Welcome to the Understanding Service Journey

I believe a key to the innovation problem is to take a service-first view of our world. Rather than start with goods and try and determine where service fits, we start the other way and see where goods fit in a service world. And it turns out, goods fit nicely into our service-first thinking. Compared to goods-first thinking where service is seen as a problem.

Our challenge is that our casual (and often academic) view of the world is goods-centric. That comes from observations starting in the industrial revolution (and before). And we can easily define goods (tangible items) and say that service is intangible, inconsistent, can’t create an inventory, etc (there are in fact 5Is).

We also tend to see value as being embedded by the manufacturing process, and exchanged at the point of sale (so called value-in-exchange).

Yet, our economies are around 80% built on service. And this is growing. And service doesn’t really have value-in-exchange. We have a more complex value-in-use; and value is co-created. This is a good thing, as value becomes an item under control, rather than fire and forget.


In this article journey, we observe there are four main causes behind the shift to service economies – economic, user behaviour, asset usage and value of data.

We look at what service is through many definitions. We find that classically we define service as a poor relative to goods. Noting that they are intangible, inconsistent, inseparable, can’t build an inventory, and need involvement. However, we further find that these attributes are actually good attributes. Inventory is expensive, inconsistent means configurable etc.

And when we start with service and see where goods fit in, we find that a beneficiary is trying to make progress in some aspect of their life. And to do so, they integrate with a service. That service is supported by people, systems and goods of service providers. Imagine being thirsty. You can either grab a bottle of water from a fridge (goods) or turn on the tap and pour yourself a glass of water (service). In reality, both are helping make the progress of removing the thirst.

Next we uncover a more formal way of describing a service – as a set of characteristics. Once we have that, we can then understand what service innovation is – improvements to those characteristics.

And we introduce den Hertog’s 4-dimension model that we can use for searching for service innovations. We enhance it to reflect the modern world that is technology and data forward. And we see how we can use the concepts in that model to manage a service innovation portfolio. As well as understand our ability to execute service innovations (and where we could improve).

You may be surprised to learn that the service economy is around 80% of the economy in "developed" lands (already 79% in UK). And it is an economic segment that is increasing everywhere.

I explore why we shift towards service dominant economies and the impact of that shift.

Not least if that you need to think of innovation differently for the service world than you do at present

Reading time <11 mins

In our increasingly service based economies it is important to understand what services are.

We gain this understanding by looking at services through academic definitions, marketing, and economic attributes, a continuum between gods and services and finally the logic behind services.

Reading time <20 mins

Can we define what a service is in a more formal way? And then use that to better understand what innovation means?

Yes we can. Service(s) can be defined as lists of:

  • External Characteristics - what the end user experiences, including parts of the business model
  • Technical Characteristics - the processes, tools, and products used to deliver the service; including the client interface
  • Provider competences - the competences the individuals in provider bring to the table
  • Customer competences - the competences the customer brings to the service
It is the particular interaction between a combination of competences and technical characteristics that deliver the external characteristics.

Service innovation is then the act of adjusting these competences and characteristics to generate new/additional value

Reading time <16 mins

We can understand exactly what innovation - and its different types, for example: incremental, radical, ecosystem etc - means when we use a characteristics model.

Even better, a characteristics model provides a framework on which we can more systematically hunt for innovation. Including the impact of introducing partners in an ecosystem

Reading time <8 mins

In a goods-dominant logic, we define services in contrast to goods. And the definition leads to negative interpretation of service. Goods are good, services are inconsistent, inseparable, can't create an inventory etc

But is this tarring of service justified and correct? Not really. And we'll summarise two papers in this article to highlight this:

  • Lovelock & Gummerson show that not all goods-dominant logic attributes for services are applicable to all services.
  • Lush & Vargo show that these negative attributes should be looked at as benefits.

Intangibility powers scalability, inconsistency is really customisation. Lack of inventory reduces costs and focusses value creation at the point of consumption. And inseparability/involvement leads to the benefit of co-creation of value.

Reading time <8 mins