Toward a Value Metrics -A Service-Dominant Logic View-
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This document proposes a framework for value metrics from a Service-Dominant Logic perspective. It defines potential value as the value proposition offered by service providers, and realized value as the actual benefits gained through resource integration. Interactions, context, time, and institutions are proposed as mediators that influence the conversion of potential to realized value. The framework is conceptual and intended to guide future research on developing concrete scales to quantitatively measure value in service systems. Validating the framework will require empirical studies involving service providers and customers from different industries.
Toward a Value Metrics -A Service-Dominant Logic View-
- 1. Toward a Value Metrics ˗A Service-Dominant Logic View˗ Md. Abul Kalam Siddike Graduate School of Knowledge Science Japan Advanced Institute of Science and Technology, Japan, Email: kalam.siddike@gmail.com Kazuyoshi Hidaka Professor, School of Environment and Society Tokyo Institute of Technology, 3-3-6 Minato-ku, Tokyo, Japan, Email: hidaka.k.ac@m.titech.ac.jp 30-07-2016 This research is supported by Grants-in-Aid for Scientific Research (A)(Grants ID:26245044), Japan Society for the Promotion of Science (JSPS)
- 2. Highlights of Presentation • Develop a framework of value metrics of service systems in the paradigm of service dominant (SD) logic. • Interaction, context, time, and institutional arrangements are the candidates of mediators for converting potential value into realized value. • Suggests future research direction for developing and validating concrete scales of measuring value in the view of SD logic. 2
- 3. Outline of Presentation • Service-Dominant (SD) Logic • What is value? And its dimensions • Potential value and Realized Value • Candidates of Mediators for Conversion of Potential Value into Realized Value • Framework of Value Metric • Significance and Implications of Value Metric 3
- 4. Service-Dominant (SD) Logic • SD logic is a perspective new thought of market and marketing. (Vargo and Lusch, 2004) • It continues its evolution from 2004 to 2016. • ‘Value’ or ‘value co-creation’ is the core concept or heart of SD logic or service science. (Vargo and Lusch, 2016, 2008, 2004; Lusch and Vargo, 2014; Spohrer et al., 2008) 4
- 5. What is value? • Value relates to the benefits for some actors and value is co-created through the establishment of new resources, from resources provided by multiple sources (Vargo and Lusch, 2012) • Benefits experienced by beneficiaries using providers’ competencies, customers’ experiences, and other stakeholders’ intention. • More specifically, these providers’ competencies, customers’ experiences and other stakeholders’ intentions are alternatively considered as “service content”. 5
- 6. Multi-Dimensionality of Value • Neoclassical economists view value as utility that provides the satisfaction. (Sampson, 2015; Lovelock, 1983) • Happiness economists view that value is happiness that is subjective to well-being, quality of life and life satisfaction. (Sampson, 2015; MacKerron, 2012; Easterlin, 2001) • SD logic view that value is co-created through the application of resource integration by providers and customers. (Vargo and Lusch, 2016, 2008, 2004; Lusch and Vargo, 2014) 6
- 7. Nature of Value • There are two phases/nature of value: 1. Potential value 2. Realized value 7
- 8. Potential Value (1) • Potential value is a stochastic estimate of impact on subject to well- being (Sampson, 2015). • It is a function of value realization (Sampson, 2015). • Potential value is defined as value proposition offered by the service providers using their experiences, knowledge and skills for the benefits of service recipients. 8
- 9. Potential Value (2) • In SD logic, actors cannot deliver value but can participate in the creation and offering of value proposition (Vargo and Lusch, 2016). • Potential value invites actors one another to engage or serve one another in order to achieved realized value (whether it is economic, financial, or social or some combinations of those). Proposition 1: Potential value has a great positive impact on realized value. 9
- 10. Realized Value (1) • Realized value is the actual change in the subject of well-being resulting from interaction with an offering (Sampson, 2015). • “Co-creation of value” is considered as “realized value” in this paper. • Realized value is the actual benefits received or gained by service beneficiaries including the customers, stakeholders, providers and the community people through the integration of operant resources via service-for-service exchange. 10
- 11. Realized Value (2) • In achieving realized value, actors namely customers interact with the service offerings through the exchange of operant resources (skills, knowledge and experiences). • Value is realized in the service system, which have several dimensions like, interactions, economic and social background, time and space. Proposition 2: Interactions, context, time, and institutions positively affect the conversion of potential value into realized value. 11
