2. 1 E. Gummesson 2009 1960s-present Marketing management of consumer goods plus 1970s-present Services marketing and management plus 1980s-present Quality management, excellence, value, satisfaction plus 1990s-present Relationship marketing, CRM, one-to-one adding up in the 2000s- S-D logic, service science, many-to- many networks LET ME OPEN WITH A NOTE ON MY PERSONAL JOURNEY FROM THE PAST TO THE PRESENT:

3. 2 E. Gummesson 2009 AN EXCITING TIME: 1. THE MOST PROFOUND TRANSITION IN THINKING AND CONCEPTUAL DEVELOPMENT THAT I HAVE EXPERIENCED IN MY CAREER. 2. IT IS INDEPENDENTLY INITIATED AND DRIVEN BY ACADEMIA AND, THROUGH IBM, BY INDUSTRY. It’s simply UNIQUE!

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5. 4 Professor Evert Gummesson Stockholm University School of Business Sweden eg@fek.su.se www2.fek.su.se/home/eg/ Complexity, network theory & many-to-many marketing

6. 5 E. Gummesson 2009 The noun “complexity” stems from the Latin complexus meaning “network” accompanied by the verb complecti meaning ”to twine together”. The word “system” is derived from the Greek systema, meaning “a whole composed of many parts”. “Context” comes from Latin contexere, “to join together”. These words and several others, like ”ecology” and ”holism”, obviously belong to the same family. I use the word system in its generic and general sense, for example “service system”, but let networks through network theory (and case study research) be the basis for analysis and discussion. ON MY TERMINOLOGY:

7. 6 E. Gummesson 2009 Throughout my research the overriding key variables are relational in three ways: relationships, networks & interaction

8. 7 E. Gummesson 2009 Traditional American marketing management and marketing mix Customer centric Centered on one party Customer Relationship marketing CRM One-to-one marketing SupplierCustomer Relationship centric Centered on two parties Many-to-many marketing Network centric Centered on many parties 1960s-present1990s-present 2000s- DEVELOPMENT OF THE RELATIONAL APPROACH TO MARKETING

9. 8 E. Gummesson 2009 Definition: “Many-to-many marketing describes, analyzes and utilizes the network properties of marketing.”

10. 9 E. Gummesson 2009 Marketing as Complex Networks: Many-to-Many Marketing From one-to-one to many-to-many in the marketing of the value- creating network economy PRELIMINARY CHAPTERS: 1 From One-to-One to Many-to-Many 2 B2B: Networks in Business-to-Business 3 B2C/C2B: Networks in Business-to-Consumer and Consumer-to- Business 4 C2C: Customer-to-Customer Networks 5 B2B2C2C2B2B... Everything Is Linked to Market, Mega and Nano Networks 6 Infrastructure and Mega Networks 7 High Tech/High Touch: Human Beings Are Not Obsolete! 8 Many-to-Many Management: From CEO to NEO, from CMO to NMO, from ROI to RON 9 Traveling the Land of Theory and Research 10 Many-to-Many: Science, Internet – or Innernet?

11. 10 E. Gummesson 2009 Network theory: both methodology and a theory of life

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13. 12 E. Gummesson 2009 The topology of Capri – going from a photo to a network and fractals model

14. 13 E. Gummesson 2009 air Baltic Air China air greenland Air One Atlantic Airways Cimber Air City Airline Estonian Air Qantas Skyways Wideroe Adria 3 REGIONAL PARTNERS 11 SPECIAL SAS PARTNERS Blue 1 Croatia Airlines Star Alliance TAP Portugal Thai United SWISS US Airways Spanair South African Airways Austrian Asiana Airlines Lufthansa LOT Polish Airlines bmi british midland SAS Scandianvian Airlines Singapore Airlines Shanghai Airlines Air New Zealand Air China ANA All Nippon Airways Air Canada 19 FULL PARTNERS THE STAR ALLIANCE, FEBRUARY 2008

15. 14 E. Gummesson 2009 HUB NODE LINK CENTRALIZED NETWORK DECENTRALIZED NETWORK DISTRIBUTED NETWORK WHAT IS NETWORK THEORY?

