1 © E. Gummesson 2008 2 22nd Service Conference and Workshop University of Westminster London,...

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© E. Gummesson 2008

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22nd Service Conference and WorkshopUniversity of WestminsterLondon, November 2008

HOW ARE SERVICE-DOMINANT LOGIC,

SERVICE SCIENCE &MANY-TO-MANY MARKETING

RELATED?

Professor Evert GummessonStockholms University School of Business, Sweden

[email protected]

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OPEN SOURCE CODE[MASS]COLLABORATION

CONTINUOUS IMPROVEMENTS

Let theory emerge both through own reflection and in dialogue with others.

Don’t debate -- create constructive dialogue!

Don’t ”test” theory! Either erase its weak points through incremental improvements or offer a quantum leap, a new paradigm.

GUIDELINES FOR SCIENTIFIC RESEARCH

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The word system is derived from the Greek systema, meaning “a whole composed of many parts”.

Complexity, from the Latin verb complecti meaning ”to twine together” and the noun complexus meaning network.

Context, from Latin contexere, “to join together”.

Complexity, including networks and systems thinking, has started a natural science family, complexity theory. Its members embrace complexity instead of shunning it. Complexity theory family members are network theory, quantum physics, chaos theory, autopoiesis (self-organizing systems), fractal geometry, string theory, and more.

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NetworksMany-to-Many Marketing

Service-Dominant LogicS-D Logic

Service Science

THESE APPROACHES FULFIL MY DEMAND FOR AN OPEN SOURCE CODE,[MASS]COLLABORATION, AND CONTINUOUS IMPROVEMENTS.

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SERVICE-DOMINANT LOGICS-D LOGIC

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Recent references:

Vargo, S. L. and Lusch, R. F. (2008), “Service-dominant logic: continuing the evolution”, Journal of the Academy of Marketing Science, Vol. 36 No 1, pp.1-10.

Vargo, S. L. and Lusch, R. F. (2008), “Why ‘service’?” Journal of the Academy of Marketing Science, Vol. 36 No 1, pp.25-38.

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FP1Service is the fundamental basis of exchangeThe application of operant resources (knowledge and skills), “service,”as defined in S-D logic, is the basis for all exchange. Service is exchanged for service

FP2 Indirect exchange masks the fundamental basis of exchangeBecause service is provided through complex combinations of goods, money, and institutions, the service basis of exchange is not always apparent

FP3 Goods are a distribution mechanism for service provisionGoods (both durable and non-durable) derive their value through use – the service they provide

FP4 Operant resources are the fundamental source of competitive advantageThe comparative ability to cause desired change drives competition

FP5 All economies are service economiesService (singular) is only now becoming more apparent with increased specialization and outsourcing

FOUNDATIONAL PREMISES (FPs)

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FP6 The customer is always a cocreator of valueImplies value creation is interactional

FP7 The enterprise cannot deliver value, but only offer value propositionsEnterprises can offer their applied resources for value creation and collaboratively (interactively)create value following acceptance of value propositions, but can not create and/or deliver valueindependently

FP8 A service-centered view is inherently customer oriented and relationalBecause service is defined in terms of customer-determined benefit and co-created it isinherently customer oriented and relational

FP9 All social and economic actors are resource integratorsImplies the context of value creation is networks of networks (resource integrators)

FP10 Value is always uniquely and phenomenologically determined by the beneficiaryValue is idiosyncratic, experiential, contextual, and meaning laden

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Service, not services as opposed to goods

There is no service sector, no manufacturing sector and no agricultural sector when seen through the customer eyeglasses

SUMMARY: KEY POINTS

The service sector is a ghost!

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Service

Service

Agriculture

Manufacturing

Example:a restaurant

A restaurant is dependent on the factory (kitchen)and the food (from the agricultural and manufacturing sectors).The only sector it can do without and still feed people is the service sector. And yet it is classified as belongingto the service sector!

X

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Companies offer value propositions

Customers are responsible for value actualization

Customers are co-creators and resources

The ultimate in co-creation of value: the IKEA Car.

