Category: Understanding Service

Our economic (and casual) view of the world is very product-centric. We feel comfortable with tangible things. And have built up ways of thinking and acting (a logic) around the value of (tangible) goods and that we exchange value by exchanging goods. We see that the manufacturing process is where value is added – raw goods are less valuable than something they are manufactured into.

Yet, our economies are around 80% built on service. And this is growing.

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.

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.

Finally 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 implement service innovations (and where we could improve).


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

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 <12 mins

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

How do we understand service innovations?

In this article we find that we innovate in services in three broad categories: emerge, enhance and extend.

  • Emege - brand new innovations, including servicisation of products
  • Enhance - improvements and incremental innovation
  • Extend - moving our service sideways, or downwards; as well as aligning with other services to increase our success

To help us understand this, we use Gallouj & Weinstein's model. This breaks services into two sets of characteristics - external and technical - and two sets of competences - provider and end user. Innovation is then a case of changing those characteristics and/or competences that creates new value

Reading time <14 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