The Service-Dominant Mindset

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Presentation transcript:

The Service-Dominant Mindset Presentation to IBM’s Service Science Management and Engineering Conference: Education for the 21st Century October 7, 2006 Robert F. Lusch, University of Arizona Stephen L. Vargo, University of Hawaii at Manoa

Service-Dominant Logic: What it is A logic that views service, rather than goods, as the focus of economic and social exchange i.e., Service is exchanged for service Essential Concepts and Components Service: the application of competences for the benefit of another entity Service (singular) is a process—distinct from “services,” which implies “intangible goods” Shifts focus to “operant resources” from “operand resources” Value is always co-created Views all economies as service economies All businesses & organizations are service businesses

Difficult Conceptual Transitions Goods-Dominant Concepts Goods Products Feature/attribute Value-added Profit maximization Price Equilibrium systems Supply Chain Promotion To Market Product orientation Transitional Concepts Services Offerings Benefit Co-production Financial Engineering Value delivery Dynamic systems Value-Chain Integrated Marketing Communications Market to Market Orientation Service-Dominant Concepts Service Experiences Solution Co-creation of value Financial feedback/learning Value proposition Complex adaptive systems Value-creation network/constellation Dialog Market with Service-Dominant Logic (Consumer and relational)

A Service-Logic for Service Science Meta Questions? G-D Logic S-D Logic What do firms do? They produce output. Thus they need to know how to produce output efficiently. They produce inputs. Thus they need to know how to co-produce inputs for a service system. How do firms do this? Through operand resources. Thus they must know how to control people and stuff (static). Through operant resources. Thus they must know how to co-create operant (dynamic) resources. Why do firms do this? To maximize shareholder wealth. Thus they must know how to increase profit, cash flow and share price. To build mutually beneficial exchange relationships to enhance well-being for the firm and stakeholders. They must know how to serve. What scientific concepts and tools are dominant? Optimization Models; Controlled Experiments; Static Equilibrium; Logic of Justification. Evolutionary Computing; Ethnography; Complex Adaptive Systems; Logic of Discovery.

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