- 12. Candidate of Mediating Factors for Conversion of Potential Value into Realized Value • There are several candidates of mediating factors that greatly influence the conversion of potential value into realized value namely: -Interaction; -Context; -Time; and -Institutions and institutional arrangements 12
- 13. Interaction • Interaction is one of the most influential candidate of mediator for conversion of potential value into realized value. • In service systems, there are either direct or indirect interaction between or among service providers, customers, and other stakeholders. Proposition 3: Direct and indirect interactions positively mediate the conversion of potential value into realized value. 13
- 14. Context • As value is uniquely and phenomenologically determined by the beneficiary. (Vargo and Lusch, 2016) • Value-in-context suggests that value is always co-created; but it is contingent on the integration of other resources and actors thus is contextually specific. Proposition 4: Context positively affects the conversion of potential value into realized value. 14
- 15. Time Dimension • Time dimensions (short-term and long term) affect the realized value from potential value (Sampson, 2015). • In general, there is less realized value in short-term orientation. But in the long-term, there is a high possibility of realized value. Proposition 5: Time dimension positively affects the realized value from potential value. 15
- 16. Institutions and Institutional Arrangements • Institutions and institutional arrangements control and coordinate the behavior of actors (service providers, customers and other stakeholders) under economic and social constraints. • Without institutions, actors are the freely moving actors in the service systems. Proposition 6: Institutions and institutional arrangements positively affect the realized value from potential value. 16
- 17. Potential value Realized value Candidates of Mediators Interactions Context Time Institutions and Institutional arrangements Framework of Value Metrics 17
- 18. Significance of Value Metrics • Our framework provides an opportunity for SD logic as well as service science researchers for quantitatively measurement of value. • It is an initial attempt to develop more concrete scales for quantitatively measurement of value. 18
- 19. Implications of Value Metrics • Service industries will be greatly benefited from understanding the value realization process which is composed of operational mediators in our value metrics framework. • Theoretical service study including service science as well as SD Logic discipline will also be greatly benefited through the use of our theoretical framework of value metrics for further discussion about value co-creation mechanism. 19
- 20. Limitations of the Research • First of all, our framework of value metrics is based on literature review and our understanding of SD logic and service science. • Secondly, our value metrics framework is conceptual and it is not validated yet. But we provide several propositions for developing concrete measurement scales as future research agenda. 20
- 21. Future Research Directions • How we can drill down four mediators? • Deepen down each mediator's categorization and mode, etc. • What are the value transforming mechanisms in service systems? • How can we connect actual service system (i.e. healthcare, IT companies, Telecommunications). 21
- 22. Acknowledgement • This research is supported by Grants-in-Aid for Scientific Research (A) (Grants ID:26245044), Japan Society for the Promotion of Science (JSPS) 22
- 23. References • Easterlin, R.A.: Income and Happiness: Towards a Unified Theory. Econom. J. 111, 465--484 (2001) • Lovelock, C.H.: Classifying Services to Gain Strategic Marketing Insights. J. Mark. 47, 9--20 (1983) • Lusch, R.F., Vargo, S.L.: Service-Dominant Logic: Premises, Perspectives, Possibilities. Cambridge University Press, Cambridge (2014) • MacKerron, G.: Happiness Economies from 35 000 Feet. J. Econom. Surveys. 26, 705--735 (2012) • Sampson, S.E.: Value Paradoxes and the Time Value of Value. Serv. Sci. 7, 149--162 (2015) • Spohrer, J., Vargo, S.L., Casewell, N., Maglio, P.P.: The Service System is the Basic Abstraction of Service Science. In: 41st Hawaii International Conference on System Sciences, pp. 1--10. IEEE Press, New York (2008) • Vargo, S.L. and Lusch, R.F.: Institutions and Axioms: An Update of Service-Dominant Logic. J. of the Acad. Mark. Sci. 44, 5--23 (2016) • Vargo, S.L., Lusch, R.F.: Evolving to a New Dominant Logic of Marketing. J. of Mark. 68, 1--17 (2004) • Vargo, S.L., Lusch, R.F.: Service-Dominant Logic: Continuing the Evolution. J. of the Acad. Mark. Sci. 36, 1--10 (2008) • Vargo, S.L., Lusch, R.F.: The Nature and Understanding of Value: A Service-Dominant Logic Perspective. Rev. of Mark. Res. 9, 1--12 (2012) 23
