It’s been more than 50 years since marketing thought began to shift toward what became known as the marketing concept—an attempt to focus the firm on customers. Yet, in practice, the customer centricity that the marketing concept produces is still highly firm-centric, usually concerned with trying to sell customers more of what the firm produces.

The problem with customer centricity at most companies is that it is grounded in an old enterprise or manufacturing pattern of thought—what has been referred to as a goods-dominant logic. This outdated logic regards what the firm produces as the proper focal point for creating value.

In contrast, a service lens regards the proper focus for value creation as helping customers to get one or more jobs done (i.e., accomplish a goal or resolve a problem). This reorientation enables firms to pose truly customer-centric questions grounded in value creation. In this article, we introduce four premises to guide marketing thought and practice that combine to form a service lens on value creation. The premises remove the constraining limits placed on how marketing can and should contribute to value creation and strategic advantage.

Service_Lens_Value_Creation_coverSERVICE IS WHAT IS ALWAYS HIRED TO GET A JOB DONE

Service is the application of resources, primarily knowledge and skills, for the benefit of another or oneself. In this sense, service is always what a company offers, though it can be provided either directly (e.g., tax preparation by a CPA) or indirectly through a good (e.g., tax-preparation software). In other words, all companies sell service (i.e., applied knowledge or skills), and strategic advantage comes from understanding, internalizing, and acting on this service logic.

In 2004, for example, Amazon began working on its vision to make it “easier than ever for customers to discover and enjoy books.” This service-centric vision led to the first Kindle e-reader in 2007. It sold out 5½ hours after it was released. As Amazon has continued with successive generations of Kindle e-readers and tablets, it has also evolved its recognition that the value of Kindle comes from the service it provides. For example, when Amazon introduced the Kindle Fire tablet in 2011, it was described as “a fully integrated, end-to-end service that gives customers access to more than 18 million movies, TV shows, books, magazines, apps and games.”

A company with a service lens removes the mental constraints of current offerings by focusing on redefining the knowledge and skills that can help customers get their jobs done better. Sustainable strategic advantage does not come from a firm’s offerings. Rather, it comes from know-how that can be applied for someone’s benefit—i.e., service. The proper focus of strategy is, therefore, to find unique, valuable, and sustainable ways of linking together an organization’s knowledge and skills with businesses or individuals who have jobs that will benefit from those resources.

THE CUSTOMER ALWAYS CO-CREATES VALUE TO GET A JOB DONE SUCCESSFULLY

A forward-looking perspective of value creation recognizes that a product is not embedded with value. Value is not something that things, or even people, possess. Rather, they possess capabilities that give them value potential. A digital recorder has no value until it is used to record and play back. In the same way, a gym membership has no value until it is used to exercise or mentally escape.

Value is realized when a customer relies on the service potential embedded in resources to get a job done. In other words, value does not come during acquisition (“value-in-exchange”). Rather, it comes during job accomplishment (“value-in-achievement”). This shifts the traditional view of the customer as a passive recipient of value to an active collaborator in value co-creation. Consider the surgeon who needs to replace a patient’s hip. Surgical outcomes are affected not only by the value realized from the implant and tools selected, but also by the surgeon’s training, procedure choices, senses, and skilful application of tools.

A service lens shifts the role of marketing from being a value distributor to being a value enabler. The customer is no longer viewed as a “target” for value delivery, but rather as a “partner” who actively contributes to value creation. Rather than shying away from customer involvement, companies that compete with a service lens utilize customers as resources in value creation and actively search for innovative ways of co-creating value with them.

ALL FIRMS AND INDIVIDUALS INTEGRATE RESOURCES TO GET AN ENTIRE JOB DONE

Though the tide has shifted dramatically in the past 20 years to a greater focus on the potential within resources, a focus on resources as things still permeates business thinking and creates mental barriers as to what is seen as a resource.

A service lens reveals that all resources should be viewed as bundles of potential service(s). Ladybugs, for example, have become big business as both homeowners and farmers are increasingly “hiring” them, rather than using pesticides, to control bugs that are harmful to gardens and crops.

It is critical that the resource-integration role of a company extend beyond its inputs and outputs to include external environments, partners, and stakeholders as well as customers and their resources. The city of Paris, for example, has created Autolib, a public-private partnership to provide 3,000 autos in Paris for auto sharing. Importantly, the partnership integrates the resources of over a dozen private partners such as auto manufacturers, insurance companies, parking garages, banks, and recharging stations.

Operating with a service lens, it is marketing’s role not only to create a value proposition based on the information gleaned from others, but also to ensure that the entire network of resource-providing stakeholders (such as customers, employees, and partners) understand it and what role they play in fulfilling it.

VALUE IS ALWAYS SPECIFIC TO THE CONTEXT IN WHICH A JOB IS DONE

Value always depends on the context in which a job is done because co-creation is inherently experiential. Value co-creation happens as customers integrate a unique set of resources through service provision to satisfy their distinct value priorities in getting a job done at particular times and locations. As such, companies must expand the traditional lens on customer experience beyond “product use.”

The development of the ChotuKool refrigerator by Indian conglomerate Godrej and Boyce is an excellent illustration of contextual innovation with a service lens. From the beginning, the $69 portable refrigerator was designed with input from village women to ensure its acceptability in the usage context. For example, because the vast majority of people in India live in rural areas that have very poor access to power, the ChotuKool was designed with high-end insulation that enables it to stay cool for hours without power.

With a service lens, the role of marketing is to understand how context affects the ability of a customer to realize the value they desire in getting a job done. It must then segment the market based on use context, barriers, and individual resources; create value propositions that anticipate unique job priorities by context; innovate service that fits the context; and ensure that internal and external stakeholders fulfil their role in co-creating value for specific contexts.

With a service lens, marketing should be viewed as the set of processes for: co-creating value with customers by identifying and developing organizational competencies; connecting with customers who value the competencies for the jobs they are trying to get done; integrating resources across the company, customers, partners, and society at large in support of customer value co-creation; and assessing and responding to how well value promises have been fulfilled. This view removes many mental barriers on what marketing is and, in so doing, opens boundless possibilities of what it can and should be.

This blog post was excerpted from an article in the Fall 2014 issue of California Management Review (citation below).

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Excerpted almost entirely from the article: Bettencourt, Lance A.*, Robert F. Lusch, and Stephen L. Vargo (2014), “A Service Lens on Value Creation: Marketing’s Role in Achieving Strategic Advantage,” California Management Review, 57 (1 | Fall), 44-66.  

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Original Post: http://www.service360partners.com/marketings_new_role/

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