Monday, March 23, 2009

Steve Vargo: Service-dominant logic

Vargo and Lusch are key thinkers within management studies addressing the theory gap in services - of relevance to service designers as much as to service managers. At a seminar organized by the Advanced Institute of Management (AIM) last week, I was able to hear Steve Vargo first hand on the service-dominant logic. References to the key papers are below. There's also a book which I have not yet read. This is the quick summary of what Vargo presented which draws on the papers. Calling their ideas a 'logic' does not mean Vargo and Lusch are making claims to something that works similarly to a mathematical proof. Rather, they are drawing attention to the underlying dynamics of economic theory if it's rethought as to do with service, rather than products to which, in the industrial production model based on a (mis)reading of Adam Smith, value is added. The fundamental idea is that people (and organizations) exchange services for services.

1 There are no services - only service. (The use of the singular draws attention away from 'services' as offerings that are produced slightly differently to products, to the concept of a service-based economic model. This has already been influential in the renaming of the IBM-led initiative services science as service science.)

2 There is no new service economy. Instead all economies are inherently service economies. Some services are direct and some are indirect, involving goods or money.

3 There are no producers and consumers. Instead all parties are what Vargo and Lusch currently call 'resource integrators' playing a role in assembling resources in to offerings. Service is a process.

4 Goods are not 'goods'. Intead goods are value propositions within service. Goods (what some people call products) are 'appliances' for service delivery.

5 Firms do not create value. Value is co-created.

6 There is no B2C. Instead, economic interactions are all B2B in which all of us are resource integrators operating at different scales.

My apologies to Steve Vargo if I have got their ideas wrong in this summary.

Vargo, S. and R. Lusch (2004), “Evolving to a new dominant logic in Marketing,” /Journal of Marketing, /68, 1-17
Invited Commentaries on “Evolving to a New Dominant Logic for Marketing”, /Journal of Marketing /Vol. 68 (January 2004), 18–27
Vargo, Stephen L. and Lusch Robert (2008), "Service-dominant logic: continuing the evolution," Journal of the Academy of Marketing Science, 36 (1), 1-10.

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