The Big Picture…
Goods are distribution mechanisms for service. Back in goods-dominant logic, we see a strong distinction between goods and services. Typically goods are good, and services problematic. This softens a little when we understand there is a continuum between goods and services.
In service-dominant logic, we evolve our thinking to recognise there is just service. We, therefore, see goods as a mechanism for distributing service. And I feel this is better thought of as freezing the service:
- Freezing mid-performance – a CD distributes a band’s playing mid-performance to be unfrozen when playing the CD at a different time and place.
- Capturing skills/knowledge – a wood saw captures the skills and knowledge of what is needed to cut wood. This is then unfrozen in the act of sawing the wood at a different time and place (typically, the user of the goods brings complementary/additional skills to bear in the service provision)
Goods truly are a distribution mechanism for serivce provision.
I found foundational principle #3 one of the stranger ones to get my head around. Here it is:
Goods are distribution mechanisms for service provisionVargo & Lush (2016) – Foundational Premise #3
It makes sense, though, when we think of the evolution from goods-dominant to service-dominant logic. So let’s start at the common perspective today, that of service in a goods-dominant logic.
Service in a pure goods-dominant world
In the goods-dominant logic suppliers/manufacturers exchange goods, in which they have embedded value, for cash. Being goods-focussed thinking, we try and think of services like goods. We try to believe that the provider has embedded value in the service before it is used. And it is that value that customers are going to pay for.
Taking such a view brings out some problems since services are not goods. Firstly in how we define services – we try to define service in relation to goods. Which leads to them being seen as problematic, as reflected in the terminology used. Services are intangible and inconsistent. We cannot inventorise them. And their delivery is inseparable (produced and consumed at the same time) and they require customer involvement.
Additionally, the marketing mix needs to be extended to cope with these problematic services. For discussion on why this is misguided see my article “Goods are good; service bad – not quite“.
But we soon discover that the goods vs services debate is not so binary.
Evolving to see a continuum
A cursory glance at the world outside textbooks quickly leads us to see that some goods come with supporting services. An all you can eat buffet, for example. That is fairly goods (the food) focussed but has services such as refilling the buffet and lightweight waiting. And there are some services that come with supporting goods. Continuing our food example, we can think of 5-star dining. There is still goods involved (again the food), but now the focus is very much on the service aspects.
There is a continuum between tangible and intangible dominance – the goods-service (or product-service) continuum, as it is called.
So our original thinking can be said to start at the left end of the continuum and (failingly) tries to fit service into the definitions. What about starting at the other end?
The service-dominant evolution
A cunning thing happens to goods if we take a service first view of the world. Rather than end up defining goods in relation to service, we find they are distribution mechanisms for service.
This evolution starts by considering what progress is it that someone – let’s call them the beneficiary – is trying make. In our continuum above, that would be something like “eating some nutritious food”.
They can make that progress in many different ways. Cooking at home, for example. Or eating at a buffet, ordering something from Subway, or going to a 5-star restaurant. All of these are services (yes, even eating at home – which is an example of a self-service). Now we’re talking about a service-service continuum. And one where goods are being used in varying amounts to distribute the service.
We can also call this progress they are trying to make a job to be done.
Job to be done theory
The insight that Christensen et al make in 2016’s “Competing Against Luck” is that beneficiaries (customers in their case) are hiring things in order to get a job done.
What is the customer hiring you to do?Competing Against Luck
Where the job is
“Job” is shorthand for what an individual really seeks to accomplish in a given circumstance.Christensen, Hall, Dillon, Duncan (2016), “Know your customer’s job to be done“
The article “Know your customer’s job to be done” gives 5 questions to ask in finding what the job is.
And that there is plenty of competition offering to get that job done. Some of which may not be obvious in the old marketing approach of customer segmentation. Reed Hastings’ noted that Netflix’s competition is not just other streaming services, they are competing with anything that helps you fill your time (including a bottle of wine!).
We lose the goods vs service distinction when we think in terms of jobs to be done. Our focus is on how to fulfil the job. And goods become part of a subset of solutions in the way they enable a service to be frozen, distributed/moved elewhere in time and space, and unfrozen.
I find the best way to understand this is to consider two cases. Freezing a service mid-performance. And freezing the application of skills (which by definition is a service). Arguably they are the same if we want to get pedantic with definitions, but the distinction is helpful for understanding.
Goods: freezing a Service mid-performance
The most obvious, to me at least, example of goods being a distribution mechansim for service is when that service becomes frozen as a goods. Which is then unfrozen by the beneficiary at some later time and often different location.
There are many examples of this. Here are just two to explore the idea.
If my job to be done is quenching my thirst then I’ve many options. But let’s say my preference is to use water. I can go to my tap (faucet) and pour a glass of water. Or I could go to my fridge and take a bottle of water.
In both cases, water has been processed, cleaned and filtered at source. The difference is in how the water is distributed. We see a service when it is distributed by a pipe. However, if it is distributed in a bottle, we see goods. The bottle has frozen the water service, allowing us to distribute it to where it is needed. I unfreeze the service once I open the bottle and drink.
Music on CD
I can go to a concert and listen to a band play – the performance is a service. Alternatively, I can buy a CD of that band’s music. The CD contains a frozen instance of the performance service. And, every time I play the CD I am unfreezing that performance.
Goods: freezing skills to be used elsewhere
Goods also capture a manufacturer’s skills and resources to be transported somewhere else and used at a later time.
Cutting wood with a saw
Say you want to cut a piece of wood. You need something that can do the cutting. And it is the saw maker’s skills you need to create the saw blade for you. In modern times, it is unlikely you’ll have a saw maker on hand. More likely you can use a saw that has been pre-made by the saw maker.
All the rage recently is buying a bag of food items that comes with some menus for you to cook a few nights meals from. Here we harness the skills and resources of a chef that has created the menus and chosen the items; but we will create the meals later and in a different location.
So we can conclude that goods are distribution mechanisms for service.
We use them to freeze a service mid-performance – a band playing, water being processed to drink, for examples. And then unfreeze that performance – play the CD, drink the bottle of water – at another time/place.
Or we use them to capture the skills and knowledge of one or more actors so that that can be applied elsewhere. In this case, those skills are often complemented with the users own skills to give a complete service. A carpenter uses their carpentry skills together with the saw-makers skills, captured in a saw, to cut wood.