What Do We (really) Mean by Advanced Services?
In the past few weeks, Tim Baines and I spent a good amount of time to address what do we really mean by advanced services? How such services are different with notions such as solution, outcome based services etc.? This was a quite challenging task as several concepts have been developed to explain the evolution of the manufacturing operations to deliver services.
Services have been defined and classified in the Product-Service Systems (PSS), Services Marketing, and Operations Management communities. In the PSS community, researchers have well established definitions and classifications for services, predominantly around product-oriented services that are more conventional services that a manufacturer might offer, and use-, and result-oriented services that are more sophisticated in which the product’s functional results are sold and the ownership of the product remains with the provider Tukker (2004). The service marketing community has a more traditional view towards services and focus more on what it is not, rather than what it is. The Service Dominant Logic (SDL) looks at services as the channels to deliver products. Others in this community also talk about the notion of solution, which are combinations of products and services leading to high-value unified responses to customers’ needs. Researchers with more operational management perspective tend to define services through distinction made between outcomes (centred on ‘selling performance’), outputs (referred to the service functionality and level of performance). Yet, these distinctions are not sufficient to define advanced services.
In all these definitions, there are some attributes for a definition for advanced services, however, there are not completed and integrated. We focused our attention on three key points - which are mainly missing from the previous definitions - while trying to define advanced services; (i) types of value that these services create, (ii) the ways these value could be created, and (iii) the role of provider in the process of value creation.
Advanced services mainly deal with bringing functional values (Almquist et al., 2016) since they tend to help customers (in both B2B and B2C context) deal with complexities in their own operations.These values could be related to saving time, reducing cost and risk, reducing effort, avoiding hassle, simplifying and integrating operations, and improving quality and variety.
They should be co-created through interactions between organisations, which emerges through the joint working of the organisations’ resources (Vargo and Lusch, 2008). Co-creation is a collaborative process with the customer where the ‘interaction’ based on the exchange of data, information, and knowledge plays a key role.
There is a key role of the provider in this co-creation process. We are more interested in manufacturing, but this could apply to non-manufacturing firms too. Manufacturing firms need to operate across a range of ‘capabilities’ in the co-creation process. Here, the term capabilities refers to the ‘appropriate knowledge, experience and skills required for the activities to be carried out, and are about ‘knowing how’ rather than ‘knowing that’ (Loasby, 1998). So . . .
Advanced services are propositions, where the provider (the manufacturer) engages in in-depth customer interaction and extensive capability integration, and through a co-creation process delivers functional values to that customer.
Guiding References:
Almquist, E., Senior, J. & Bloch, N. (2016). "The Elements of Value". Harvard business review, September 2016 Issue.
Loasby, B. J. (1998). "The organisation of capabilities". Journal of Economic Behavior & Organization, 35, 139-160.
Tukker, A. (2004). "Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet". Business strategy and the environment, 13, 246-260.
Vargo, S. L. & Lusch, R. F. (2008). "Service-dominant logic: continuing the evolution". Journal of the Academy of marketing Science, 36, 1-10.
