The Big Picture…
When we take an evolved view of the world – where beneficiaries are trying to make progress in some aspect of their life – we find we are in a service-first world.
Rather than goods vs service, we find goods are a distribution mechanism for service. And they are just one of the service provider’s elements that a beneficiary can interact with to make their progress. The others being systems, physical resources and employees.
In such a world, the familiar goods-service continuum doesn’t make sense. However, we can re-use the concept to observe a (self-)service-service continuum.
Now we observe that a beneficiary uses a service provider’s goods during acts of self-service. And uses, increasingly, service provider employees, physical resources and systems as we move to full service. Although in a digital world, the line between systems and goods can be blurred.
Whilst out first question in innovation should always be “what progress am I trying to help a beneficiary make”. Now we can add ”how would they like to be helped?”. Should we look to help them self-serve? Or provide a full service? Perhaps somewhere in between.
And we can understand the implications of that choice. For example, Self-service has less hold-ups, but requires the beneficiary to have more skills. Whereas, full-service lowers beneficiary risk, is simpler. But it reduces own sense of achievement. We need to remember that progress being sought is both functional and non-functional.
And those aspects of non-functional progress – safely, independently, availability, simplicity, sense of achievement etc – help position you in the innovation space and along the service-service continuum. Doing that is one step closer, mentally, on the service-service continuum than the goods-service continuum.
When we think in traditional terms about goods and service, we end up observing the traditional goods-service continuum. Where we appreciate that some goods (tangibles) come with supporting services. And some services (intangibles) come with supporting products. As in Figure 1.
For example, we might buy food at a supermarket, go home and cook it for an evening meal. This is at the tangible dominant end of the continuum. We are dealing with goods – the food items. (Well, OK, you could argue that the supermarket and distributors have provided a service, but let’s keep the example simple. You bought some goods and used them)
At lunchtime, though, you might have gone to an all you can eat buffet. You’re still mostly interested in the goods – this time the range of food on offer. But there’s a few services supporting the buffet. A cook has prepared the dishes. And a waiter has probably seated you and may have cleaned the table after previous guest so it was clean for you. We’ve shifted a little to the right on the continuum.
Tomorrow night you might be off to a 5-star restaurant with friends. Clearly there is still food (tangibles) involved. But now you’re mainly there for the experience and skills of the chef, waiting team and restauranteur. It’s a major service with supporting products.
And such a continuum leads us to concepts such as servitisation – wrapping goods up in service(s) in an attempt to find growth. As well as fitting into the narrative of there being some kind of goods vs service discussion.
This goods-service continuum works nicely in a world where we see a clear distinction between goods and service. However, that’s not where we need to be (or are).
Our Service Evolution
Over in my article on what is service I said we should not consider a world dominated by goods and then try and fit in service. Rather we should consider a service-first world, and see how goods fit in. That thinking leads to Grönroos’ definition of service. Which you can see again in Figure 2.
Now we can see that goods are just one of the service provider elements a beneficiary can interact with during a service. Along with employees, physical resources and systems.
We can draw a distinction in how the elements are used. Goods are mainly used in acts of self service. Cooking our own meal, for example is self service. Or we could buy (or already own) a drill and use it to make a hole in the wall to hang up a picture. Whereas the beneficiary using employees is not self-service.
What about using service provider’s systems? Well, that could be in an act of self-service. Think of online banking for example. Or it could be as part of a fuller service. Here we can think of those telephone menus we have to navigate to get to speak to a real human. Or the Uber app to summon a car. And the system might be a bot/AI agent fulfilling the role of an employee.
Similarly with the service provider’s physical resources. The hire cars, the uber vehicle, the restaurant building etc. And employees are used the more we move along away from self-service.
We’re seeing a service-service continuum emerge.
Here, in Figure 3, we see the service-service continuum. From self-service through to full service.
As we’ve noted, buying our own food and cooking it using our own pans and pots on our own stove is self-service.
Moving along the continuum to the buffet…we are still performing an element of self-service. Picking up our own plate. Going to the buffet counter and putting the food items we want on that plate. But we are using some of the service provider’s employees and physical resources now to make progress. Their cook is preparing the food, and their waiting staff making the tables clean for you before you arrive. You’re using the service provider’s location. And maybe even used their booking system to book a table.
In the afternoon at the boutique coffee shop the focus is still on a good – the coffee. But we’re no longer in a self-service act. You’re using the skills of the barista – a service provider’s employee – to get the bean you want and prepared in the best way.
Whereas at the 5-star restaurant, you would be disappointed if you had to do any self-service (beyond lifting the food from plate to mouth!).
In our service-dominant logic it is only the beneficiary that can determine value. And that means only they can determine where on the continuum they want to be. So, we need to think more about value.
Our value evolution
Beneficiaries are seeking to make progress with some aspect of their life. For example, above we wanted to get nourishment. It could equally be getting a hole put in a wall to hang up a picture. And this is not revolutionary news. Oft quoted is Theodore Levitt from 1969:
People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!often credited to Theodore Levitt (1969) “The Marketing Mode: Pathways To Corporate Growth”
And Christensen further refined this into his job to be done theory.
