service to a product. S-D logic, however, would actually argue that I am applying my knowledge for somebody elses benefit, i.e. providing service, in both cases. This service it can be provided either directly or indirectly (through a tangible object).

This example was okay, but not really what I did, right? Instead of telling you my thoughts in person or through a printed book, I digitized them. Basically this meant that I wrote my thoughts down in a Word document with my laptop and published them at our blog. I could also have shared them differently, e.g. record a video of me telling this and posting it somewhere in the Internet. If we are looking at all this from the traditional viewpoint and trying to determine whether we are talking about products or services things get complicated. The blog and its contents or the video would probably be considered as intangible (you can’t really touch them) and due to this characterized as a service. However in order to access these “services” you need to have some kind of a tangible device with an internet connection (to put it very simple). Due to the digital nature of my service (my thoughts in the blog), it is not constrained in a single tangible object, e.g. a specific computer, but accessible through numerous different tangible devices. Hence, digitization enables us to see the direct-indirect continuum of service more clearly and makes it unnecessary to divide the world into outputs called products and services.

References:

[1] Normann, R. (2001) Reframing Business: When the map changes the Landscape, Chichester, England: Wiley.
[2] Lusch, R.F., Vargo, S.L. & O’Brien, M. (2011) Competing through service: Insights from service-dominant logic. Journal of Retailing, 83 (1), 5-18.

The Cloud and many facets of value

By: Kaisa Koskela-Huotari and Andrey Sirotkin

The word value has been used lately a lot in the discussions related to business and the Cloud. What do we, however, mean by value in this context? Roughly, one can argue that the concept of value has evolved into two quite distinct meanings [1]. Firstly, value is used to portray ‘goodness’ of something physically external to a person. This something can be another person, a product, an activity or anything else. Secondly, the concept of value can also describe ‘goodness’ as determined by an individual personally and culturally, and in an ethical sense. Usually in this meaning the plural term – values – is used.

Value (of something) and the Cloud

There are three ways to discuss the concept of value (of something) [2, 3, 4] and the Cloud.

The first one is the value-in-exchange perspective, where the focus is on outputs. Value is seen as something created by companies in their production activities and embedded in company outputs such as tangible products. Therefore, value is measured by the exchange transaction and is equal to money. In the case of the Cloud this perspective would mean e.g. that a Cloud-based service would be regarded valuable on its own – without being used by someone. We would be more worried about what our sales numbers are than do our customers perceive our service beneficial or not.

The second, value-in-use, perspective provides a very different view on value and value creation. Here, the attention is focused on the process of use, and the locus of value creation shifts from the producer’s end to the customer’s end. Hence, value is seen as something that emerges as a person uses or applies a resource provided to him/her by somebody else. For a Cloud-based solution the value-in-use perspective would mean that we would view the solution valuable only when someone is using it – e.g. to share photographs with family and friends – and therefore perceiving the service valuable for him/her.

The third value-in-context perspective can be seen as an extension of the value-in-use perspective. In this perspective value is seen as an experience. This experiential view on value implies that the perception of value is not a linear, cognitive process restricted in isolated events of use but an iterative and circular process including both lived and imaginary experiences as well as individual and collective dimensions. The value-in-context perspective for a Cloud solution would mean that we acknowledge that the value of a service does not remain the same for the individual using in, but that the perception of value constantly alters as the time, place and context of use changes, and also that the perception is influenced by social interaction.

When tapping into the potential of the Cloud it is important that we take into consideration all the different perspectives on value (of something) as they all provide us important information on how we can create solutions that are beneficial both from the business’ and customers’ perspective.

Values as beliefs

A concept of human values is different from that of value (of something). Human values are principles and beliefs that people use to evaluate goodness, fairness and the legitimacy of experiences. Human values are defined in axiological sense. These values are beliefs that people hold in aesthetics (e.g. beauty, harmony, goodness) and ethics (e.g. right, wrong, fair, legitimate). What makes values especially interesting in business studies is their motivational character. Values guide individuals’ choices, evaluate behaviour, and provide meaning to experiences (e.g. [5], [6], [7] and [8]).

