1. S-D Logic The Service Ecosystem 19 th Annual Frontiers in Service Conference Karlstad, Sweden June 11-13, 2010 Robert F. Lusch Muzzy Chair in Entrepreneurship & Innovation University of Arizona Stephen L. Vargo Shidler Distinguished Professor of Marketing University of Hawaii

2. Exchange Systems …

3. S-D Logic A service ecosystem is a spontaneously sensing and responding spatial and temporal structure of largely loosely coupled value proposing resource integrating social and economic actors interacting through institutions, technology and language to: Co-produce service offerings Exchange service offerings Co-create value Service Ecosystems

4. S-D Logic Emergent, Co-created, Resource Integrating, Dynamic WEB 1.0WEB 2.0 Speak to CustomerConversation with Customer Customer is PassiveCustomer is Experiencing Customers Locate ContentCustomers Offered Service Push Messages OutPull Customers In Standardized Mass Produced Messages Customized and Relevant Exchange of Messages Seller ControlEcosystem Control

5. S-D Logic

6. S-D Logic Phase Transition A phase transition is a process where the characteristics of a given medium with given properties is transformed into a medium with new properties.

7. PHASE TRANSITION

8. S-D Logic LONG AND SMALL VIEW Universe expanding from an extremely dense and hot state.

9. CAMBRIAN EXPLOSION HUMAN ARTIFACTS INTERNET

10. Driving the Phase Transition

11. S-D Logic Phase Transition to Ecosystems States Flows Hierarchical Control Rigid Structures Centralized Management Defined Boundaries Secretive Closed Systems Produce & Store Optimizing Planning Grounded Control Flexible Structure Distributed Management Fuzzy Boundaries Transparent Open System On-Demand Adaptive & Learning Improvising

12. Phase Transition STATES FLOWS GOODS PUSH PULL SERVICE

13. S-D Logic Phase Transition to Ecosystems: What it Means for Organizations OldNew BureaucracyLearning Factory ProductionCo-creation Platforms R&D LabsInnovation Platforms Marketing Channels Integration Platforms Push and G-D logic Pull and S-D logic

14. S-D Logic No B2B, B2C, C2B, etc…..

15. S-D Logic Resource Integrating Actors (RIA)

16. Coordination Communication Calculation Behavior Meaning ThoughtsSignifiers Signs Language Resource Integration & 3 Cs Source: Loebler & Lusch

17. Resource Integrating Platforms

18. S-D Logic For More Information on S-D Logic visit: sdlogic.net We encourage your comments and input. Will also post: Working papers Teaching material Related Links Steve Vargo: svargo@sdlogic.net Bob Lusch: rlusch@sdlogic.netsvargo@sdlogic.netrlusch@sdlogic.net Thank You!

19. S-D Logic Some Definitions System = set of interacting or interdependent entities forming an integrated whole. Service = application of resources for the benefit of another actor (Vargo and Lusch 2004) Service System = A dynamic value co-creation configuration of resources, including people, organizations, shared information (language, laws, measures, methods) and technology, all connected internally and externally to other service systems by value propositions. (Spohrer et al.2007) Ecosystem = a system formed by the interaction of a community of actors in an environment that these actors through interaction create.