The Big Picture…
Value co-creation – where actors are seen as working together to co-creation value – is a distinguishing aspect of service-dominant logic.
But where there is co-creation could there be co-destruction? Yes. And it defined as when interactions between actors result in a decline in at least one of the actors’ well-being (Plé and Cácares (2010)). Think of bad hotel service, misunderstandings in Agile software delivery, imposing self-service or abusing review platforms. But also, open innovation could suffer.
At a high level, it comes about when one or more actors misuses their own or other resources, either accidentally, or intentionally. But there are subtleties in this, which Lintula et al (2017) pull out in their framework below.
They say that value co-destruction comes from a variety of components spread over time (before, in-use, and after service provision). And can be grouped into 3 dimensions:
- orientation – goals and intentions
- resources – lack, misuse, non-integration, and loss of resources. As well as when an impacted party tries to recover loss (e.g. posting a bad review online of service delivery)
- perceptions – expectations, the incongruence of applied practices (different views), insufficient perceived value and contradictions in value for a party.
Each actor can take one of several positions (Echeverri and Skålén). They can be a
- co-reducer or
- co-destroyer of value.
What is value co-destruction?
Much is made in service-dominant logic about value being co-created. It is even captured as an axiomatic foundational principle:
Value is co-created by multiple actors, always including the beneficiaryAxiom 2 / Foundational Principle #6 of Service Dominant Logic
And we see this value co-creation as happening through interactions between actor generated institutions (individuals or organisations). The result of those interactions being the increase in the system’s well being. This is captured in another axiom:
Value co-creation is coordinated through actor-generated institutions and institutional arrangementsAxiom 5 / Foundational Principle #11 of Service Dominant Logic
Or in plainer English: you, as an actor generated institution, want insurance. To do that, you’ll interact with an insurance company, another actor generated institution. And together, you explore insurance offerings, perhaps tailoring them, to co-create something that has value for yourself (you, as the beneficiary, become insured). At the same time, the insurance company gains valuable data that helps it tailor its future offerings. In this case, both you and the insurance company are better off after the interaction. Although you may have generated different levels of perceived value.
It’s not always value co-creation…
And where value can be co-created, Plé & Cáceres claim – not unreasonably – it also can be co-destructed. In “Not Always Co-Creation: Introducing Interactional Co-Destruction Of Value In Service-Dominant Logic” they introduce value co-destruction as:
an interactional process between service systems that results in a decline in at least one of the systems’ well-beingPlé, L., Cáceres, R. (2010)
They see that this decline in at least one of the system’s well-being comes as a result of the misuse of one or more of the systems’ resources. In general, if two service systems are interacting, then either of the systems could misuse their own or the other’s resources, either accidentally or intentionally, leading to value co-destruction.
And it is important to note that value co-destruction can for all or just one of the actors involved in the service (Plé, 2017).
Let’s jump to some better examples!
Examples of value co-destruction
I find it’s always easier to get the concepts by looking at some examples. Below I’ll highlight bad service experience, abuse of review platforms, Agile software development, co-innovation (open innovation) and imposing self-service.
Bad service Experience
Not all interactions between firms and customers are enjoyed. Nor are they all perceived in a positive manner by the customer (Prahalad and Ramaswamy). I think we’ve all experienced this guy at some point:
Here the hotelier is misusing his own resource (himself) to create poor interactions with hotel guests. His behaviour leads guests to behave differently to him; which cyclically leads to worse behaviour. Value is co-destroyed.
Abuse of Review Platforms
TrustPilot, Air B’n’B, Uber, Yelp, Amazon, TripAdvisor and more offer the ability for people to leave reviews on a variety of services.
The value co-creation potential of such sites is three-fold. Firstly, on one side of the platform, is the actor that offers the value proposition. Better reviews by beneficiaries should lead to more custom. On the other side of the platform is the potential beneficiary (customer). Truthful reviews help them make decisions. And thirdly the platform itself benefits. With more usage comes more eyes, and more eyes mean popularity which means even more eyes. And eyes often translates to advertising revenue.
Yet it is easy for customers, even fake customers, to leave malicious untrue reviews – a misuse of the platform resource. Now the value is destroyed for the actor offering the proposition. And the value is destroyed for the customers as they may decline great offers. As is the value destroyed for the platform if both parties start to distrust it.