Although values are abstract concepts, they are practical for understanding customer experience. By understanding we mean an ability to find reasons or explain meaning. Regardless of whether such explanations are rational or irrational they contain cues for companies for what experiences customers may value. When customers have difficulty with anticipating what future product and services they will value (in terms of goodness of something), they can describe their view of reality in terms of desires and values. Thus, values can be a very useful source of information about customer experiences.

Because values are remarkably stable and resistant to change even in dynamic environments, they may serve as a vector of strategic differentiation. That is, a strategy can be intentionally focused on the perceived value of experience, which is a key differentiation factor. Values, for example, can be used to describe customer desired experiences, which, in turn, can be disseminated throughout the organisational processes. As a result, values bring together strategy, marketing and development functions in a unified effort of staging an experience that customers will value.

This posting is modified and shortened from the original article. To see the full version and to read about more about our research in the Cloud context, check out the newest edition of VTT Research Highlights – Value-driven Business in the Cloud.

References:

[1] Ng., I.C.L. & Smith, L.A. 2012. An Integrative Framework of Value. In Vargo, S.L. & Lusch, R. F. (eds.) Special Issue – Toward a Better Understanding of the Role of Value in Markets and Marketing. Review of Marketing Research, Vol. 9. Emerald Group Publishing Limited. Pp. 207–243.
[2] Vargo, S. L., Maglio, P. P. & Akaka, M. A. 2008. On value and value co-creation: A service systems and service logic perspective. European Management Journal, Vol. 26. Pp. 145–152.
[3] Chandler, J. D. & Vargo S.L. 2011. Contextualization and value-in-context: How context frames exchange. Marketing Theory, Vol. 11. Pp. 35–49.
[4] Helkkula, A., Kelleher, C. & Pihlström, M. 2012. Characterizing value as an experience: implications for service researchers and managers. Journal of Service Research, Vol. 15. Pp. 59–75.
[5] Boudon, R. 2001. The origin of values: Sociology and philosophy of beliefs. New Brunswick, New Jersey, USA: Transaction Publishers.
[6] Kahle, L.R. 1996. Social values and consumer behavior: Research from the list of values. In Seligman, C., Olson, J.M. & Zanna, M.P. (eds.) The psychology of values: The Ontario symposium, Vol. 8. Mahwah, NJ: Lawrence Erlbaum Associates, Pp. 135–151.
[7] Schwartz, S.H. 1992. Universals in the content and structure of values: Theoretical advances and empirical tests in 20 countries. Advances in Experimental Social Psychology. Vol. 25. Pp. 1–65.
[8] Rokeach, M. 1979. Understanding human values: Individual and societal. The Free Press: New York

It is all about service

The first fundamental premise of the service-dominant (S-D) logic says that service is the fundamental basis of exchange [1]. In other words ─ all business is actually service business. This sounds quite straightforward. However, in order to truly capture what is meant by this statement we need to make clear distinction with services as traditionally understood and service as defined in the S-D logic.

In my previous post I told how I was struggling with the awkward division between services and products before I found the S-D logic literature. Traditionally, we view services and products as something very different from each other, to an extent that there seems to be quite strong confrontation between the two. Due to the triumphs of the industrial era, our attention has been steered towards making tangible outputs, i.e. products. For a long time, service was ignored almost altogether and treated either as an add-on to the core product or as a residual. These intangible outputs are described with the plural term of “services”. Many times the nature of services is mainly described by listing how they differ from products (e.g. charahteristics such as intangibility, heterogeneity, inseparability, perishability). Services are thought to be something tied to a direct interaction among people, while products are easily distributed and stored.

One of the aims of the S-D logic is to overcome the products versus services (or tangible vs. intangible output) divide by offering a transcending concept of service [2]. The singular term service, as used in the S-D logic, focuses on the processes of serving rather than on the form of output. Therefore, service in the S-D logic is defined as the application of specialized competences (such as knowledge and skills) for the benefit of another actor [3]. Hence, service is a process that respresents the basis of all social and economic exchange.

This transcending view enables us to examine all kinds of market offering independent of their form and output related characteristics. What this means is that, ironically, there are no services in S-D logic. Products, however, still exist and they have an important role as vehicles for service provision. In other words, a service can be delivered to a customer indirectly through a product. Service (the process of applying one’s resources for another’s benefit) can therefore be seen as a continuum where there exists both direct service and indirect service.

