Marketing Strategy in Service Business - amegaro@unisa.it - Programme • Marketing and Service Marketing: an overview • Marketing plan • Complexity management • New marketing strategies approaches: Relationship Marketing and Many-to-Many network; Experiential marketing; Unconventional marketing • New marketing vision: Service Research - from S-D logic & Service Science to service ecosystems & service systems • Technologies as Decision Support Systems for marketing strategies Case studies Examples Project work Agenda: Lesson 5 • SSMED, service systems & smart service systems • Service innovation and technologies as Decision Support Systems for marketing strategies Examples Service Science, Management, Engineering and Design 5.1 Computer Science Service Research What is the link? Service Science, Management, Engineering and Design The Science Service, Management, Engineering and Design (SSMED) by IBM Corporation as a project of the Almaden Research Center, involved hundreds of researchers in the world trying to promote a new discipline to meet the most important themes emerging: the study of service systems. Service Science management, engineering and design (SSMED) Aim: to combine and to apply computer science, operational research, industrial engineering, management and social sciences to find the most appropriate organizational model to support the emergence of value The founders: Spohrer and Maglio (2008) • Multidisciplinary research stream that studies the implications emerging from the new management approach to service • Unifying framework for service design, delivery and evaluation that aims at developing the capabilities required by service economy; • Introduced after company’s shift from a good-logic to a service centered perspective Service Science Always looking for service innovation, service science would combine organization and human understanding with business and technological understanding to: (1) explain the origins and growth of service systems; (2) solve fundamental problems such as how to invest optimally to improve service productivity and quality; (3) produce unique service professionals and service scientists Service Science Many disciplines have accumulated knowledge relevant to the understanding of service system, each focusing on different aspects of the overall system. For instance, organization theory focuses on structures, rules, and incentives to create effective groups of individuals. Service Science Technology 5 1 9 25 27 14 28 10 26 24 8 4 2 3 6 7 11 12 13 15 16 17 18 19 20 21 22 23 Technology 1990 - 2004 1960 - 1990 Prima del 1990 1900 - 1960 16. Organization Theories 17. Operations Research 18. Systems Engineering 19. Management Science 20. Games theories 14. Information Science 15. Human Resource Management 21. Industrial Engineering 22. Marketing 23. Management Psychology 24. Business Administration 25. Economics 26. Law 27.Sociology 28.Formation 2. Activities and management of services 1. Science and Information Systems 3. Services engineering 4. Marketing of services 5. Social Complexity 6. Computational economy 7.Organizational theories 8. Management of innovation 9. Experimental economics 10. AI & Games 11. Management and Information Systems 12. Computer Supported . Work (CSCW) 13. Business Support Systems • Service is related to value cocreation among actors. • Adopting a Service view improves positive interaction between entities in reticular system. • Service co-creation involves many actors within a dynamic process. • Service exchangers need evolving expertises and competencies. Service is an ever complex issue to deal with. Service Science The service-dominated economy has been multisectoral and transdisciplinary. This makes difficult to define a new kind of discipline that could be considered really “cross and unifying”. There are important academic debates on how to describe the implications of service concept characterizations both for basic and applied research. Service Science focuses on a new and updated service concept, on the study of service systems and on the recent conceptual and interpretative development of smart service systems. Service Science, Management, Engineering and Design Service Science, Management, Engineering and Design (SSMED), proposes several prospects of investigation and embraces many fields of interest and application. • In terms of Science, it investigates what service systems are and how they really evolve, focusing on the active role of the people employed in them, of knowledge, of shared information, and of technologies, as well as on the importance of the active participation of the services’ users (the demand) in the production process (offer); • In terms of Management it investigates possible solutions for implementing evaluation of efficiency, sustainability reports, and systemic interaction within service systems; • In terms of Engineering it is responsible for developing new technologies for the processes of detection, measurement, and dissemination of information-essential for sharing in the contemporary process of value-generation; • In terms of Design it seeks to deepen the appropriate configuration techniques for the proper structuring of service systems. Service Science, Management, Engineering and Design Service systems are value-creation networks composed of (Bryson et al. 2004; Maglio et al. 2006): • People • Organizations • Technology • Shared information Service Systems • promote real-time relationships and accelerate up colearning processes in many fields (e.g. smart services in the energy sector, transport, etc.). • come from systematic methods, continuous learning, data collection, innovation, social