The perspective of the user

According to the SD logic literature, the analysis of service systems should take place in multiple levels and, hence, zooming in and out is a repeating task that is necessary in order to reveal the different but interrelated views of the various stakeholders (Chandler and Vargo, 2011). For this, now we zoom in the User Domain to provide a conceptual model that depicts the user’s perspective in service value. The emphasis on the user’s perspective is endorsed by the critical role of the user in the creation and determination of service value. Most importantly, understanding the user perspective in service systems is a challenging objective that can provide new insights for service strategy, service design and service innovations.

Zooming in the User Domain requires the introduction of additional concepts about service usage from the user’s point of view. For this we employ concepts from the Customer Dominant (CD) logic (Heinonen and Strandvik, 2015), that regards service is embedded in the people’s life practices and claims attention should be paid at the role and the intentions of the user when he uses service.

The conceptual model for service value from the user’s perspective is depicted in figure 4.3.

Figure 4.3: A conceptual model of service value from the user’s perspective

First of all, when we abandon the ecosystemic perspective of SD logic and zoom in the user’s perspective, it is necessary to distinguish the Actors into service Providers and service Users, because now they are different entities with a different nature and roles. Service is an activity in which the Provider uses Resources to deliver directly or indirectly some benefit to the User. The User may participate in the Co-production of (some parts of) this Service activity. A Service can be part of many particular Service Offerings. The Service Offering contains a Value Proposition, which is the potential value it can bring to the user – seen from the provider’s perspective. The User may accept the Service Offering and use it; Service Usage takes place as a part of the Life Practices of the User in a specific Context. The user’s Context is multidimensional and can be related to social (relationships), personal (cognitive or behavioral aspects), spatial, temporal and other characteristics. The Context characterizes the Customer Ecosystem, which includes other actors and the physical and virtual elements related to the service. As an input from SD logic, Institutions govern the operation of the Customer Ecosystem.

Service Value derives as a result of the Service Usage in the Life Practices and the Context of the User (Heinonen and Strandvik (2015) name it ‘customer value’ to differentiate it from the Value Proposition, which is the provider’s perspective on service value). Service Value can be of different Value Types that are based of the functional, symbolic or emotional elements of Service and can be affected by the experiences and expectations of the customer (Heinonen and Strandvik, 2015).

The model in figure 3 relates to the three-domain framework for the study of service systems. We include certain key concepts, but we do not elaborate on them to keep the focus on the user’s perspective on service value and keep the model concise. Therefore, Providers are typically business organizations and reside in the Business Domain, while Users reside in the User Domain. Service Development and Service Provision are the two main service processes, that take place in the Technology Domain and the Business Domain, respectively.

Resources can be of different types (e.g. physical, technological (related to the Technology Domain), or mental/ cognitive (related to the User Domain)).

CD logic includes the concept of ‘presence’ as a value factor that denotes ‘being’

in a specific place in a physical or mental sense (‘absence’ is the opposite of presence). It is relevant to the concept of ‘commitment’ in Ferrario and Guarino (2009) and in the REA framework, which was often used in previous works.

Presence (absence) of service can have positive or negative impact on the value for the customer and, therefore, important design implications. It is not included in the model because it is not a self-contained concept, but a property of other concepts. For instance, presence of a wi-fi network can increase the service value for the customer, even if it is not used by the customer.

4.3 Discussion

The two conceptual models portray service-related and value-related concepts and relationships in service systems aiming to elaborate the conceptual background of the three-domain framework. The development these conceptual models was based on the most recent trends in the service management literature. The first model provides a global view of service value in service ecosystems according to the most recent evolution of service-dominant logic (Vargo and Lusch, 2016), while the second model portrays service value according to the customer-dominant logic (Heinonen and Strandvik, 2015). To the best of our knowledge, both the ecosystemic approach of the service-dominant logic and the user’s perspective reflected on the customer-service-dominant logic have not been formalized in conceptual models before.

We consider service-dominant logic and customer-dominant logic as complementary, rather than contradicting conceptual frameworks, that have a different focus: service-dominant logic views the full picture of service ecosystems and describes their operation, while customer-dominant logic emphasizes on the customer’s concerns and practices. For this, we use the former for the development of a global perspective on service ecosystems and the latter for the depiction of the user’s perspective on service value. There are certain similarities between service-logic and customer-dominant logic, especially with concern to the importance of the customer context, the multi-contextual, dynamic and experiential nature of service value, the determination of value by the customer, etc. There are also differences between them, with the most important one referring to the definition of the value creation process: in service-dominant logic value is always co-created, while in customer-dominant adopts largely the approach of Gronroos and Voima (2013), according to which value is either created by the user during the use of service or it is co-created with the provider, through direct interaction. As noticed in the state of the art

analysis, certain previous works about service modelling adopted the service-dominant logic approach (e.g. Poels, 2010), while others favored the approach of Gronroos and Voima (2013) (e.g. Alter, 2012; Guarrino 2013).

Even though this difference about the notion of value creation can be significant from a theoretical point of view, it is not pertinent to the design of service systems. We agree with Alter (2012) who suggests the character of the value creation process is a matter of service design decisions. The direct or indirect interaction between the provider and the user can be seen from a designer’s point of view as alternative options to build service offerings and business models that would support alternative use patterns. Hence, there is no right and wrong value creation process, but different options for the design of service systems with concern to the business models that are employed and the use patterns that are supported.

We should notice the proposed conceptual models aims to provide a general aspect of service value. In the service management literature we can find many other notions that can be useful for the design of specific service system. These notions could be introduced directly in the design of specific models, according to the requirements of the specific service systems.

Chapter 5. Customer participation in the development of the business offering

In the recent years the discussion about the role of the customer has shifted to new directions. The customer is not considered anymore a passive actor, whose role is pretty much related to consumption, but an empowered, creative and motivated individual that participates actively and collaborates with companies and others for the development of products, services, new ideas, solutions and experiences. Today customer participation in joint value activities with the provider is considered an overall phenomenon that transcends the service research field (Osborne et al., 2015).

One can find plethora of references to the active role of the customer, the opportunities it offers and the potentially disruptive impact it may induce to the business practices and the economic and social life in general. Despite the important research, strategic and managerial implications that spring from the role of the customer as a value factor, we have observed in the state of the art analysis a deficiency in research how firms can identify ways to induce customer participation in co-creation activities and how firms can implement business models that take advantage of co-creation opportunities. Particularly the topic of customer participation in the development of the business offering as a value activity has not been extensively studied, despite its significance, and suffers from theoretical gaps and an insufficient understanding by academics and practitioners. The role of the customer in the development of value propositions that convey the value potential of the business offering is a connected topic that also needs further research.

In this chapter we study the participation of the customer in joint value activities with the provider for the development of the business offering. With respect to the proposed framework for the study of service systems, this work refers to the Business Domain and the relationship between the Business Domain and the User Domain (see figure 5.1).

Figure 5.1: Customer participation in joint value activities and the three-domain framework