In Practice
 

Value is uniquely and Phenomenologically determined by the beneficiary

Part of a series on making service-dominant logic approachable

economy lived-experience experiential figure innovation logic blue-ocean phenomenologically service service-dominant servicescape value

[This article is part of a series on making service-dominant logic more approachable]

We’re not going to get anyone to embrace service-dominant logic if we use words like phenomenologically. Let’s try and demystify foundational principle #10 of Lush & Vargo’s Service-Dominant Logic.

Value is always uniquely and phenomenologically determined by the beneficiary

Lush & Vargo (2016) – Foundational Premise #10

If we don’t, we conjure up complete confusion. Or worse, visions of this:

We’ll do so by first looking at what we mean by the beneficiary. Then move onto phenomenological. And it’s a tour that takes us through the experience economy, servicescapes, blue ocean strategy and building brands that people love.

Along the way we will discover phenomenological is a complicated way of saying lived experience.

Beneficiary

Vargo & Lush (2004) define a service as follows. It is the application of specialised skills and resources for the benefit of someone else. But, we want to avoid thinking of providers and consumers. That implies there is an exchange of value. And we’ve seen this is not how we observe the world under service-dominant logic.

Virgo & Lush (2016) use the term actor. So an actor applies skills and resources for the benefit of another actor. But we also have the premise of value cogeneration. And all the actors involved are potential beneficiaries.

Let’s take getting a haircut as a simplistic example. Both you and the haircutter are beneficiaries of value. How? Well, the haircutter generates value for you through cutting your hair. But you also generate value for the haircutter. Not least because another haircut adds to their skill list.

And this value generation may carry on after the service provision completes. Your haircut will likely continue to get compliments. And you’ll likely advertise where it was done.

But there’s a potential trouble with service. They are known to be inconsistent.

Services are inconsistent

Unfortunately, we often define service from a goods-dominant perspective. That means we tend to define them with negative attributes. They are, for example, inseparable (provision and consumption have to happen in the same place/time) and require customer involvement. We cannot create an inventory of them. And, worse, they are inconsistent.

Now, we can argue those attributes are positives. Lush & Vargo (2004b) did that. Inconsistency they claim is an opportunity. Since we can tailor the experience per customer. However, let’s take the intended meaning. Actors involved in the same service provision more than once are unlikely to report gaining the same value each time.

The value you feel you get for today’s haircut is unlikely to be the same as the last time. And it is unlikely the haircutter will feel they got the same benefit each time.

But why is this so? Now its time for the long word: phenomenological.

Phenomenological, Do do, do-do do

Lush & Vargo’s (2014) “Service-Dominant Logic: Premises, perspectives, possibilities” (page 16) explains that “value is experiential“. That’s to say that your experience contributes to your judgement of the value generated.

We can all recognise this. We experience greater value from a service that treats us well, is hassle-free and conducted in a pleasant location. And less when we feel badly treated, or there are hassles, or the location is not pleasant. And let’s not forget we cogenerate value in a service. So how you behave and interact with other actors affects the value they feel.

Imagine the haircutter had a terrible journey to work. And you’re the first person they work with. Before they’ve even had their first cup of coffee of the day. Well, your experience may not be so great. Similarly, if you are in a mood and don’t express what type of haircut you want. Then the haircutters view of value gained is low value.

Also, this value generated through experience is highly contextual. When buying your lunch in a rush, that supermarket self-service checkout has great value. But it is a cheap attempt by supermarkets to cut costs, not passed onto you!!, when buying your weekly shop.

So we can see that each beneficiary of a service determines the value they get through the experience they have. And they do it separately for each time the service is provisioned. That’s to say value is determined by the beneficiary from the unique experience they had.

Lush & Vargo, though, had a concern using the word experience.

Value is Phenomenologically determined

Lush & Vargo (2014) say they paid particular attention to use the word phenomenological. Rather than experiential. Their rationale was to confuse us normal people. Sorry, their rationale was that experiential usually implies a positive, entertaining experience. A Disney land feeling they summarise. And that is not what they meant.

Phenomenological, on the other hand, does convey the sense they want. Even if it is not going set the management lecture tour circuit on fire!

For a start, phenomenologically is an established qualitative research method. That makes academics comfortable. Groenewald, in his paper “A Phenomenological Research Design Illustrated“, states the following:

A researcher applying phenomenology is concerned with the lived experiences of the people involved, or who were involved, with the issue that is being researched.

Groenewald (2004)

Secondly, phenomenological captures in one word the essence Lush & Vargo were after. That it relates to the experience actors have during the service provision. But it does not infer an always positive Disneyland approach.

Lush & Vargo also wanted to steer us clear of a notion they disagree with: the experience economy.

The Experience Economy

Pine & Gilmore (1998) coined the term experience economy in their HBR article: “Welcome to the Experience Economy“. They see staging experiences as a distinct evolution of an economy (see Figure 1). A step beyond mere services. And where staging experiences is the most differentiated and commands premium pricing.

Figure 1: Where might an experiences economy lie in relation to commodity-, products- and service-based economies?

Their article and subsequent book (revised 2019) give several examples of experiences. Such as “eatertainment” in relation to theme restaurants, or Geek Squad, Apple Stores, Disney, LEGO, and Starbucks.

