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A Theory of the Offering, and Changes in Business Strategy in a Neo-Industrial Age

Posted on June 29, 2012 by daviding

In the service management literature, a “theory of the offering” is an alternative to a “theory of the firm”. Leading up to the ISSS San Jose 2012 meeting, Rafael Ramirez asked if I was aware of a 1989 chapter on “A Theory of the Offering: Toward a Neo-Industrial Business Strategy” by Normann and Ramirez. I responded that no, I had not seen that. My understanding of offering comes from the 2006 Business Orchestration book by Johan Wallin, the 2000 Prime Movers book by Ramirez and Wallin, and the 1994 Designing Interactive Strategy book by Normann. These are rooted in an appreciation of distinctions between a cause-effect relation and a producer-product relation (of coproducers) from the 1972 On Purposeful Systems book by Ackoff, based on the 1959 Experience and Reflection book by Singer and Churchman.

I’ve always been a fan of the perspective of service systems taken by Normann and Ramirez, as the thinking is well-aligned with systems theory. This 1989 paper enlightened me on the context in which offering was first developed, that I missed in reading the later writings:

  • 1. “Service management” evolved to focus on systems in the secondary (production) sector, over the tertiary (service) sector.
  • 2. A “theory of the offering” is a not about measuring economic activity, but is instead an alternative to a “theory of the firm”.
  • 3. Distinctions made between product and service businesses in the early 1980s gradually became less relevant.
  • 4. Sellers help customers create value for themselves, as co-producers (and potentially as competitors).
  • 5. Offerings can be viewed in three strategic dimensions of depth (of coproduction), range (of products and services), and choice (as bundled to unbundled).
  • 6. Transformations in a neo-industrial business strategy can be enumerated as single, dual and triple changes in the three strategic dimensions.

The full article is worth reading. Only snippets are provided here, with the hope that interested readers might look to their libraries, or request a softcopy from Rafael Ramirez. My assessment is that the 1989 book is difficult to find in libraries, and should be considered for republication somewhere more accessible.

1. “Service management” evolved to focus on systems in the secondary (production) sector, over the tertiary (service) sector

In the emergence of “service science”, there’s always been some confusion across the labels of “service”, “services” and “service sector”. The 1984 Service Management book by Richard Normann, can serve as one foundation. I have been advocating the clarity of a label of “service systems”, which has led to “service systems science”. Normann and Ramirez saw similar challenges in labelling in 1989.

Services are no longer what they used to be. This is, in short, the lesson that recent developments in Western economics has taught us, for the massive growth in services has not taken place in the ternary (service) sector of these economies. On the contrary, services are growing fastest in the secondary (production) sector, implying that whatever distinguished goods from services must be rethought.

In our view, the notion of neo-industrialism, characterized by a “service-intensive” industrial sector, is more likely to depict emerging business than the notion of postindustrialism that has dominated thinking over the last 20 years. The extent to which we believe this to be the case is evident in the fact that the invitation to write this chapter found us in the middle of the most comprehensive R&D project which the organization in which we work has undertaken since its inception. The project is designed to provide a new perspective of business theory and practice in this period of neo-industrialism, for it is clear that existing theories are unable to grasp, let alone manage. the complexity that is emerging. [p. 111]

In a systems thinking approach, the changes impacting business could be less about the reductive perspectives of parts (i.e. of organizations), and more about the expansive perspectives of the containing whole, (i.e. the trend towards service intensity).

2. A “theory of the offering” is a not about measuring economic activity, but is instead an alternative to a “theory of the firm”

Coming from the industrial organization research, the literature on “theory of the firm” responds to the question of why companies exist, when markets are presumed to be more efficient institutions for exchange. The answers typically come from “transaction cost economics”, i.e. firms have economies (of scale, scope or speed) that markets don’t. Thus, while a customer might have the option to go to the market to purchase components from a variety of suppliers and assemble a product (or integrate a service) by himself or herself, going to a firm for an integrated output may be more expedient or convenient to lead to the same outcome.

