Continuing on our journey making service-dominant logic more approachable, we arrive at an interesting point. And I might mean “interesting” with a typical Englishman’s understatement.
In our typical view of how economies work – the so-called goods-dominant logic – everything focusses on the goods and its exchange for value.
Now we’re going to make some observations about goods, services and the economy. And we’ll find this goods-dominant focus doesn’t fit. It hampers our growth and innovation ability. Rather, we’ll find service-dominant logic’s 3rd foundational principle:
Goods are distribution mechanisms for service provisionVargo & Lush (2016) – Foundational Premise #3
This may not be the easiest thing to get our heads around straight away. But we’ll see that goods either capture skills/knowledge or freeze a service so a beneficiary can use at a later time/different place. And it links to the job-to-be-done theory.
First, we need to look at the mythical division of goods and services we arrive at with a goods-dominant logic.
Goods versus Service?
Service-dominant logic is not the opposite of goods-dominant logic. Rather it emerges when you look at how the economy works without being constrained by goods-dominant logic.
In the goods-dominant logic suppliers exchange goods for cash. Doing so exchanges the value they have embedded into the goods to the consumer. To understand services we do two things.
First, we define services in relation to goods. They are intangible and inconsistent. We cannot inventorise them. And their delivery is inseparable (produced and consumed at the same time) and require customer involvement.
Secondly, we observe that there is a continuum between goods and services. In some cases, we have a situation only using goods. For example, you are cooking at home. Or maybe you’re eating at a buffet. Here the focus is still on the food (the goods) but there are some service elements involved. At the other end, you may be eating at a 5-star gourmet restaurant. Now the service aspect is right upfront. And the goods are now the supporting element.
Service-dominant logic views the basis of every exchange as a service. is a service. Which means that there is no goods-service continuum. Yet we still have and use goods.
The observations we make in service-dominant logic are:
- there is no goods vs services debate – there is only service
- a service helps a beneficiary get a job done
- getting a job done may require the use of a goods
- those goods must, therefore, be a distribution mechanism for services.
It might sound a bit strange talking about goods being a distribution mechanism for services. What we mean is that they either capture skills/knowledge that can then be used by the beneficiary. Or they freeze a service so it can be transported elsewhere and then unfrozen.
Capturing skills and resources
A service is the application of skills and resources to benefit a beneficiary.
Let’s say you want to transport yourself between A and B. There are many service that can meet that job to be done. You could fly, take the train, an Uber. Or you could drive a car (your own or hired). In the first set of services we’d probably have no issue seeing as a service. But each is using a goods – a plane, a train, a car.
Freezing a Service
The good could be a frozen (in time) service.
A band’s musical performance is frozen onto a CD in a recording studio. And when you play the CD you are unfreezing the performance.
Water in a bottle is a thirst-quenching service. The bottler freezes that service. When you open the bottle and drink you are unfreezing the service.
Earlier I said that a goods-service continuum only exists if we believe goods and service are different. , since we should see everything as a service. However, we can see a service-service continuum. One that ranges from self-service to pure service.
Job to be done
A recurring theme in this series making service-dominant logic more approachable is job-to-be-done theory. It is one of those theories born out of goods-dominant world. But is a natural given/fit in service-dominant logic.
What is the customer hiring you to do?
This applies to both goods and service. And I would argue it allows you to take a step back and see where you are on the goods-service continuum. Once you know where you are you can decide if you need to (or want to) innovate a good further. Or if you want to innovate a service. Or even innovate a good wrapped in a service.
All for getting the job done that the customer is hiring you for.
And of course you will want to do that job in a way that removes current hassles for all actors. So that the beneficiaries uniquely and phenomenologically determine you have done a great job.