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18. 17 E. Gummesson 2009 Neural networks: Bundles of nerve fibers running to various organs and tissues of the body. Computer representation of the human brain that tries to simulate its processes.

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20. 19 E. Gummesson 2009 Patient ANNA, 82 Network & systems manager 5 doctors prescribing 9+2 pills 23 diagnosed disorders 11 therapies comprising 41 components 55 specialists masseurs social assistants social insurance people nurses ambulance and taxi drivers an endless amount of capital goods and disposables Based on Akner, G. (2004). Multisjuklighet hos äldre. Malmö, Sweden: Liber.

21. 20 E. Gummesson 2009 Patient ANNA, 82 Network & systems manager 5 doctors prescribing 9+2 pills 23 diagnosed disorders 11 therapies comprising 41 components 55 specialists masseurs social assistants social insurance people nurses ambulance and taxi drivers an endless amount of capital goods and disposables

22. 21 E. Gummesson 2009 This is not a customer-oriented service system! It is too complex to work. How do we find the necessary simplicity to make it work? We are facing a huge challenge!

23. 22 E. Gummesson 2009 THIS IS ABOUT MARKETING, SO WHERE DOES MANY-TO-MANY MARKETING AND NETWORKS COME IN? WE HAVE TO ANSWER SEVERAL FUNDAMENTAL QUESTIONS: Who are the customers and who are the suppliers? What do suppliers do best? What do customers do best? What do third parties do best? What should be one-party (individual) action? What should be two-party (dyadic) interaction? What should be multiparty (network) interaction? What should be C2C interaction? What should be face-to-face interaction, ear-to-ear interaction, email interaction, Internet interaction, text messaging, and interaction with automatic machines? What do human beings do best? What does technology do best? Is there a no-man’s land where service is neglected?

24. 23 E. Gummesson 2009 In the new service logic the customer and supplier roles have merged, although they perform different tasks in differnet context (“value-in-context”). The following categories of suppliers are found in the market: business enterprises governments on a national, regional and local level and increasingly on a mega, supra-national level, such as the EU NGOs and voluntary organizations which arise where the first two have failed, or act as supplementary to them In B2B, the suppliers are also customers. In B2C/C2B we find consumers citizens who are also co-creators, that is suppliers.

25. 24 E. Gummesson 2009 Properties of case study research and network theory. They can accomodate: Complexity Context Change Non-linearity Both parts & the whole Both structure, hierarchy & process Both tech & human aspects COMPLEXITYTHEORYCOMPLEXITYTHEORY No other research methods in social sciences can do that!

26. 25 E. Gummesson 2009 CASE STUDY RESEARCH Verbal narratives High validity, low reliability Interactive NETWORK THEORY Verbal Graphical Mathematical Interactive STATISTICAL SURVEYS Usually low quality data Superficial Cannot handle complexity Pseudo-preciseness Low validity, high reliability Non-interactive ONLY SPECIAL APPLICATIONS AT BUSINESS SCHOOLS CLAIMED TO BE SCIENTIFIC: ”SURVEY- DOMINANT LOGIC” CLAIMED TO BE ONLY ANECDOTAL AT SOME BUSINESS SCHOOLS, HIGH ACCEPTANCE AT OTHERS

27. 26 E. Gummesson 2009 But this is not enough. Scientific methodology is not a technique; it is techniques in the context of a philosophy and worldview. Researchers who just become technicians are not scholars. To be a scholar and true scientist you have to consider other dimensions as well: common sense intuition sound judgment wisdom insights hunches experience instincts visions... Without these additional aspects, scientific method is empty!

28. 27 E. Gummesson 2009 “Networks are the fundamental stuff of which new organizations are and will be made.” Source: Manuel Castells, Professor of Sociology, in The Rise of the Network Society. Oxford, UK: Blackwells, 1996. Quotation from p. 168

29. 28 E. Gummesson 2009 Source: Mark Buchanan, physicist and former Editor of Nature and New Scientist, in Small World, Phoenix, London, 2003. Quotations from p.165 “Physicists have entered into a new stage of their science and have come to realize that physics is not only about physics anymore, about liquids, gases, electromagnetic fields, and physical stuff in all its forms.” “At a deeper level, physics is really about organization – it is an exploration of the laws of pure form.”