responsibility and network governance, and all the operations that benefit from the application of new technologies. Service systems: value-co-creation configuration of people, technology, value propositions connecting internal and external service systems, and shared information able to create and deliver value to providers, users and other interested entities, through service. SPOHRER, MAGLIO, BAILEY AND GRUHL (2007) (1) Service Systems: definition The aim of service system is to use its own resources and the resources exchanged with other actors to improve its own and other’s well-being Service systems SSMED Key Concepts Value-Co-creation Entities (Systems) Interactions (Networks) Outcomes (Value Changes) Value Proposition Based Interactions Governance Mechanism Based Interactions Access Rights Measures (Rankings) Resources Stakeholders (Roles) win-win lose-lose win-lose lose-win Source: www.ibm.com SSMED Foundations Main Focus Resources: Everything that has a name and is useful can be viewed as a resource Useful instrumentsfor activities Entities: Some complex resource configurations can initiate actions, and these are called service system entities (or just entities, or sometimes just service systems) Openness of evolving systems Access rights: dealing with the social norms and legal regulations associated with resource access and usage. Supra-Systemsrelevance Value Co-creation Interactions: Also known as value-proposition-based interaction mechanisms Jointprocess within Service Systems Governance Interactions: Intuitively, governance mechanisms are a type of valueproposition between an authority service system entity and a population of governed service system entities Common finality,internal andexternal equilibrium Outcomes: When service system entities interact, value-co-creation is only one of the possible outcomes. Valueintendedin an extendedway Stakeholders: The four primary types of stakeholders are customer, provider, authority, and competitor Contextual influencesand self-regulation Measures: The four primary types of measures are quality, productivity, compliance, and sustainable innovation Up to now only qualitative Networks: Also known as service system networks, service systems entities interact with other service system entities (normatively) via value-propositions Networked embeddedness Ecology: Also known as service system ecology, the macro-scale interactions of the populations of different types of service system entities Service Ecosystems Luca Carrubbo – Brno 2017 value-co-creation configurations, resources integrators, knowledge-based, capable of enabling connections and interaction, with the aim of reaching desired outcomes, simply, always, an operative application, any number of elements, interconnections, attributes, and stakeholders interacting in a co-productive relationship. … a Service System is basically composed of heterogeneous entities, interacting with each other with specific purposes 5 (2) Service Systems: definition Service System definitions Authors Year Service systems represent value co-creation configuration of people, technology, value propositions connecting internal and external service systems , and shared information (e.g., language, laws, measures, and methods), like an assemblage of unites entities by some form of regular interaction or interdependence. Spohrer, Maglio, Bailey and Gruhl 2007 Service Systems can simply be a software application, or a business unit with an organization, from a project team, a business department, a global division; it can be a firm, institution, government agency, town, city or nation; it can also be a compostiion of numerous collaboratively connected service systems within and/or across organizations. Qiu, Fang, Shen and Yu 2007 Service Systems act as resource integrators, understandable in terms of elements of a work system, within the organization and through the network enduring resource specialization, those operand and operant, such as knowledge, skills, know-how, relationship, competences, people, products, money, etc. Spohrer, Anderson, Pass and Ager 2008 Every service systems is both a provider and client of service that is connected by value propositions in value chains, value networks, or value-creating systems. Vargo, Maglio and Akaka 2008 A service system is any number of elements, inteconnections, attributes, and stakeholders interacting in a co-productive relationship that create value, in which principal interactions take place at the interface between the provider and the customer. Spohrer, Vargo, Maglio and Caswell 2008 A service system primarly relates to customer-provider interactions as well as open system with it being capable of improving its own state and the one of another system though acquiring, sharing, or applying resources, with the aim of creating a basis for systematic service innovation. Golinelli 2008 Service systems are a complex interplay betwwen form and customer that form an open system which needs to be designed using the techniques of viable systems and systems dynamics, in which both parties are focused on achieving outcomes. Ng and Maull 2008 Service systems can be divided into “front stage” (about provider/customer interactions) and “back stage” (about operational efficiency) and service performance relies on both of them, putting people (customers and employees), rather than physical goods, in the centre of its organizational structure and operations. The smallest service system is a single person; the largest one is represented by the global economy. A service system essentially is a social-technical system, focusing on engineering and delivering services