Since most firms deal in multiple products (or services), a “theory of the offering” provides an opportunity for a more fine-grained discussion. A business could have different levels and/or combinations of products, services and information that would satisfy different segments of the market. Normann and Ramirez came to these conclusions while working on real world cases.

Since we began in 1980 as consultants in service business management, it has become clear that the basic distinction between “services” and upon which our work was originally based is changing. The standard criteria used to distinguish the two kinds of economic activity are, as Gershuny and Miles (1983) showed, so problematic that calculating economic activity by sector figures entails making a large number of subjective and/or arbitrary choices. Even more importantly, our opinion is that the emerging pattern in business is making the sectoral distinction between goods and services irrelevant from a strategic point of view. This is so because what companies offer in the market in effect is made up of mixes (or systems made up) of both goods and services (see Figure 1).

In our view, examining business strategy in a way that takes the “offering” (a product-service-information mix defined by a given price) as the basic unit of analysis presents important advantages over existing theories that use the “firm” as their point of departure (e.g., Porter, 1985). The first advantage is that, precisely because the offering consists of different mixes of goods, services, and information, a theory using this concept should, in principle, hold for any kind of business. As Miller and Friesen (1986) have shown, this is something that Porter’s (1980) framework fails to do.

A second advantage is that the theory of the offering we propose automatically takes into account the “new” assets that companies need to manage strategically in order to keep or obtain competitive advantage. These assets include know-how, information, and customer “access control” — assets that traditional theories either do not allow for or ignore.

A third advantage of the theory of the offering is that it provides an explanation as to why the distinction between services and goods is so difficult to assert, and simultaneously. it delimits the situations in which such a distinction is appropriate.

It is important to point out that the theory of the offering introduced in this chapter does not, in and of itself, constitute a strategic framework. The overall strategic framework of which it forms a part also includes an “ecological” framework that provides a systematic understanding of the industry (or industries) that make up the offering provider’s context. The ecological framework includes dimensions of the business environment such as level of fragmentation, extent of regulation, stage of development and so forth. [p. 112]

This last point on an “ecological” framework aligns well with systems theory. It’s not enough to focus reductively (i.e. looking from the offering or firm, inward). The expansive view (i.e. looking from the offering or firm, outward) sweeps in in the industry context.

The outline for the rest of the chapter foreshadows some content that is more fully developed in later writings, as well some foundational thinking that seems to have faded away as background.

In this chapter, we limit ourselves to presenting the theory of the offering, which builds on and develops state-of-the-art service management theory and practice. The theory is largely focused on the relationship that the provider has with the buyer or consumer, which is the place where the sustained profitability of the business strategy is actualized.

In the first section, we briefly discuss why the distinction between goods and services is becoming increasingly ambiguous.

The second section derives the strategic implications of the neo-industrialist characteristic of seller-client collaboration in the co-production of an offering.

The third section presents three important dimensions along which an offering can be designed, and

the fourth section introduces the “offering cube,” a diagrammatic means of showing composite offerings.

The final section presents some conclusions and suggestions for further research. [pp. 112-114, editorial paragraphing added]

Building on the relation between provider and buyer-consumer, rather than each as independent actors is a systemic style.

  • The first section on distinctions between goods and services draws attention to a shift of perspective from Normann (1984) to this 1989 publication.
  • The second section expands on the idea co-production with offerings by the provider (in a “wide array” or “narrow array”) and the clients to be provisioned (as “all and any” or “mostly core”).
  • The third section presents offerings along strategic dimensions of depth, range and choice.
  • The fourth section enumerates possible changes in offerings, by dimension.
  • The fifth section foreshadows research to come.

The idea of offering is familiar in post-1989 writings. Somehow, I didn’t appreciate the strategic dimensions, and changes in the offering cube in those readings.

3. Distinctions made between product and service businesses in the early 1980s gradually became less relevant

As a historical context, Richard Normann was one of the first researchers focused on Service Management. With this chapter, he shows that his thinking on distinctions had published earlier had evolved, and that readers should appreciate that some of that content has been superseded. For clarity, the 1984 material is sourced to show the change in view.