Comes with screwdriver in a flat package. Unbeatable price.

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Traditional American marketing managementand marketing mix

Customer centric Centered on one party

Customer

Relationship marketingCRM One-to-one marketing

SupplierCustomer

Relationship centricCentered on two parties

Many-to-many marketing

Network centricCentered on many parties

There is a network involved beyond just supplier and customer

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SERVICE SCIENCE

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The ultimate goal of service science “…is to apply scientific understanding to advance our ability to design, improve, and scale service systems for business and societal purposes…”

Source: Maglio, P.P. and Spohrer, J., (2008), “Fundamentals of service science”, Journal of the Academy of Marketing Science, Vol. 36 No.1, p. 20.

“… service-dominant logic may be the philosophical foundation of service science, and the service system may be its basic theoretical construct.”

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Benoît B. Mandelbrot (born 1924) is the father of fractal geometry. Worked at the IBM Thomas J. Watson Research Center in Yorktown Heights, New York from 1955 to1987.

IBM contribution to complexity theory

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Mandelbrot extended the scope of geometry from the circle, square and the triangle...

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A fractal is an irregular geometric object that is self-similar to its substructure at any level of refinement.

...to non-smooth and complex parts of the real world:

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Natural fractals include the shapes of mountains, costlines and river basins; the structure of plants, blood vessels and lungs; the clustering of galaxies.

Man-made fractals include companies, management, service, and stock market prices, but also music, painting, and architecture.

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MANY-TO-MANY MARKETING

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My definition:

“Many-to-many marketingdescribes, analyzes and utilizes

the network properties of marketing.”

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Everything we do in marketing and management is rooted in

interaction in

networks of

relationships

TOGETHER THEY FORM UNIQUE MANY-TO-MANY MARKETING

SITUATIONS

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Madelene, daughter in the city

Dagmar, 85, neighbor

Ingrid & Gunnar, neighbors

Laila, Sverker,Linnea & Fredrik,neighbors

Retailer

Transportcompany

Electrolux

WE & OURFREEZER

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OUR FREEZER

Madelene, daughter in the city

Dagmar, 85,neighbor

Ingrid & Gunnar,neighbors

Laila, Sverker,Linnea & Daniel,neighbors

Retailer

Transportcompany

Electrolux

WE

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Planning the next Olympics – who’s going to get it?

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Chinese art and entertainment and...

... Steven Spielberg bringing Hollywood to Beijing

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Beijing Olympics Creates Job Opportunities In China and Asia

The media, advertising and public relations sectors in China and Asia (Singapore, Hong Kong, Japan) are looking for more talents to fill in positions as the Beijing Olympic Games is drawing near. International and local (China) sponsors are looking ways to maximize their sponsorship dollars in the Games. Advertisers are also more interested in online and mobile medium now as compared to the previous Olympic games. These activities have in turn drive a need for qualified talents.Much of this growth is driven by the demand for Olympics-related marketing and publicity projects, which are now moving into the implementation phase.

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Not just a shoe –a scientific sportsproduct

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Function, fashion andglamor

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Preparing at an early age

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The Olympics form a HUGE

HUUGE

HUUUGE service system of

networks of networks!

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Network theory:

both methodologyand a theory of life

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“Networks are the fundamental stuff of which neworganizations areand will be made.”

Source: Castells, Manuel, The Rise of the Network Society.Oxford, UK: Blackwells, 1996, p. 168

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Albert-László Barabási, Professor of Physics, in Linked: The New Science of Networks (2002) underscores network applications to markets:

“…understanding network effects becomes the key to survival in a rapidly evolving new economy.”

(p. 200)

“In reality, a market is nothing but a directed network.”

(p. 208)

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Networks of life:network of interactionsbetween proteins inbaker’s yeast

Source: Buchanan, Mark (2003), Small World. London: Phoenix, p. 144.

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THE OLYMPICS ARE A

GALAXY OF INTERRELATED

EVENTS, TECHNOLOGY,

EMOTIONS, AND MORE...