I’ll give an example of this. If I would be telling you this same thing face to face, hence applying my knowledge for your benefit, it would be regarded as a service also by the traditional thinking. In the S-D logic this would be considered as a direct service. If I would write the same thing down on a piece of paper and print a book out of it, it would be regarded as a product by the traditional logic, though the same underlying service still exists. With the S-D logic lenses on we will still acknowledge the underlying service, though this time it is provided indirectly through a service vehicle, the tangible book, through which I am able to offer my service more independent of time and my physical location. Hence, it is unnecessary to make a divide between products and services, especially as this kind of division seems to steer our attention so much to the particular service vehicle that we forget the underlying service altogether.

Usually, the increasing attention towards service(s) is seen necessary due to the emerging “services revolution” (e.g. that approximately 70 % of economic activity in developing countries is in something categorized as services, i.e. non-products). If we adopt the transcending concept of service implied by the S-D logic, we can see that it has always been service that has been exchanged (either directly or indirectly through a product). Hence, what we are witnessing is not so much a service revolution, but a service realization [4].

References:

[1] Vargo, S.L. & Lusch, R.F. (2008) Service-Dominant Logic: Continuing the Evolution. Journal of the Academy of Marketing Science 36, 1-10.
[2] Vargo, S.L. & Lusch, R.F. (2011) It’s all B2B…and beyond: Toward a systems perspective of the market. Industrial Marketing Management 40, 181-187.
[3] Vargo, S.L. & Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.
[4] Vargo, S.L. & Akaka, M.A. (2009) Service-Dominant Logic as a Foundation for Service Science: Clarifications. Service Science 1(1), 32-41.

Researcher’s (r)evolution

As this blog is written by a team instead of a single author, it is rich in a way that it consists of several voices stemming from different backgrounds, perspectives and world views. We’ve already written few posts about our team’s efforts to increasing communication and discussion on what matters the most: the substance of our research. As human beings we use language and words when describing our thoughts and ideas. Words are tricky though. They enable us to share our thoughts and ideas, but at the same time they restrict our thinking and always leave room for misinterpretation and misunderstanding.

With this post, I am for the first time in this blog giving a voice for my own thoughts concerning the actual research I am doing and, more importantly, would like to do. I’m quite cautious in doing so as I am going through a phase in which I am really redefining my research and my identity as a researcher. Some might argue that aren’t we all the time in this process of redefining ourselves and shaping our identities and I do agree with that. However, maybe there are periods when this process is more incremental and unobtrusive by its nature and other periods when it is more radical and striking. Right now I feel that I am experiencing the latter.

One of the most critical turning points for me as a researcher happened slightly over a year ago on an evening flight from Madrid to Helsinki. But before going to that moment in more detail, I need to tell a little more about my background as a researcher. I’ve been a doctoral student in marketing already for several years. In the beginning, I used concepts such as user innovation, lead user approach and consumer needs to describe my dissertation topic. Gradually, my research interests developed more towards co-design methods (e.g. Owela) and understanding “consumers” in the context of their lives. Hence, research on understanding people and being able to combine knowledge from multiple sources in order to create something new has always been close to my heart. However, even when I felt that I was doing an important job in trying to get the voice of the consumer/user heard and understood by the companies providing solutions, something in the way I was approaching the whole phenomenon just felt wrong for me. Another issue with which I have been struggling quite hard are the actual solutions that I am dealing with. They are very technology-intensive digital solutions including both tangible and intangible elements, hence how should I characterize them; as products or as services?

On that evening flight, at the time when I was struggling with these issues the hardest, I started reading the article “Evolving to a New Dominant Logic of Marketing” by Stephen L. Vargo and Robert F. Lusch [1]. And then it just hit me! Service-dominant (S-D) logic provided me a new way of seeing the world so that I could find the answers for many of the questions that I had been pondering about. I could see a glimpse of a world without the artificial division between products and services and without labelling actors to e.g. consumers and producers. Even though I now have seen a glimpse of the alternative way, I still constantly find myself falling back to the traps of what Vargo and Lusch [1] call the goods-dominant or manufacturer-dominant logic especially when interacting with the “real world” that so heavily builds on the lexicon of this conventional world view.

I hope that this blog could serve as a sense making platform for me as well as for all my team members in the (r)evolution we are going through as researchers. Welcome to be part of our journeys!

Reference:

[1] Vargo, S.L. and Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.