Based on that, and others, I’ve defined value as being founded on the concept of making progress. An enterprise can only offer a value proposition – how they propose to help a beneficiary make progress. And proposed value, as you can see in Figure 4, is partly made up of functional and non-functional progress.
Getting a quarter-inch hole, or nourishment, is the functional progress the beneficiary is seeking.
And equally important is that the beneficiary also seeks to make non-functional progress. Such as: safely, quickly, simply, to feel good, with reduced risk etc.
Only the beneficiary can determine value. That is to say how much progress they feel that can make using a value proposition, how much they are making, and how much they have made.
Complicating things is that beneficiaries can be quite fickle over over determining value. They do so based on context, or their lived experience and the experience they are having right now (phenomenologically, to use the academic term). For example, what makes you decide to cook at home Tuesday, eat out Wednesday and have a take-away on Thursday?
We can use this insight into non-functional progress to further understand the service-service continuum.
Service-Service Continuum – non-functional progress implications
Why did you choose to cook tonight instead of eat out at a 5 star restaurant? Or why did you drill the hole to hang up a picture instead of hiring someone to do it for you?
The answer is likely to be different for each reader. But there are common themes. Often we think about cost. And we don’t want to wait (be held up). Or you feel you have the skills to do the job yourself. These are all aspects of non-functional progress. Similarly you may choose a full service option to minimise your risk. And so we get an insight into innovation resistance. Which is something we wish to minimise (and recognise in the innovation adoption decision).
In Figure 5 I show how some of these non-functional progress look on the continuum.
And here’s some, non-exhaustive, examples of non-functional progress beneficiaries may be seeking to make. It’s difficult to give a general list, given the unique and phenomenological nature of value determination.
…not being held-up
A big benefit of self-service is that you usually are not “held up”. That is to say you are not dependent upon anyone else on when you can make progress. If you have the goods in your possession, you can make your functional progress when and whenever you want.
Whereas if you’re hiring an expert (full service) to make the hole, you are dependent upon their availability. Or if you are going to hire a hole making device, you’re dependent on the availability of the hirer. But here you can see innovation possibilities. If not being held up is key non-functional progress for beneficiaries, can you solve that? I’ve recently seen a service where hiring is done from unmanned toolboxes distributed across a city accessed via a mobile app.
…benefitting from technology updates
But there is a downside of owning goods. You are locked in to today’s (or yesterday’s) technology. There may be some huge leap in hole drilling technology that unless you buy a new goods you will not be able to take advantage of. Unless you buy the new goods.
Similarly, a service provider providing systems may reduce hold-up. Banking, for example has gone from using employees 5 days a week between 9-5, to 24/7 on-line self-service systems. Which reduces hold-up. However the lack (or reduction) in employees may hold-up resolving issues that don’t fit nicely into the systems. And here we see having to take a set of non-functional progress together. availabilty is one, but securely and risk transfer are other perhaps competing.
Or the majority of beneficiaries might prefer simplicity that comes with someone else making the hole than the ability to make it whenever they want to.
…beneficiary needs more skills and competence/risk transfer
However, a big downside of self-service is the need of the beneficiary to have relatively more skills and competence compared to a full service.
In our hole example, the beneficiary needs to know how to use the drill and how to avoid pipes and electric cables in the walls when drilling. Moving along towards full service the beneficiary can start transferring this risk. And/or get advice, so improve their competence.
These might not be so difficult in this drill a hole example. But say you want to make a 5-star restaurant meal at home, now you need a way of being a 5-star chef if you start from scratch. And that brings us to another not to be ignored non-functional element of progress.
…own sense of achievement
We talk of a shift to services – meaning really a move away from self-service. And there are several reasons we observe this. But equally, many beneficiaries will prize their own sense of achievement. Be that drilling their first hole or making that complicated restaurant meal at home.
And here you have an innovation space to explore that moves towards the self-service part of the continuum.
As a restauranteur, you can write a book to teach how to cook like you. Want to cook like Heston Blumenthal? There’s a book for that. Or recreate dishes from El Bulli? There’s books.
And that comes with the preparation done for you. You just need to finish off the cooking at home.
These are enabling home cooks to make functional progress with getting nourishment. But also the non-functional progress of own sense of achievement.
These type of insights are useful for our innovation space. And not so obvious from the traditional goods-service continuum.
With the evolved view of service – where beneficiaries seek to make progress using service provider’s elements of goods, employees, systems – the goods-service continuum looses relevance.
Though we can replace it with a helpful (self)service-service continuum. One that guides us in the innovation space. Our first question should always be “what progress am I trying to help a beneficiary make”. Now we can add the question of how would they like to be helped? Should we help them do something themselves (self service)? Or should we help them by doing it for them? Perhaps the answer is somewhere in between.
And it is important that when we think of where to place on the service-service continuum from a functional perspective that we consider non-functional progress. What skills/competence do we push to the beneficiary to have if we drive a self-service approach? Can we minimise that? What level of risk transfer can we help with? Are the beneficiaries looking for simplicity, speed, safety, sense of achievement or more?