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air BalticAir Chinaair greenlandAir OneAtlantic AirwaysCimber AirCity AirlineEstonian AirQantasSkywaysWideroe

Adria

3 REGIONAL PARTNERS

11 SPECIALSAS PARTNERS

Blue 1

Croatia Airlines

Star Alliance

TAP Portugal

ThaiUnited

SWISS

US Airways

Spanair

South African Airways

Austrian

Asiana Airlines

Lufthansa

LOT Polish Airlines

bmi british midland

SAS Scandianvian Airlines

Singapore Airlines

Shanghai Airlines

Air New Zealand

Air China

ANA All Nippon Airways

Air Canada

19 FULL PARTNERS

THE STAR ALLIANCE,FEBRUARY 2008

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Advantages of a network approach.It can accomodate:

Complexity Context Change Non-linearity Both parts & the whole Both structure & process Both tech & human aspects

COMPLEXITY

THEORY

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* Nodes and links* Hubs* Random networks* Planned networks* Clusters* Connectors* Preferential attachment* Rich gets richer* Fitness* Fit-get-rich* Winner-takes-all* Scale-free networks* Power laws* Phase transition* Robustness, error tolerance* Cascading failure* Tipping points* Thresholds* Spreading rates* Self-organizing* Six degrees of separation* What is the Internet, really?

A SAMPLE OF CONCEPTS AND

ISSUES FROM

NETWORK THEORY:

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* Nodes and links* Hubs* Random networks* Planned networks* Clusters* Connectors* Preferential attachment* Rich gets richer* Fitness* Fit-get-rich* Winner-takes-all* Scale-free networks* Power laws* Phase transition* Robustness, error tolerance* Cascading failure* Tipping points* Thresholds* Spreading rates* Self-organizing* Six degrees of separation* What is the Internet, really?

A SAMPLE OF CONCEPTS AND

ISSUES FROM

NETWORK THEORY:

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OVERLOAD?

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To become excellent researchers and educators, marketing scholars should:

recognize complexity and deal with it

learn network theory and other methods that address complexity

understand the real roles of suppliers and customers

get out of the box of conventional marketing thinking

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Publications 2000-2008 (selected)

On service, relationships and networksGummesson, E. (2002), ”Relationship Marketing in the New Economy”. Journal of Relationship Marketing, vol. 1, no. 1, pp. 37-57.Gummesson, E. (2002), ”Relationship Marketing and a New Economy: It’s Time for De-Programming”. Journal of Services Marketing, vol. 16, no. 7, pp. 585-589.Gummesson, E. (2003), ”Relationship marketing: It all happens here and now!” Commentary, Marketing Theory, vol. 3. no.1, pp.167-169.Gummesson, E. (2004), ”Return on Relationships (ROR): The Value of Relationship Marketing and CRM in Business-to-Business Contexts”. Journal of Business and Industrial Marketing, vol. 19, no. 2, pp. 136-148.Gummesson, E. (2004), ”Service Provision Calls for Partners Instead of Parties.” Commentary, Journal of Marketing, vol. 68, no. 1, pp. 20-21.Lovelock, C. and Gummesson, E. (2004), ”Whither Services Marketing? In Search of a Paradigm and Fresh Perspectives,” Journal of Service Research, vol. 7, no.1, pp. 20-41.Gummesson, E. (2004), Many-to-Many Marketing, Liber, Malmö, Sweden, 244 pp; test edition in English will be available in 2008.Gummesson, E. (2004), “From One-to-One to Many-To-Many Marketing.” Plenary Session Presentation at the QUIS 9 Symposium, Karlstad University, Sweden, June 15-18, 2004. Published in Edvardsson, Bo et al., eds., Proceedings from the QUIS 9 Symposium, Karlstad, Sweden: Karlstad University, pp.16-25.