Agile Software Development
Developing software in an Agile manner offers many promises. Not least flexibility and a focus on the early generation of business value. Both the business and software development team work together co-creating value. Guided by four principles:
- Individuals and Interactions Over Processes and Tools
- Working Software Over Comprehensive Documentation
- Customer Collaboration Over Contract Negotiation
- Responding to Change Over Following a Plan
But if either party does not understand the approach and ways of working, then they quickly start misusing the other party’s resources. Value is quickly co-destroyed.
And in my experience, many on the business side want an Agile approach, but struggle to give up the certainty (and disappointments) of fixed price and fixed schedule contracting. Value co-destruction arises as the business perceives it is not getting what it wants. And similarly, the developers feel they are in a war they cannot win.
Open Innovation – in general, asking outsiders for ideas – is an example of value co-creation. Firms publish challenges and look to outsiders to submit ideas. Interesting ideas are discussed further; with the expectation that some of those interactions lead to co-creation of value.
However, as Plé & Cáceres note, there is a challenge if your open innovation looks to customers/the public. Customers have limited knowledge of the technologies available. And so are not best placed to predict which innovations are best to chase or able to envisage how innovations would be used. As such, customers are unable to use their or the firm’s resources in the best way.
Value co-destruction comes about as the firm becomes less competitive by being distracted into chasing ultimately wrong innovations. And for the customer, they can feel they are wasting time they could spend elsewhere and risk getting frustrated with the firm.
Plé & Cáceres also list an example of firms shifting interactions to an automated self-service approach. It’s not uncommon today to see self-service in supermarkets. However, the willingness of customers to adopt self-service is variable (perhaps due to innovation resistance). When a firm imposes self-service technology on customers, those customers can see this as a misuse of the firm’s resources to adversely impact their well-being.
Framework for Value co-destruction
But it turns out that linking value co-destruction to accidental or intentional misuse of resource is simplistic. Since Plé & Cáceres paper there has been more research done.
Lintula, Tuunanen, & Salo’s paper “Conceptualizing The Value Co-Destruction Process For Service Systems: Literature Review And Synthesis“. surveyed the literature. From that, they developed a framework to understand value co-destruction.
That framework identified three dimensions of components leading to value co-destruction. These are: orientation, resources and perceptions. And these components arise at different times: before, during, or after the service process. Figure 1 shows this framework.
Let’s look at these dimensions and components in turn.
Goals and Intentions
What are the goals and intentions of each actor in the interactions?
In “Co-Creation And Co-Destruction:: A Practice-Theory Based Study Of Interactive Value Formation“, Echeverri and Skålén take a practice-based view. They identify four positions an actor can take. They can be value co-creators or co-recoverers. Or they can be value co-reducers or value co-destroyers. These positions come from how they interpret the procedures, understandings and engagements in five interaction value practices – informing, greeting, delivering, charging and helping.
I look at this more in this article [link to come].
Service is the co-ordination of resources for the benefit of others or the entity itself. And in service-dominant logic, we see operand resources – those that act on things with skills and knowledge – as being the source of strategic benefit. Through operant resources – goods – can be used as distribution mechanisms for service.
Customer resources that are potentially used in value co-creation were investigated by Plé in “Studying customers’ resource integration by service employees in interactional value co-creation“).
Lack of Resources
If resources are lacking in any actor then the process of value co-creation through interactions will likely fail, leading to value co-destruction. Examples would be lack of:
- time and or skills
- information being provided
Our example of public open innovation is an example of lack of knowledge, usually on the side of the public. As well as information being provided. The public is unlikely to get certain useful information from the firm.
And Lintula et al summerise Robertson et al’s online medical diagnosis example (from “Are my symptoms serious Dr Google? A resource-based typology of value co-destruction in online self-diagnosis“).
value was co-destructed by both the provider and the user due to initial lack of resources. Consumer …often couldn’t comprehend the provided information due to lack of resources, such as sufficient medical knowledge, and secondly, providers often lacked resources to provide users with complete and understandable information. Due to initial lack of such resources, false and incomprehensible self-diagnoses occurred with a negative impact on customers’ well-being, and thus, value was co- destructed in the interactions .Lintula, Tuunanen, & Salo (2017) Conceptualizing The Value Co-Destruction Process For Service Systems: Literature Review And Synthesis
Misuse and non-integration of resources
We’ve already seen the Plé and Cáceres originally definition of value co- destruction. That it comes from the accidental or intentional misuse of resources during the interaction process between service systems. And that the misuse could be of own and/or other actor’s involved resources.
