Guest article by Bo Edvardsson.

How do we communicate and explain what we do as service scholars? We have a message and contribution to business and practice! But, are we building a service Ivory tower by using concepts that are hard to grasp outside the service community? How can we by breaking free from the services – goods divide and a narrow offering focus? Is service and NOT services creating a communication challenge? My experience is that the distinction between services and service is hard for practitioners to understand. Or, is it my inability to explain? Is value creation through service useful? 

I have during some time reflected on the essence of how we at the Service Research Center – CTF communicate our mission statement: Value creation through Service. I have discussed with leaders from a wide range of businesses, including Volvo and IKEA. I also learnt from participants in a program at CTF focusing on bringing service research to practice; Improving value creation through Service Education (ISE), with around 20 online courses (see website). My experience is that three interdependent aspects of value creation are particularly useful when bringing service research to practice:

1. Understanding what value creation is. Value creation can be understood as systemically, cocreated, actor defined and situation/context dependent. Value creation cannot be understood by focusing on offerings (goods, services, information), individual brands or firms only. Resources, actors, technology and institutional arrangements in a wider ecosystem is needed to understand what is shaping value creating processes and outcomes. This wider ecosystem scope is useful if not a necessity to inform management practice. This makes sense for managers. They understand the relevance. In the travel and hospitality industry, various service providers, such as airlines, hotels, tour operators, and transportation companies, collaborate to create value for customers. For example, a customer planning a vacation might book a flight, reserve a hotel room, arrange for local transportation, and purchase sightseeing activities. By integrating these services, the ecosystem creates value by simplifying the travel planning process, reducing customer effort, and enhancing customer experience.

Additionally, online travel platforms like Expedia and Booking.com act as intermediaries in value creation processes across ecosystems, to offer convenience and competitive pricing. By providing a single platform for customers to access a wide range of services, these platforms create value by saving customers time and effort in searching and booking individual services.

Smart home devices, such as smart thermostats, security systems, and voice assistants, create value by integrating with different service providers and offering enhanced convenience and control to customers. Companies like Amazon (Alexa) and Google (Google Assistant) have developed voice-activated assistants that connect actors to various devices and services. Customers can control their lighting, music, security, temperature in different rooms and even (remotely) order products through voice commands.

In these examples, value creation is driven by the integration of multiple service providers’ resources (offerings) within and across ecosystems, enabling customers to benefit from individualized experiences.

2. Controlling and governing value cocreation processes and outcomes; including quality, productivity, experience, circularity and profitability.  Firms and other organizations create online customer communities where customers can interact, collaborate, and co-create value. Controlling and governing such value co-creation processes is crucial to ensure intended outcomes and experiences.

LEGO created the LEGO Ideas platform, where customers can submit their own unique designs for LEGO sets. The community members can vote on the designs, and if a design receives enough support, LEGO considers producing it as an official set. LEGO carefully monitors the platform to maintain quality and ensure that designs comply with their guidelines. By controlling and governing the platform, LEGO can effectively harness the collective creativity of their customers and co-create value while maintaining brand integrity.

In business-to-business (B2B) service ecosystems, organizations often establish service level agreements to control and govern value co-creation processes and outcomes. SLAs define the agreed-upon terms, metrics, and responsibilities for delivering services between the provider and the customer. They serve as performance benchmarks and contractual obligations, controlling that the value created meets the expectations of engaged actors. Cloud service providers like Amazon Web Services (AWS) offer SLAs that control and specify uptime guarantees, response times for support requests, and data security measures. 

These examples highlight the importance of controlling and governing value co-creation processes and outcomes in service actors’ ecosystems. By implementing monitoring mechanisms, establishing guidelines, and defining performance expectations, organizations can maintain the desired direction and quality of the co-creation efforts, leading to enhanced value for both the customers and the organization.

3. Renewing value creation through innovation

Renewing value creation through innovation involves identifying and capitalizing on emerging trends, technologies, and customer engagement and needs. Innovation through robots are improving the creation of value in sectors such as healthcare, hospitality and not only in manufacturing firms. We all know the iPhone, which disrupted the mobile phone industry by combining features such as a touchscreen interface, internet connectivity, and a variety of multimedia capabilities in one device. Apple’s ability to anticipate customer experiences, design sleek and intuitive user interfaces, and create an ecosystem of complementary products and services has allowed them to continuously renew value creation.

Another example is Tesla. By continuously pushing the boundaries of what is possible in EV technology, Tesla has catalyzed a shift towards sustainable transportation and redefined the value proposition in the automotive industry. 

We benefit today from earlier innovations and the stream of innovations are continuously improving value creation through service. The examples above highlight how organizations can renew value creation in a wide range of ways by identifying untapped opportunities, leverage emerging technologies, and reimagine traditional industries. 

Conclusion

All organizations exist to create value and we need to understand and explain how! If we use Value creation through service to explain the relevance of our research for different actors, we might improve the impact of service research! Other suggestions? Let us continue the dialogue.

Bo Edvardsson
Professor of Business Administration, Karlstad Business School, Karlstad University
Founder of CTF Service Research Center, Karlstad University




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