using all available means to realize respective values for both provider and customer. Qiu 2009 Service systems can be represented as real networks, in which the same entities combine their streghts through direct and indircet connectivity, as they are oriented toward enduring competitiveness and daily intercations with other external interdependent service systems. Polese 2009 Luca Carrubbo – Brno 2017 «A service system is any number of elements, interconnections, attributes and stakeholders interacting in a co-productive relationship that create value, in which the principal interactions take place at the interface between the provider and the customer» The different definitions Spohrer, Vargo, Maglio and Caswell, 2008 «A service system primarily relates to customer-provider interactions as well as open system with it being capable of improving its own state and the one of another system though acquiring, sharing, or applying resources, with the aim of creating a basis for systematic service innovation» Golinelli, 2008 «Service systems can be represented as real networks, in which the same entities combine their strengths through direct and indirect connectivity, as they are oriented toward enduring competitiveness and daily interactions with other external interdependent service systems» Polese, 2009 The concept derives from systemic vision and network theory (Richardson, 1972; Normann and Ramirez, 1993; Castells, 1996; Capra, 2002) Service Systems: origins entity emerging from a specific structure (organzationalphysical equipment) thanks to interactions among all system’s members (Barile, 2013). Aim: survival through the acquisition (and the exchange) of knowledge from the other systems situated in the context which leads to the creation of new knowledge. Since value co- creation is centred on knowledge exchange to acquire mutual benefits, system is the most adequate configuration for companies aiming at acquiring sustainable competitive advantage. System Luca Carrubbo – Brno 2017 • “complex of interacting elements” (Von Bertalaffy, 1956) • “an entity that is adaptable for the purpose of surviving in its changing environment” (Beer, 1975); • “entity which is a coherent whole” (Ng, Maull and Yip, 2009) From Systems Theory Composed of many parts (Parsons, 1965), boundaries, connections and different relationships with relevant stakeholders based on the sharing of critical and influential capabilities sub-systems focus on the analysis of relationships among its own internal components while suprasystems focus on the connections between the analysis unit and other influencing systemic entities in their context (Golinelli, 2005) SYSTEM Actors & connections SUB-SYSTEMS SUPRA-SYSTEMS Today, service systems represent an emerging issue in economic research, all-encompassing many specific topics (innovation, smart cities and communities) and even quality, traditionally related to technologies and processes MAIN REFERENCES: ALTER, S. (2008) SPOHRER, J., VARGO, S.L., MAGLIO, P.P, CASWELL, N. (2008) Service Systems Reinterpretation of service design, service supply and fruition, in which multiple active actors synergistically participate in the value co-creation process, which is characterized by resourcesharing and common finality. Service Science, Management, Engineering and Design SSMEDProcesses and Business Models People and Culture Science and Technology Information Organizations: interconnected systems entities sharing the same value system. (1) Service Systems: ORGANIZATIONS A Service system is composed of a network of organizations carrying out integrations of multiple resources in order to achieve reciprocal benefits for all the stakeholders. Every member of the system has its own interests and pursues specific aims. Thus, managers should seek to harmonize the differing needs of each subject in an attempt to satisfy the stakeholder’s demands and, at the same, the well-being of the system. Individual objectives System’s Goal Human factor is essential to balance the needs of all the stakeholders. (2) Service Systems: PEOPLE Knowledge is the real added value to foster value co- creation, since this process is grounded of the exchange of internal and external (contextual) competencies and resources In a market based on intangibilities, service delivery does not represent only economic exchange, but can be undesrtood as the result of the integration of the specialized skills of each member. Customers can help firm to improve service starting from service design, by sharing their capabilities and creativity. ICTs: opportunities for providers and consumers to exchange resources, fostering the sharing of value propositions at intra- and inter-organizational level (3) Service Systems: TECHNOLOGY The diffusion of new technologies and platforms (community, forum, blog, social network) can enhance the interactions among stakeholders, with an increase in stakeholder engagement. Users can make comments and judge service quality, providing organizations with suggestions on the improvement of the offering. The more the social and relational capital grow, the more the knowledge exchanged intensifies. The possibility to transfer every kind of information in real time permits users to play a predominant role in business decisionmaking and service improvement (4) Service Systems: INFORMATION Through technology and ICTs co- creators can constantly share flows of information, increase their knoweldge, strenghten relationships and modify their behaviors to pursue common goals. The combination of the 4 elements of service systems (organizations, people, technologies and information) allows to create value