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Celebrate Life Enterprise
Address
- The New Business Model
Revolution In A Service
Economy
SPEAKER
David KweeCEOTRAINING VISION INSTITUTE
Customer
Producer
All
Stakeholders
Business Enterprise
Eco-System
Transformative Focus – Customer, Producer & All Stakeholders
Transforming Service
• The New Economic World
• Service Dominant Logic; A New Science For
Service Business Model Revolution
2 Key Areas Of This Address
It’s A New Economic World
INTANGIBLEASSETS
• GOODWILL
• INVENTORY
• TERMINALS
• PIPELINES
• MATERIALS
• SYSTEMS
• EQUIPMENT
• MACHINERY
• BUILDINGS
• LAND
TANGIBLEASSETS
• BRAND
• INTELLECT
• KNOWLEDGE
• INNOVATION
• TEAMWORK
• AMBITION
• COURAGE
• AGILITY
• SYSTEMS
• PRODUCTS
80% of S&P Assets Today Are Intangible
TALENT
Escalating Value of Intangibles
Year Intangible % Tangible %
1982 38% 62%
1992 62% 38%
2000 85% 15%
Source: Human Capital Institute, USA
“People represent one of the last reliable sources of competitive advantage”
Peter Drucker Business Guru Author, New Realities
Human Capital Is The Key Driver
The Problem Is….
• Thomas Stewart: “All the major structures of companies—their legal underpinnings, their systems of governance, their management disciplines, their accounting—are based on a model of the corporation that has become irrelevant.”
• David Norton: In the New Economy, human capital is the foundation of value creation. This presents an interestingdilemma: the asset that is most important is the least understood, least prone to measurement and the least susceptible to management.”
Why the Bottom Line Isn’t
“ The bottom line means business. It is about the hardnumbers that tell it like it is. It is the way to measure success.It is clear precise and understood. But, in fact, the bottomline isn’t what business is all about. It isn’t the rightscorecard for business success anymore. There is a newbottom line in which the soft stuff is as important as the hardstuff. Leaders need to discover a new bottom line, onefocused on creating value through people and organization.”
• How do you set measures of value for the intangibles in
the New Economy? Example how would you measure:
- Innovation
- Collaboration
- Other intangibles
Speakers Challenge 1
Service-Dominant Logic Provides A Common Language & Framework
Source: www.amazon.com (For Class Discussion Use Only)
The Service Excellence Program
Source: http://data.worldbank.org/indicator/NV.SRV.TETC.ZS% of Service Sector in GDP
Growth of “service economies” across globe
Service Is The Future
Country Agriculture
%
Industry % Service % (2010
est)
World 5.8 30.8 53
Singapore 0 27.2 72.8
United States 1.2 22.2 76.7
China 9.6 46.8 43.6
Germany 0.8 27.9 71.3
Hong Kong 0.1 7.6 92.3
India 16.1 28.6 55.3
Japan 1.5 22.8 75.7
Philippines 13.7 31.7 54.6
Russia 4.2 33.8 62
United Kingdom 0.9 22.1 77.1
Growing recognition that all economies are service economies
Source: https://www.cia.gov/library/publications/the-world-factbook/index.html
GDP –
Composition by
Sector (%)
Service Is The Future
Premise Predecessor
FP1 Service is the fundamental basis of exchange.
Goods is the basis of economic transactions
FP6 The customer is always a co-creator of value
The producer defines its value proposition and finds customers who will pay for it
FP9 All economic and social actors are resource integrators
Scarcity of resources implies a need to focus on one’s core competence and targeted market segments.
