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Is your service creating value?

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Service dominant logic (SDL) is a way of thinking that can be used by businesses to create value for their customers. It is based on the idea that companies should focus on providing value to their customers through the creation and delivery of service rather than goods. When done correctly, this approach is said to lead to increased profits and customer loyalty.

If you've never heard of the term, you will likely have stumbled upon the focus on value, charging by value, and customer-centric sales and business approaches. Service dominant (S-D logic, see Vargo and Lusch 2004, 2008) logic created a mental framework to view and treat everything as a service, which seems resonate with the current “Everything and the kitchen sink as a Service”.

What might get lost (apart from the subtle differences between service and services in this context) is the aspect of co-creation. The value of a service develops from use - the beneficiary solely determines value. Value has to not only be recognized to be realized, but it needs the ability of your client to assimilate/make use of the value.

To maximize realized value, your client needs to be able and willing the absorb the information, adapt processes, and make the necessary organizational changes. (Cohen and Levinthal 1990)

Getting from value proposition to realized value, provider and client need to make sure the project approach accounts for social expertise (Paredes et al. 2014). “..social expertise of the client facilitates the client employees to absorb external knowledge through their interexchange.” (Oesterle et al., 2019)

In order for your client to make to most out of your offer/your value proposition, make sure your approach on execution accounts for this. Having a great offer and throwing it over the fence does not equal creating value. Sometimes you need to simplify in order to get from promise to result.

Sources: Cohen WM, Levinthal DA (1990) Absorptive capacity: a new perspective on learning and innovation.; Vargo SL, Lusch RF (2004) Evolving to a new dominant logic for marketing.; Vargo SL, Maglio PP, Akaka MA (2008) On value and value co-creation: a service systems and service logic perspective.; Oesterle S, Buchwald A, Urbach N (2016) Understanding the co-creation of value emerging from the collaboration between IT consulting firms and their customers.; Paredes MR, Barrutia JM, Echebarria C (2014) Resources for value co-creation in E-commerce: a review; Oesterle S, Buchwald A, Urbach N, (2019), To Measure Is to Know: Development of an Instrument for Measuring Consulting Service Value, Advances in Consulting Research.
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