Service-Dominant Logic: Status and Directions S-D Forum on Markets - PowerPoint PPT Presentation

Service-Dominant Logic: Status and Directions S-D Forum on Markets & Marketing Logic University of Auckland December 10, 2012 Stephen L. Vargo, Shidler Distinguished Professor University of Hawai’i at Manoa Robert F. Lusch, James and Pamela Muzzy Chair University of Arizona

Service-Dominant Logic: Recent Citation Acceleration S-D Logic Citations FMM 2010 (Sept) FMM 2012 (Dec) Total Citations (V&L) 3100 (750) approx 8900 (2500) approx – Google Scholar (ISI) 2004 JM (Only) Citations 1400 (435) approx 3500 (1000) approx -- Google Scholar (ISI)

Marketing Management Entrepreneurship Impact of S-D Logic S-D Logic

Information Technology S-D Logic

Systems and Other Topics Hospitality Networks Impact of S-D Logic S-D Logic

S-D Logic FOUNDATIONS: THE S-D LOGIC CORE

Goods-Dominant Logic Model: Value Production and Consumption S-D Logic Producer Supplier Consumer Supply Chain

Core Foundational Premises (Axioms) of Service-Dominant Logic S-D Premise Explanation/Justification Logic FP1 Service is the The application of operant resources (knowledge and skills), “service,” is the fundamental basis of basis for all exchange. Service is exchange. exchanged for service. FP6 The customer is always a Implies value creation is interactional. co-creator of value FP9 All economic and social Implies the context of value creation is networks of networks (resource- actors are resource integrators). integrators FP10 Value is always uniquely Value is idiosyncratic, experiential, contextual, and meaning laden. and phenomenological determined by the beneficiary

Value Co-creation through Resource Integration & Service Exchange S-D Logic Economic Currency Market-facing Resource Integrators New Resources Resource Social Private Integrator Currency Resource (individual, Integrators family, firm, Value etc.) Public Resource Integrators Public Currency

Micro Exchange Embedded in Complex (Eco)Systems of Exchange S-D Logic Resource Resource Integrator/ Integrator/ Supplier Producer Consumer Supply/Value Chain Beneficiary Beneficiary (“Firm”) (“Customer”)

S-D Logic Research Topic INSTITUTIONS, ECOSYSTEMS & AN A2A ORIENTATION

“Its all B2B…” – A2A (Actor to Actor) S-D Logic  From a G-D logic, perspective  (B2C, producer to consumer)  Consumer centricity is inherently firm (producer) centric  From a S-D logic perspective  All actors are, resource- integrating, service-providing enterprises (B2B or A2A)  Resources & value creation must be understood, contextually, co- creatively, and (service- eco)systemically

Resource Integration & Service-for-service Exchange within the Market System S-D Logic Resource Resource Integrator/ Integrator/ Beneficiary Beneficiary (“Firm”) (“Customer”) Resource Integrators Institutions

The Structure and Venue of Value Creation: Institutions & Service Ecosystems S-D Institution Logic • “ any structure or mechanism of social order and cooperation governing the behavior of a set of individuals within a given human community. • (Stanford Encyclopedia of Social Institutions) Service Ecosystem (S-D logic) • relatively self-contained, self- adjusting systems of resource- integrating actors connected by shared institutional logics and mutual value creation through service exchange.

Resource Integration & and the Structuration of Service Ecosystems S-D Logic Macro Meso Micro Institutions Resource Integrators

Rethinking. Reframing, and Reconciling from an S-D Logic Perspective Markets S-D  From a priori to imagined, created, and institutionalized Logic  Market-ing  From functional area to essential function of the firm (actor)  Economic (and social) Actors  From Bs and Cs to generic A(ctors)s  Value  From a property of output to a co-created outcome  Innovation  From invention to designing systems for value co-creation  Strategy  From prediction and control to effectuation  Technology  From exogenous variable to service-provision mechanism  Role of Information Technology  From tool to a transformation in value creation processes  International Marketing  From “marketing to” across cultural boundaries to value & market  co-creation within/across nested ecosystems/institutions

S-D Logic Research Topics MARKETS: FROM A PRIORI TO INSTITUTIONALIZED SOLUTIONS

Issues for a Theory of the Market S-D  There are no (a priori) markets Logic  There are just micro-level, A2A, service exchanges  gifts, generalized reciprocity, service-for-service  There is a Market (Market System):  transitory, linked, contextual configurations of resources and exchanges  …and yet markets can “exist”  They can:  Be envisioned --images of service potential  become institutionalized -- Intersubjective realities  Thus, markets become performed within the Market  They exist because we act like they do  “Markets are functions of marketing” (and other business practices)

A Market as an Institutionalized Solutions S-D Logic Resource Application (service) De-institutionalization Re-institutionalization Institutionalized Market Inter- Solution performativity subjective = Agreement A Market Quasi-predictability Human Problem

S-D Logic Research Topics INNOVATION AND TECHNOLOGY

Perspectives on Innovation S-D • Making better output (goods) Logic Goods • New technology • Efficient processes Innovation • Decreasing returns to scale • Purpose: increase market share “Services” • Making better output ( “services” ) • Apply goods innovation principles, adjusted Innovation for “IHIP” deficiencies • Providing more input into customers’/actors’ value - creation processes Service • Link firm-available resources to peoples purposes • Effective solutions Innovation • Increasing returns to scale • Purpose : Designing/Defining/“Owning” the market -- market shaping • Deinstitutionalization and reinstitutiinalization

Innovation Meets Marketing S-D Logic Business has two basic functions: Innovation & Marketing Peter Drucker In S-D logic, these become intertwined, if not indistinguishable True innovation is not the making of novel units of output but the design and institutionalization of novel means of facilitating value creation through resource integration and mutual service provision

The Meaning of Technology S-D  Definitions Logic  A means to fulfill a human purpose  Arthur (2009)  Useful knowledge  Mokyr (2002)  The application of scientific knowledge for practical purposes  Oxford New American Dictionary  And relationship to service  Service = Use of competences (knowledge and skills) for another’s benefit  Service = applied, beneficial technology (operant resources)

Arthur on New Technologies: Resource Integration S-D Logic “A novel technology emerges always from accumulation of previous components and functionalities already in place.” (p. 124)

S-D Logic Research Topics MASSIVELY COOPERATIVE VALUE CREATION

Building from the S-D Logic Platform S-D Co-Creation of Value Logic Value- proposition Institutions s Service Innovation ecosystems Service- Dominant Technology Context Logic Platform

From the Individual to Market- Based Co-Creation S-D Logic Source: Ridley 2010

Cost of Light in Hours Worked S-D Logic

S-D Logic

S-D Logic

S-D Logic

Value Co-creation: Growth in Prosperity through Collaboration S-D Logic

The Drivers of Increasing Returns to Scale S-D Logic Property rights  Scientific rationalism  Capital markets  Specialization Fast/efficient Rules and  and communications Laws exchange Competition  Consumer society  Science and Work ethic  Language Health, medicine  Large-scale production 

S-D Specialization Logic and exchange Rules and Science and Language Laws Macro Meso Integrating Micro Value co-creation Practices/system Normalizing Representing s Adapted from Kjellberg and Helgesson 2007

S-D Thank You! Logic For More Information on S-D Logic visit: sdlogic.net We encourage your comments and input. Steve Vargo: svargo@sdlogic.net Bob Lusch: rlusch@sdlogic.net