Core Foundational Premises of
Service-Dominant Logic
Steve Vargo’s foundational premises of SDL
Stated Alternatively…
GOODS LOGIC IS ABOUT NOUNS
Restaurants, hospitals, tours, automobiles,
airplane, university, insurance etc
SERVICE LOGIC IS ABOUT VERBS
Enjoyment, healing, caring, relaxing, travelling,
learning, providing etc
Service Dominant Logic
Organizations
with the New
Service Science
builds on
fundamental
premises which
contain the latest thinking and research in
Service Management for Business Transformation
Organizations
with the New
Service Science
builds on
fundamental
premises which
contain the latest thinking and research in
Service Management for Business Transformation
Co-Value Creation
Integrated Resourcing
Service-for-Service Exchange
Service innovation for Business Competitiveness
Organizations
with the New
Service Science
builds on fundamental
premises which contain
the latest thinking and research in
Service Management for Business Transformation
Value-in-context
Value-in-use
Value-in-exchange
Co-Creation of value
Co-Production
• The nature of human value creation
• Co-creation of the value proposition
Value = Benefit (beneficiary specific)
Evaluation = Perception of benefit
Co-production is relatively optional Value is always co-created
Value as a Central Concept
Customers as Co-Producers: Five Phases
– Through advertising & promotion engage customers emotionally,
if not physically, in the act of co-production
– Involve customers through self-service; transfer work from the firm
to the customer
– Stage an experience where the firm constructs the context and the
consumer is part of it
– Empower customers to navigate a firm's system to solve a problem
– Engage customers as co-producers
C.K. Prahalad, "The Cocreation of Value," In Invited Commentaries on Evolving to a New Dominant Logic for Marketing, Journal of
Marketing, v.6., January 2004, p.23
The Service Dominant Logic Paradigm
Coca-Cola Happiness Machine
Coca-Cola Happiness Truck
Customer Co-CreationCoca-Cola’s Experience
• “Accept that consumers can generate more messages than you
ever could”
146 million YouTube views of content related to Coca-Cola.
Only 26 million views were of content that Coca-Cola created.
• “Accept that you don’t own your brands; your consumers do.”
“Coca-Cola’s Facebook fan page has more than 25 million likes.
The fan page was launched by two consumers in Los Angeles as
an authentic expression of how they felt about Coca-Cola.”
Source: Joe Tripodi, Coca-Cola Marketing Shifts from Impressions to Expressions, HBR Blog Network, April 27, 2011
Customer Co-CreationCoca-Cola’s Experience
• In what ways would value co-creation be possible in your
business?
- Co-creating curriculum and customer experience
- Co-creating your brand value proposition
- Co-creating your products
- Other ideas
Speakers Challenge 2
Resource
Integrator/
Beneficiary(“Firm”)
Resource
Integrator/
Beneficiary
(“Customer”)
Resource IntegratorsInstitutions
Resource Integration & Service-for-Service
Exchange within the Market System
Source: Prof Robert Lusch, University of Arizona
Market-facing
Resource
Integrators
Private
Resource
Integrators
Public
Resource
Integrators
Resource
Integrator (individual,
family, firm,
etc.)Value
Economic
Currency
Social
Currency
Public
Currency
New
Resources
Source: Prof Robert Lusch, University of Arizona
Resource Integration
“We saw an opportunity to enter the market place
with a new product offering & identified a small
company that was interested in working with us to
manufacture the product. Unfortunately, the small
company that had the capability we needed, had
limited resources and their product did not meet
our flavor, stability or quality requirements. We
arranged for the company to leverage the unique
technical expertise from a team of YourEncore
Experts. YourEncore quickly resolved the issues
and allowed us the opportunity to capture this new
business opportunity.”
- Peter Erickson, General Mills
Relatively self-contained, self-adjusting systems of
resource-integrating actors connected by shared
institutional logics & mutual value creation through
service exchange.
Service Eco-system
To Market
WebPlumbing
Market-ing To
Web 1.0Retrieve &
Read
Market-ing With
Web 2.0Co-Create
Market-ing System Evolution
“A state arises, as I conceive, out of the needs of
mankind; no one is self-sufficing, but all of us have
many wants. . . Then, as we have many wants . . . and
many persons are needed to supply them, one takes a
helper for one purpose and another for another; and
when three parties and helpers are gathered together
in one habitation, the body of inhabitants is termed a
state. And they exchange with one another, and
one gives and another receives under the idea that
exchange will be for their good.”
Plato, The Republic, 380 BC
“the great economic law is this: Services are exchanged for services… It is trivial, very commonplace; it is, nonetheless, the beginning, the middle, and the end of economic science…”
Frederic Bastiat, 1860
• Identify a new area of opportunity in your business that
you think or feel you could capitalize if you adopt a
integrated resourcing strategy.
- new products
- new customer segments
- new business
• What new competencies/resources do you need to
capitalize on the new opportunities and/or markets?
Speakers Challenge 3
Training Vision Institute Pte Ltd
11 Eunos Road 8, #06-04/05
Singapore 408601
Paya Lebar, Hougang, Jurong
East, Tampines, Woodlands
T. +65 6325 1068
F. +65 6325 1065
trainingvision.com.sg
Thank you.