Lintula et al add to this misuse, the non-integration of resources. Here one of more actors decide not to integrate their resources. The Agile software development is an example. When the business do not follow the expected ways of working, they are non-integrating their resources. And that leads to value co-destruction as the Agile approach cannot be used (and so business value is not achieved).
Loss of Resources
If expected resources are lost, then value co-creation is likely hampered. And in certain cases, such as the loss is too much to handle, then value co-destruction occurs.
Lintula et al point to Smith’s work on “The Value co-destruction process: a customer resource perspective” who states:
From the customer point of view, loss of resources (value co-destruction) would occur in four scenarios:Smith (2013) The Value co-destruction process: a customer resource perspective
1) the provider is unexpectedly not able to fulfil the expected resource offer
2) expected resources are not gained
3)customer loses more resources than expected or
4) “A combination of the above”
Attempt to Restore Resources
This, to me, is a little misleading. We are not talking about the impacts of trying to restore lost resource. Rather Lintula et al refer to the negative actions an impacted actor may take due to a perceived loss of resource in the other party. This may lead to a secondary value co-destruction for one or more parties
Lintula point to a consumer that orders from an online food delivery service. And that delivery is late. The consumer experiences loss of resources (time, perhaps money etc). In response, the consumer publicly complains on Twitter etc. Now the service may suffer secondary loss, such as reputation.
Employees’ integration of customers’ resource(s) in interactions is a dynamic process that may initially generate value co-creation (co-destruction) before it eventually results in value co-destruction (co-creation)Plé Studying customers’ resource integration by service employees in interactional value co-creation
Which means that initial value co-destruction may turn to value co-creation through interactions, and vice-versa. We’ve all heard of examples where bad experiences highlighted on social media have been turned around by savvy firm responses.
We all partake in service with perceptions. When those are not met, we may see value co-destruction.
Lintuna et al find three ways expectations can lead to value co-destruction.
Firstly, when expectations of service are not met by all parties involved then value co-creation is not achieved. And so value co-destruction can be inferred.
They further note that if one party’s expectations are not met, then that may lead to their intentional misbehaviour. Think again of our dissatisfied on-line food deliver service leaving a scathing review.
Finally, resources may be used or integrated in an unexpected or inappropriate way, leading to the concept of value destruction-through-misuse (the opposite of value-in-use).
Insufficient Perceived Value
Service starts with a value proposition. And when partaking in a service actors have a perception of the value they expect to create. We know that this perception is phenomenological, that is to say, based on lived experience.
Value co-destruction comes from when the expected level of service is not met or non-preferred value being co-created.
Incongruence of Practices
If we jump back to Echeverri and Skålén’s practice-based view of service delivery (in “Co-Creation And Co-Destruction:: A Practice-Theory Based Study Of Interactive Value Formation“) we find that value co-destruction can arise when actors have differing views of any of the procedures, understandings and engagements.
They highlight, for example, someone running to catch a bus at a bus stop, which pulls off before the person gets there. In the eyes of travellers this can be seen as a negative – why didn’t you wait for her as you saw her running. But the driver might be following procedures related to the traffic light system they will miss if they have already activated the “let me through, I’m a bus” button.
Contradiction of values
Lintula et al (2018) define contradiction of values as follows in their investigation of Augmented Reality mobile games:
value is co-created for a user while a different value is co-destroyed during or after the use of the serviceLintula et al (2018) “When Value Co-Creation Turns to Co-Destruction: Users’ Experiences of Augmented Reality Mobile Games“
And they give as an example value contradictions “playing the game was fun, but it took her away from her young child, which made her feel like a bad parent”. “Wanting to take care of responsibilities”, “Luck defines success too much”,”Play takes time from other things in life”,”Playing excludes others”,”Setting a bad example for kids”
Vartiainen and Tuunanen (2014) looked at value contradictions in geocaching and identified the following contradictions: “i) an open secret society exists; ii) hedonism-seeking undermines hedonistic experiences; iii) one can experience nature while consuming it; and iv) building community occurs with competition.“