They make the distinction between four types of economies, see Figure 2.

Figure 2: How an experience economy differs from other economies

For example, Pine & Gilmore see experiences as staged, personal and revealed over the duration. Whereas services are customised and delivered on-demand.

Should we ignore the concept of the experience economy?

Lush & Vargo (2014) take exception to any notion we are entering an experience economy. For them, there is no separate category of the experience economy. They say “can you think of a consumption situation that is not experiential?”. I agree. And add that services are delivered over a duration. Sometimes short, like checking a bank balance through an iPhone app. Or they can be of a longer duration, such as a 5 year IT services contract.

Though, let’s not ignore Pine & Gilmore’s work. It can be useful to think of staging a service (a performance) and making them memorable and personal. That we should think of the main beneficiary as a guest looking for sensations. We’ll see variants of this when we look at servicescapes and the triplet “entice, enable and enrich” shortly.

But first, let’s tie off how we could solve this word choice problem.

The Lived Experience

So, if the word experience is to be avoided, and the word phenomenological is unapproachable, what should we do? For me, the key is in the definitions of phenomenology.

phenomenology is the lived experience.

“Lived experience” I find a more compelling phrase. It is more approachable. And captures the essence. That it is the experience actually experienced, not the one that has been designed. That gives us a slightly longer, but more approachable definition:

Value is always uniquely determined by the lived experience of the beneficiary during the service provision

In summary we can say that value derives from the lived experiences of actors that are beneficiaries, during a service provision. Now we arrive at a natural question. What can we do to increase that lived experience? We can first make the location where the service happens a pleasant place. Welcome to the world of servicescapes.

Servicescapes

Servicescapes – both the physical and on-line – are essentially the landscapes in which a service is provided. And I look more at them in my article “Marketing Mix – How Many Ps Are Needed?“.

The main diagram showing the scope of a servicescape is shown here again in Figure 4.

[Add a little explanatory text; add diagram from on-line sevicescapes showing Aesthetic appeal, layout & functionality and Financial security]

At the same time as providing the service in a nice locale, the service needs to solve the beneficiary’s problem. And to do so in the most hassle free way possible.

Solve Job-to-be-done and Hassle maps

[Tie together job-to-be-done theory (the problem the customer has) with hassle maps (the problems they have when trying to solve their problem. ]

A service solves a problem. And a problem is a job that needs to be done. This is why job-to-be-done theory fits nicely into the service-dominant logic narrative. And smashes down the marketing myopia door.

Hassles and Hasslemaps

But just fulfilling a job-to-be-done is only the first step of increasing the lived experience. The service needs to remove hassles. For all actors involved. Hassles are defined by Adrian Slywotzky:

hassles: the negative experiences of the customer. Where are the emotional hot spots, the irritations, the frustrations, the time wasted, the delay? Where are the economic hot spots?

Adrian Slywotzky “Demand: Creating what people love before they know what they want

I suggest we need to expand this by swapping “customers” to “actors”. Since all involved with delivering the service have hassles. And removing any of those will increase the beneficiaries lived experience. As an example, say your payment process is clumsy. Actors using it will get irritated. And that irritation will filter down to the servicescape; and so to the lived experience of the actor we often call the customer.

hassles: the negative experiences of actors involved in delivery of the service

Why service design is a natural fit?

[This may be an obvious point, but customer journey and service design are a natural fit with service-dominant logic]

Brand Admiration

This leads us to the enable, entice and enrich aspects in the book “Brand Admiration – building a business people love“.

The Resulting Services Marketing Mix
The Resulting Services Marketing Mix

Blue Ocean Strategy

[Update text]

Blue Ocean strategy is “about creating and capturing uncontested market space, thereby making the competition irrelevant.”. To me, it is intrinsically tied to service; particularly a service’s client interface (where the experience happens). And the Blue Ocean Strategy Canvas helps us see how to differentiate this.

I’ve looked at the services provided by Facebook, Instagram and Snapchat in Figure 3. I wanted to see what makes Snapchat different.

Figure 3 Blue Ocean Analysis of Facebook, Instagram and Snapchat

“Live in the moment”, “remove performance need” (the hunt for likes) and “apply digital effects” all score high for Snapchat. But “view past content” and “ease of use” score very low. Yet it is these that drive the experience that Snapchat’s users crave – and differentiate it’s experience from Instagram and Facebook. Poor “ease of use”, for example, is a counterintuitive plus – young adults like that parents will find it hard to use, and enjoy the rush associated with stumbling across a way of doing something and sharing only with their friends.

Note 1: Important to remember this is about simultaneously differentiating and eliminating costs. This is trap 5 of Kim & Mauborgne’s “Red Ocean Traps“.

Note 2: Trap 1 of Red Ocean Traps is related to customer wishes. We are after the non-customers, so focussing too much on today’s customers is not going to help.

Wrapping Up

OK, so “phenomenologically determined” is a valid term to use. But a bit tough if we want to get service-dominant logic mainstream. Uncharitably we could think it was used to discourage the phrase experience economy.

I believe we can instead use the more relatable phrase “lived experience”. That positions value as experienced by an actor, as part of co-generation of value, rather than a provider arranged (staged) experience.

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