Kuula niemi haapasalo_reser_2015
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Article about lean co-creative encountering in professional service BtoB environment.
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Kuula niemi haapasalo_reser_2015
- 1. Service Dominant Logic –how to systematize service business Case: Siili Solutions plc Seppo Kuula Erkka Niemi Harri Haapasalo University of Oulu Aalto University University of Oulu RESER 2015 – Innovative Services in the 21st Century 10.-11.9.2015
- 2. 1. Introduction 2. Literature 3. Methodology 4. Discussion 5. Conclusion Content
- 3. Doctoral candidate at University of Oulu. Chief Executive Officer at Siili Solutions. PhD candidate, Information Systems Science at Aalto University. Chief Development Officer at Siili Solutions. Professor and the Head of Industrial Engineering and Management at the University of Oulu. Research team Seppo Kuula University of Oulu Erkka Niemi Aalto University Harri Haapasalo University of Oulu
- 4. The main aim of our research is to describe cornerstones for systematizing co- creational service dominant business logic. Value co-creation requires a change in the dominant business logic from ‘making, selling and servicing’ to ‘listening, customizing and co-creating’. Because customer is always seen as a value creator, value co-creation can be also seen as Pull System, which is an integral part of Lean Thinking and Lean management. We review literature to find out what are the approaches behind service dominant logic and value co-creation in service marketing, how the value stream optimization based on Lean – philosophy was aligned with the other encountering theories, and then are creating the encountering framework for systematically utilizing the service dominant logic in business-to-business environment. Introduction
- 6. Vargo & Lusch were presenting SDL framework 2004, exploring it through in details 2008. 2014 they were presenting original foundation points in four axioms: 1. Axiom 1 was underlining FP1; Service is the fundamental basis of exchange. Service is always exchanged to service (operant resources). 2. Axiom 2 was underlining FP6; The customer is always a co-creator of the value (interactive value creation process). 3. Axiom 3 was underlining FP9; All economic and social actors are resource integrators. Value creation is network of networks. 4. Axiom 4 was underlining FP10; Value is always uniquely determined by beneficiary; value is experiential and conceptual. Service Dominant Logic
- 7. Lean thinking is having its roots in Toyota Production System (Ohno, 1988). Lean thinking was studied, explained and popularized by Womack & Jones 1996, and later explained in more details by Liker (2004). Principles of Lean thinking are (Womack; Jones, 1996): I) identify value (value is defined by beneficiary, pull-direction) II) map value stream (seamless resource integration with customer) III) create flow (cross-functionality, culture) IV)establish pull (co-creation with customer) V) seek perfection (iterative development) Lean Thinking
- 8. Payne et al. (2008) developed a conceptual framework for understanding and managing value co- creation between customer and supplier. Bitner et.al. (2008) were creating Service Blueprint concept where encountering was divided to three subdomains; onstage, backstage and Support. Framework for value co-creation Payne, A.; Storbacka, K.; Frow, P. (2008): Managing the Co-Creation of Value. Journal of the Academy of Marketing Science 36, 1, pp. 83–96
- 9. In our empirical research we will use the Payne et al. (2008) framework for data gathering and analysis regarding the customer encounters of the case organization. However, during the research period we ended up adding elements from three other frameworks (Bitner et al., 2008: Cova et al., 2002: and Ries, 2011) and propose an improved version in this paper. Lean SDl Encountering Process Kuula, Niemi, Haapasalo (2015): ” Service Dominant Logic – how to systematize service business”, RESER 2015
- 10. 3. Methodology
- 11. ENVIRONMENT KNOWLEDGE BASEDESIGN RESEARCH Business needs • Strategic offering development • Two customer cases of the primary case organization Develop / Build • Lean SDL encountering process Justify / Evaluate • Experimental business logic and encountering process development Foundations • SD logic • Lean Thinking • Value co-creation Methodologies • Design science • Interpretive case study ASSESS REFINE Business needs Applicable knowledge Relevance Rigor Business contribution Competitive advantage Scientific Contribution Empirical implementation of value co-creation framework Research Approach Picture adapted from Sami Laine (2015), Aalto University
- 12. 2011 2016 Sein, M.; Henfridsson, O.; Purao, S.; Rossi, M.; Lindgren, R. (2011): Action Design Research, 35, 1, pp. 37-56. Longitudinal interpretive case study as a part of Action Design Research (ADR)
- 13. This research started in Finland in 2011 when a professional service company was looking for a unique competitive advantage and the first author was inspired by theories of SDL and Lean Thinking. The involved researchers are members of the management team in the case organization. The outside researcher together with involved researchers supported with scientific theories. We continued the interpretation of the data throughout the project, but decided to “step back and examine the interpretations of fellow participants” (Walsham, 2006) in June 2015 and to publish the findings. We aimed at analyzing and describing interpretations about encountering process rather than finding causal relationships (Gregor, 2006). ADR stages: data collection & analysis Sein, M.; Henfridsson, O.; Purao, S.; Rossi, M.; Lindgren, R. (2011): Action Design Research, 35, 1, pp. 37-56.