30. 29 E. Gummesson 2009 “…understanding network effects becomes the key to survival in a rapidly evolving new economy.” “In reality, a market is nothing but a directed network.” (as opposed to a random, scale-free network) Source: Albert-László Barabási, Professor of Physics, in Linked: The New Science of Networks, Perseus, Cambridge, MA, 2002. Quotations from pp. 200 and 208

31. 30 E. Gummesson 2009 * Nodes and links * Hubs * Random networks * Planned networks * Clusters * Connectors * Preferential attachment * Rich gets richer * Fitness * Fit-get-rich * Winner-takes-all * Scale-free networks * Power laws * Phase transition * Robustness, error tolerance * Cascading failure * Tipping points * Thresholds * Spreading rates * Self-organizing * Six degrees of separation * What is the Internet, really? A SAMPLE OF CONCEPTS AND ISSUES FROM NETWORK THEORY:

32. 31 E. Gummesson 2009 * Nodes and links * Hubs * Random networks * Planned networks * Clusters * Connectors * Preferential attachment * Rich gets richer * Fitness * Fit-get-rich * Winner-takes-all * Scale-free networks * Power laws * Phase transition * Robustness, error tolerance * Cascading failure * Tipping points * Thresholds * Spreading rates * Self-organizing * Six degrees of separation * What is the Internet, really? A SAMPLE OF CONCEPTS AND ISSUES FROM NETWORK THEORY:

33. 32 E. Gummesson 2009 CEO Chief Executive Offcier or...

34. 33 E. Gummesson 2009 NEO Network Executive Officer

35. 34 E. Gummesson 2009 CMO Chief Marketing Officer or...

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37. 36 E. Gummesson 2009 New indicator: Return on Networks (RON) is a measure of the profitability of a company’s networks Traditional indicator: Return on Investment (ROI)

38. 37 E. Gummesson 2009 Articles: Gummesson, E. (1987), "The New Marketing – Developing Long Term Interactive Relationships". Long Range Planning, Vol. 20/4, No. 104, August. Lovelock, C. and Gummesson, E. (2004), ”Whither Services Marketing? In Search of a Paradigm and Fresh Perspectives,” Journal of Service Research, vol. 7, no.1, pp. 20-41. Winner of the 2005 American Marketing Association Best Services Article Award. Gummesson, E. (2006), “After Relationship Marketing, CRM and One-to-One: Many-to-Many Networks,” Finanza Marketing e Produzione, no.1, pp. 138-144. Gummesson, E. (2007), “Exit Services Marketing – Enter Service Marketing”. Journal of Customer Behaviour, Vol. 6, No. 2, pp. 113-141. Gummesson, E. (2007), “Case study research and network theory: Birds of a feather”, Qualitative Research in Organizations and Management, Vol. 2, No. 3, pp.226-248. Gummesson, E. (2008), “Extending the New Dominant Logic: From Customer Centricity to Balanced Centricity.” Commentary for Special Issue of The Journal of the Academy of Marketing Science (JAMS) on the New Dominant Logic, 36 (1), pp.15-17. Gummesson, E. (2008), “Quality, service-dominant logic and many-to-many marketing.” The TQM Journal, 20 (2), pp.143-153. Gummesson, E. and Polese, F. (2009), “B2B is not an island”, The Journal of Business & Industrial Marketing 24 (5-6). Gummesson, E. (2009), “The future of service is long overdue”, in Maglio, P. P., Kieliszewski, C. A., and Spohrer, J., Eds.. Handbook of Service Science. New York: Springer. Book: Gummesson, E. (2008), Total Relationship Marketing, Oxford, UK: Elsevier/ Butterworth-Heinemann (3rd ed.). BIBLIOGRAPHY ON RELATIONAL APPROACHES (SELECTED)

39. 38 E. Gummesson 2009 OVERLOAD?

40. 39 E. Gummesson 2009 THE END

41. 40 E. Gummesson 2009 THE END