through the implementation of a networked system in which companies, institutions, organizations and users share a systematic flux of information and know-how, which can be managed in an efficient way thanks to technology Service System as Value Network People Shared Information Organizations Technology Luca Carrubbo – Brno 2017 iterative, interactive, instrumented, interconnected, intelligent S.M.A.R.T.: Specific, Measurable, Agreed, Realistic and Timely (More measurement data, More networks, More learning and adaptation) Smart traffic systems Smart water management Smart energy grids Smart healthcare Smart food systems Intelligent oil field technologies Smart regionsSmart weather Smart countries Smart supply chains Smart cities Smart retail Source: www.ibm.com/think Complex Service Systems Luca Carrubbo – Brno 2017 Smarter Food Making retail smarter Iterative, interactive, instrumented, interconnected, intelligent (More measurement data, More networks, More learning and adaptation) Smarter Products Smarter Planet There is an increasing demand for ‘smart service systems’ based upon ICT, to create a basis for systematic and sustainable service innovation in complex environment. Smart Service Systems S.M.A.R.T.: Specific, Measurable, Agreed, Realistic and Timely (More measurement data, More networks, More learning and adaptation) Smart service systems are service systems in which smart products are boundary-objects that integrate resources and activities of the involved actors for mutual benefit. SSS concerns several elements interacting with each other and working together for a common final goal, through smart solutions. Smart service systems need to be understood as complex, open, and dynamic sociotechnical systems. Smart Service Systems definition Service Science vs S-D logic SPOHRER, J., ANDERSON, L., PASS, N., AGER, T. (2008) SPOHRER, J. MAGLIO, P.P., BAILEY, J., GRUHL, D. (2007) VARGO, S.L., LUSCH, R.F., WESSELS, G. (2008) • Relational approach to business • Focus on resources (RBV) • Many-to-many logics to business behaviour Similarities with SDL Differences with SDL • Practical approach • Technological- Informational focus • Smart vision on planet • Measurement of service and systematic search for innovation and continuous improvement Service innovation 5.2 Service Innovation Service Research approach Innovation does not happen when a new product is introduced into a market or a new service provided (traditional perspective) but when its introduction determines new practices and institutionalized solutions to co-create value among players. Institutionalization, understood as maintenance, disintegration, change of institution, is the process underlying innovation (Vargo et al., 2015), useful for solving problems, developing new forms of knowledge and also implementing new and more effective technological components starting from value cocreation processes (Akaka et al., 2017). Service Innovation Service Research approach In recent years, technological advances have allowed the creation of several products that can potentially be considered smart as potentially capable of promoting the co-creation of value within smart service systems. The technological advances appear relevant and (potentially) innovative as they are able to favor better integrations of resources among the actors operating within systems which are characterized by continuous and systematic interactions between actors mediated by technology. Need for new technologies in marketing Today innovation is increasingly associated with the function of encouraging companies in pursuing and maintaining their survival, through the achievement of a competitive advantage. Service innovation occurs within networks when existing value propositions are modified through a process of integrating existing resources or by inventing new resources and involves the creation, renewal and transformation of pre-existing knowledge. Innovation cannot be exclusively linked to the use of new technologies; they have the “task” of providing companies with data. Need for new technologies in marketing Innovation implies that through technologies, responsible entities may improve themselves, and, as service systems are centered on people, it occurs when people, thanks to technologies, are able to optimize service systems operation. Need for new technologies in marketing To be competitive and survive in their complex context, companies must be able to solve complex situations and adapt to the needs of their customers. It is necessary to use a service approach and always look for interactions oriented to value co- creation. Data-driven decision making Today, decision-making processes could be more “informed”, thanks to a more precise exchange of information. This would support decision makers to define and implement a strategy in an ever timelier and precise manner, with an improvement in the overall performance. Data-driven decision making can improve organizations' performance and enable them to pursue their survival goals. Data-driven decision making A data-driven decision-making process can improve the competitiveness of companies and enable them to pursue their marketing aims, such as customer relationship management, improvement of the quality of the product or service proposed. [E.g. Data-driven decision making can also support healthcare actors to improve their performance. The healthcare system is today increasingly patient-centered and, for example, patient data, if correctly interpreted, could allow a doctor/patient co-learning process.] Antonietta Megaro amegaro@unisa.it THANK YOU. Questions? 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