- 14. • Siili Solutions Plc (the case organization in this research) is a publicly traded management consulting and technology integrator company employing several hundreds experts in Europe. • Finance corporation (Case 1) is one of the leadings in the Finnish financial sector, employing several thousands employees around of the country. Case conducted 2012-2015. • Insurance company (Case 2) is one of Finland's most respected wealth manage-ment and insurance services provider, having hundreds of thousands private customers and tens of thousands corporate customers. Case conducted 2012-2015. Case Organizations
- 15. 4. Discussion
- 16. Cross-organizational value co-creation Business, Technology and Excellence organizations are getting together in service related decision making, and therefore it is important to understand how the relationship can be leveraged and strengthened. In service co-creation the Supplier processes are seen as a value steam. Core competences are the value particles, and suppliers’ efficiency can be measured with value density (level of competency), and value stream density (optimizing utilization rate of value creating actions) based on Lean thinking. Kuula, Niemi, Haapasalo (2015): ” Service Dominant Logic – how to systematize service business”, RESER 2015
- 17. 5. Conclusion
- 18. • We conducted Action Design Research in a professional service environment in 2011-2015. • In this article we introduced Lean SDL Encountering Process as well as Cross Organizational value co-creation approach. • We offer a broadened view to Service dominant logic, some of the latest Service marketing studies, and Lean thinking. • Moreover, we connect these together for being able to explore value definition, value stream, and especially Encounter between the supplier and customer in service innovation, creation and delivery. Conclusion
- 19. Porkkalankatu 24 00180 Helsinki Finland Tietotie 2 90460 Oulu Finland Ohlauer Str. 43 10999 Berlin Germany ul. Św. Antoniego 2/4 50-073 Wrocław Poland www.siili.com
Editor's Notes
- We review literature to find out what are the approaches behind service dominant logic and value co-creation in service marketing, how the value stream optimization based on Lean – philosophy was aligned with the other encountering theories, and then are creating the encountering framework for systematically utilizing the service dominant logic in business-to-business environment.
- According to Vargo and Lusch (2004, 2008) Service Dominant Logic is based on the implication that value is defined, and co-created with the consumer, where core competencies are the competitive advantages. So applying Service-dominant logic means that the firm is not restricted to making value propositions only, but also gets opportunities to actively and directly participate in value creation with its customers. Service Innovation in the SDL framework is broadened to three different elements; service ecosystem, service platform, and value co-creation (Lusch; Nambisan, 2015).
- The goal in Lean processes, from production through management, thinking, and processes to customer interface, is to get more value created with less waste, where waste (originally Muda in Japanese) can be defined as any activity which is usind resources but doesn’t create value.
- Solutions Sales – framework (Cova et al., 2002) is defining five stages in processing the customer network value proposition, Identification of actors, targeting actors, Identifying stakes for each actor, setting up an approach for the targeted actors, and a value creation approach
- The Supplier processes are seen as a value steam, where core competences are the value particles, and suppliers’ efficiency can be measured with value density (level of competency), and value stream density (optimizing utilization rate of value creating actions) based on Lean thinking (Hines et al., 2004: Liker, 2004: Womac; Jones, 2003). Therefore Supplier Processes, Co-creation and relationship experience – related entities, are shared following Lean Startup model to Learn, Build, and Measure (Ries, 2011). Customer liaison process in practice can be seen as a sequence of activities that shall be logically connected
- This paper describes a longitudinal interpretive case study (Klein: Myers, 1999; Walsham, 1995: 2006) to provide in-depth knowledge about systematization of co-creational service-dominant business logic. The research was conducted in 2011 – 2015 as Action Design Research (Sein et al., 2011) in a publicly listed company providing professional services.
- - so what’s our role in all this? - we’re conducting a 6-year-research that was started in 2011 - we’re doing this in agile manner - starting from a practical problem, designing principles, deploying in the case company and then start all over - we do 3 iteration rounds and finally in 2016 we will have three contributions: - theoretical design principles, contribution for practitioners, and something useful for the case company
- During the research process, the involved researchers conducted several exploratory workshops to analyze a vast variety of data and to construct a comprehensive view of current situation of the service offering between 2011 and 2015. The analyses were later on validated in confirmatory workshops with the outside researcher.
- In this process we have realized that cross organizational approach for value co-creation requires cultural backbone for common entrepreneurial customer service, and lean organization where people are respected and authorized for value creation. Personnel represent core competences, which in a service society are the base of exchange. Good employee experience is the foundation for good customer experience, which enables profitable growth.
- We believe that Service-dominant logic is a great foundational framework for understanding value creation in digital age, where service is the fundamental basis of exchange, and products only vihicles for service delivery. In digital economy supplier has to be able to provide real value to its customer, for understanding the value definition supplier has to be able to transparently collaborate and co-create the value offering.