MKSE and the Intangibles:puzzling over the ‘service’ economy

JC SpenderLUSEM & ESADE

MKSE 2011

agenda

• are ‘services’ different ?• knowledge versus agency• researching service firms• future of work

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MKSE 2011

what makes services different ?

• tertiary sector, electricity as ‘service’

• intangibles, the ‘knowledge-economy’, Penrose’s point

• timing, no inventory, consume as produced

• transaction not pre-determined - responding to the particular

• trends - rising consumer power, changing consumption

• subjective goods, tourism

• Veblen goods, Giffen goods, persuasive advertising

• ‘service economy’ does not follow economists’ rules

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MKSE 2011

so what ?

• from imposing planning and efficiency-seeking towards a responsive relationship with consumer

• from imposing stability towards embracing instability

• exploiting unique non-forecastable needs/opportunities

• anti-economic theory of the firm - imagination constrained, not resource constrained

• service challenge - create manageable order from chaos

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MKSE 2011

production - service

planning - imposing consumption pattern

on the consumer

servicing the uniquenessof the consumer’s needs

and desires

it’s NOT about fitting ‘service goods’ into a planning model

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MKSE 2011

analysis breaks down - engage agency

• analysis - universals under which the unique is categorized (e.g. medical patient - or person ?)

• how to respond to the unique and construct a customized solution ?

• service as ‘business art’ - imagination supported by, not subordinated to, ‘knowledge’

• bricolage - making novel use of what is available

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MKSE 2011

service as business’s art-form

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imaginatively combining what’s

available

MKSE 2011

service firm

• NOT about categorizing customers

• managing the imagination of the service-provider

• expanding knowledge available - but what knowledge ?

• K-categories as components of service business model

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MKSE 2011

simple (but useful) business modelswhich suggest K-categories NOT solutions

• SWOT

• BCG matrix

• Balanced Scorecard

• Porter’s 5-forces

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Step 1 - select K-categories that seem to matter in the particular situation

MKSE 2011

general ideathere is NO certain or necessary definition of the service firm - management choose K-categories based on their experience, competitors’ actions, R&D forecasts, economic history, academic theories, market surveys, etc.

A

B

C

DE

Step 2 - find a way to enter and operate within the ‘strategic opportunity space’ - constructed picture of the firm’s world

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MKSE 2011

K-dimensioned value-add

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our business model

or ‘vision’

A

what we knowabout using A that the

market does not

what we knowabout using B that the

market does not

B

what we know about coordinating A with B that the

market does not

it’s all about K-basedmicro-monopoly

MKSE 2011

from concept to value-adding

• division of labor, resource contracts, etc.

• persuade others into ‘the vision’

• actualize value-adding process

A

B

C

D

E

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drawing on and combining the palette of categorizing and

process knowledge

MKSE 2011

service K-categories

• intangibility, inseparability, variability, perishability, rent-ability (Shostack)

• setting, quality, relationship/brand, demand management (Swartz & Iocobucci)

• diagnose needs/desires, value-add process, delivery, Veblen/Giffen pricing, acquire/maintain reputation (Spender)

there are NO universal K-categories - so why not ask the managers/entrepreneurs ??

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MKSE 2011

service as the future (and past) of work

• growth of services, outsourcing

• managing service provider’s imagination, franchising

• expanding K-categories available, IT impact

• from planning and stability towards the precariat

• networking and other dynamic modes of organizing

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