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Gummesson, E. (2006), “After Relationship Marketing, CRM and One-to-One: Many-to-Many Networks,” Finanza Marketing e Produzione, no.1, pp. 138-144.Gummesson, E. (2006), “Many-to-many marketing as grand theory: A Nordic School contribution.” In Lusch, Robert F. and Vargo, Stephen L. (Eds.), Toward a Service- Dominant Logic of Marketing: Dialog, Debate, and Directions. New York: M.E. Sharpe. von Friedrichs Grängsjö, Yvonne and Gummesson, E. (2006), “Hotel Networks and Social Capital in Destination Marketing,” Service Industry Management, Vol. 17, No.1, pp. 58-75.Gummesson, E. (2006), ”Customer-to-Customer Interaction in Service Development: A Many-to-Many Approach”. In Edvardsson, B. et al. (Eds.), Involving Customers in New Service Development. Imperial College Press.Gummesson, E. (2006), “Relationship Marketing: From CRM and One-to-One to Many-to-Many Networks.” In Lagrosen, S. and Svensson, G. (Eds.), Marketing: Broadening the Horizons. Lund, Sweden: Studentlitteratur.Gummesson, E. (2006), “Implementing the marketing concept: from service and value to lean consumption.” Marketing Theory, vol. 6, no. 3, pp. 291-293.Gummesson, E. (2007), “Exit Services Marketing – Enter Service Marketing”. Journal of Customer Behaviour, Vol. 6, No. 2, pp.113-141.

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Gummesson, E. (2008), “Quality, service-dominant logic and many-to-many marketing.” The TQM Journal, 20 (2), pp.143-153.Gummesson, E. (2008), “Extending the New Dominant Logic: From Customer Centricity to Balanced Centricity.” Commentary for Special Issue of The Journal of the Academy of Marketing Science (JAMS) on the New Dominant Logic, 36 (1), pp.15-17.Gummesson, E. (2008), “Customer centricity: reality or a wild goose chase?”, European Business Reveiew, 20 (4), pp. 315-330.Gummesson, E (2008), Total Relationship Marketing. Oxford: Elsevier/Butterworth- Heinemann. (revised 3rd edition).Gummesson, E. and Polese, F. (2009), “B2B is not an island”, The Journal of Business & Industrial Marketing (forthcoming).

On theory generation and research methodologyGummesson, E. (2000), Qualitative Methods in Management Research, Sage, Thousand Oaks, CA (revised second edition).Gummesson, E. (2001), ”Are Current Research Approaches in Marketing Leading Us Astray?”, Marketing Theory, Vol. 1, No.1, pp.27-48.Gummesson, E. (2002), ”Practical Value of Adequate Marketing Management Theory.” Europan Journal of Marketing, Vol. 36, No. 3, pp. 325-349. (Also in Buber, R., Gadner, J. and Richards, L. (Eds.), Applying Qualitative Methods to Marketing Mangement Research, Palgrave, Basingstoke, UK.)

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Gummesson, E. (2003), “All research is interpretive!”, Journal of Business & Industrial Marketing, Vol. 18, No. 6/7, pp. 482-492.Gummesson, E. (2004), ”Qualitative research in marketing: roadmap for a wilderness of complexity and unpredictability”, European Journal of Marketing, Vol. 39, No.3/4, pp. 309-327. Perry, C. and Gummesson, E. (2004), ”Action research in marketing”. Commentary, European Journal of Marketing, Vol. 38, No. 3/4. pp. 310-320.Gummesson, E. (2006), “Qualitative Research in Management: Addressing Complexity, Context and Persona,” Management Decision, vol. 44, no. 2, (Spring), pp. 167-179.Gummesson, E. (2007), ”Case Study Research,” in Gustavsson, B., ed,. The Principles of Knowledge Creation Methods, Cheltenham, UK: Edward Elgar.Gummesson, E. (2007), ”Case Studies.” In Dictionary of Management Research, Sage, London.Gummesson, E. (2007), “Access to reality: observations on observational methods, Qualitative Market Research, Vol. 10, No. 2, pp.130-134.Gummesson, E. (2007), “Case study research and network theory: Birds of a feather”, Qualitative Research in Organizations and Management, Vol. 2, No. 3, pp.226-248.

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