- 24. Questions Please Thank You Very Much 24
- 25. Directions for Future Research (1) • Initially, a series of workshop could be arranged for getting the feedbacks from service scientists from all over the world. • In the second phase, we could conduct interviews with service providers from purely service industries globally. • Next, we could develop the constructs or variables for our value metrics. 25
- 26. Directions for Future Research (2) • Furthermore, we could survey with the customers of the same companies for validating and justifying our value metrics. • Finally, we could develop our final version of value metrics based on the data from three phases as well as we could also use simulations and mathematics. 26
Editor's Notes
- #2: Good afternoon. Welcome to The 4th International Conference on the Human Side of Service Engineering Me Md. Abul Kalam Siddike, a PhD candidate at the Graduate School of Knowledge Science, Japan Advanced Institute of Science and Technology I under the supervision of Professor Kazuyoshi Hidaka trying to develop value metrics in the paradigm of service dominant logic. However, today I would like to talk about ……………………………………………….
- #3: In this research we try to develop a framework of value metrics in the view of SDL In our value metrics framework, interaction, context, time, and institutional arrangements are the candidates of mediators for converting potential value into realized value. Finally, we suggest future research direction for developing and validating concrete scales for measuring value in the paradigm of SD logic.
- #4: Today I will talk about …………………………………………
- #5: Service dominant logic is a new thought of market and marketing. SD logic continues its evolution from 2004 to 2016. There are several concepts in SDL. But value and its co-creation is the core or heart of service dominant logic and service science. Basically………………….
- #6: In SDL, value relates to the benefits and value is co-created through the establishment of new reosurces provided by multiple source In this paper, we defined value as benefits experienced by the beneficiaries using providers, competencies, customers’ experiences and other stakeholders’ intention More specially, these providers’ competencies, customers’ experiences and toher stakeholders’ intensions are alternatively considered as service content However, value is multidimensional……………
- #7: Neoclassical economists view that value is utility that provides satisfaction Happiness economists view value is happiness that is subject to well-being, quality of life and life satisfaction Finally, SD logic views that value is cocreated through the application of resource integration by providers and customers In general……
- #9: PV is an estimate of impact on subject to well-being. It is a function of value realization In this paper we defined PV as VP offered by the service provides……………………………..
- #10: On the other hand………………..
- #15: More specifically, value is contextually specific because contexts are always changing. So, we propose
- #16: Time dimesion is another important factor for determinantion of realized value from potential value. Time dimension namely short term and long term afteect the realized value from potential value. In general there is less possibility of realized value in short-term orientation. But in the long term, there is a high possibility of realized value. Here short term-and long term indicate the relationships
- #18: This is our framework of value metrics. This framework has not been developed yet, it is underdevelop. In this framework, PV is the propositional value offered by the service providers using their knowledge, skills and experiences. RV is the actual value determined by the service beneficiaries along with service providers and other stakeholders in the service ecosystems using their skills and experiences. Here, ICT and IIAs are the candidates of mediators for conversion of PV into RV. First of all, direct and indirect interactions between/among service providers, service beneficiaries and other stakeholders positively affect the determination of value. Secondly, value is context dependent. Therefore, context plays an important role for conversion of potential value into realized value. Thirdly, short-term and long-term orientation also affects the determination of value in the service ecosystems. Finally, institutions and institutional arrangements work as a governance mechanism for controlling and coordinating the behavior of the actors or players in the service systems under economic and social constraints.
- #22: We should drill down four mediators. That means we should deepen down each mediator interaction, context, time and institutional arrangements in service industries We should make clear how value transforming mechanism is working in any specific service industry. We should conduct case studies focusing on real life case studies like health care, IT companies and telecommunications either in Japan or USA or all over the world.