The Big Picture…

Value, in service-dominant logic, is both co-created and uniquely determined by the beneficiary (axioms 2 and 4).

Therefore, it simply follows that taking a service-centred view is inherently beneficiary oriented and relational.

If the beneficiary cannot see what progress they are able to make using the service, they are unlikely to try and engage to explore value co-creation. So, any value proposition must be inherently beneficiary oriented.

Similarly, the act of service delivery, and value co-creation, can only happen through a series of interactions. Thus we are inherently relational in a service-centred view.

Finally, note that this foundational premise is not a direction. It is not saying you must strive to be beneficiary oriented and relational. It is just a logical conclusion from 2 axioms.

A goods-centred view

I’ve covered before that a goods centred view is mainly focussed on the manufacturer and a point of sale. Where there is a clear separation between manufacturer and customer. A manufacturer embeds value by their process of manufacturing. And that value is exchanged with the customer. Who then goes about destroying that value they have just acquired.

The implications here are twofold.

First, the manufacturer starts seeing themselves as the one that benefits. They have embedded the value, and are rightfully getting paid for that. Secondly, the exchange is usually transactional, and one-off, in nature. In the case where the customer is a repeat buyer, those later purchases are just seen as a series of one-off transactions.

Of course, in real life, even discrete transactions can come with some relationship. As Vargo & Lush (2014) point out:

even apparently relatively discrete transactions come with social, if not legal, contracts (often relatively extended) with implied, if not expressed, warranties. They are promises and assurances that the exchange relationship will yield valuable service provision, often for very extended periods of time.

And interestingly, they also go on to tie this to brand equity

These contracts are at least partially represented by the brand of the offering firm. Part of the compensation for the service provision is the creation and accumulation of brand equity (an off-balance sheet resource)

It’s when we move to take a service centred view that we observe a beneficiary centred and relational approach are inherent.

A Service-centred view is…

A service-centred view is, however, inherently beneficiary oriented and relational. Those things just happen rather than are a direction to try and follow. And here’s why. They are necessary because of two axioms of service dominant logic.

Inherently beneficiary oriented

Axiom 4 of service-dominant logic (which is foundational premise #10) tells us that:

Value is always uniquely and phenomenologically determined by the beneficiary

Foundational premise #10 (Axiom #4) of Service-Dominant logic

And so when we take a service-centred view, we are always beneficiary oriented. If not, then there is no value for the beneficiary.

Inherently relational

Another axiom, axiom 2 (which is foundational premise #6) tells us:

Value is co-created by multiple actors, always including the beneficiary

Foundational premise #6 (Axiom #2) of Service-Dominant logic

And for there to be value co-creation, there needs to be a relational approach. As co-creation takes part in interactions and integrations of all the actors resources.

Wrapping up

This foundational principle is more an observation as to what must be happening than a direction of something to implement. The very nature of service-dominant logic value co-creation and how value is determined means a service-centred view is beneficiary oriented and relational. Vargo & Lush added the word inherently to point out this is not a normative (Vargo & Lush (2018)).

to add:

But perhaps listening to customers is not always best?

If I had asked people what they wanted, they would have said faster horses.

Allegedly Henry Ford, though disputed in Havard Business Review’s Henry Ford, and That “Faster Horse” quote

Even if Ford never said that quote, we do need to understand customers better. Both before they use our product, during and after.