We believe that the changes [in the nature of business] are as fundamental as those which the Industrial Revolution brought about. For example, the then-revolutionary achievement of the ability to mass produce standardized goods is today matched by the newly-acquired capacity to mass produce nonstandardized goods.

Technological and other changes have resulted in many good-production enterprises becoming more “service loaded” and many service companies being able to manage their services as goods. A few years ago, Normann (1984) noted some of the basic differences between manufacturing and service businesses (see Table 1). This table, which characterizes the “conventional wisdom” regarding the difference between service and nonservice companies as it was at the beginning of the 1980s, is useful to illustrate the extent of change that has occurred.

Table 1: Basic Differences Between Manufacturing and Service Businesses
Manufacturing Service
The product is generally concrete The service is less tangible
Ownership is transferred when a purchase is made Ownership is not generally transferrable
The product can be resold The service cannot be resold
The product can be demonstrated before purchase The service cannot suaully be effectively demonstrated (it does not exist before purchase)
The product can be stored by sellers and buyers The service cannot be stored
Consumption is preceded by production Production and consumption generally coincide
Production, selling and consumption are locally differentiated Production, consumption and often even selling are spatially united
The production can be transported The service cannot be transported (though “producers” often can
The seller produces The buyer/client takes part directly in the production
Indirect contact is possible between company and client In most cases direct contact is necessary
Can be exported The service cannot normally be exported, but the service delivery system can
Source: Adapted from Normann (1984)

[p. 115]

The first thing to note is that many of the characteristics attributed mainly to manufacturing businesses are becoming characteristic of services as well. For example, an increasing number of “services” can now be stored …. Also, it is now possible to spatially separate production and consumption in an increasing array of services. [....] Finally, increasing numbers of services can now be exported. [....] [p. 114]

In a similar manner, an even larger number or manufacturing processes are acquiring “service” characteristics. At least two reasons account for this. The first reason, the arbitrariness of accounting practices, became particularly evident when “outsourcing” became common. It turned out that what was considered a goods production “cost” if done “in-house” became a “business to business” service when bought in the market. [....] [p. 115]

The second reason that much manufacturing is becoming more service like is technological change. This characteristic is more complex and subtle, and has to do with the transformation of work that automated production involves. Thus, Hirschhorn (1984) pointed out that “line” operators in businesses such as steel rolling. who have traditionally been considered to be “goods” manufacturing personnel, become “service” providers when they oversee a battery of robots that do the “primariy manufacturing tasks.” Such “service” roles in goods manufacturing exemplify how the distinctions between service and manufacturing with which we are familiar are breaking down. No longer fitting either of the accepted definitions, the emerging pattern is a phenomenon of a fundamentally different nature that needs to be understood from an alternative point of view. [p. 1116]

The reason for the change — here labelled as neo-industrialization — was seen in the 1980s rise of microprocessors and advent at the scale of personal computers.

Much of the change, as noted, is due to the diffusion of microtechnology. But, as Emery (1978) and others (Hirschhorn, 1984; Wiseman, 1985) have described, technological transformations have social and managerial implications, so the phenomenon is more properly portrayed as sociotechnical (Trist, 1981). New sociotechnical configurations call for a fundamental revision of the managerial assumptions, practices, and orientations left over from industrialism if they are to be effectively and profitably managed. This implies that the traditional management logic may have to be surpassed and the issue dealt with at the level of strategic choice. [p. 116]

Updating this train of thought, I wonder if the rise of the Internet, or today’s new Internet of Things, would be seen as an increment or a step change from this label of neo-industrialization.

4. Sellers help customers create value for themselves, as co-producers (and potentially as competitors)

The systems approach really shows up in the definition of offering, as a change from a cause-effect relation to a producer-product (co-producer) relation. This distinction is well described by Russell Ackoff in On Purposeful Systems, and Edgar Singer in Experience and Reflection. The application becomes more important in arrangements where distinctions between customer and supplier roles are fuzzy.

… strategically, it is crucial to consider a company from the customers point of view. Although traditional service management concepts are still valid, we have come to realize that the only difference between the “service” and the “nonservice” sector that really counts for the customer is the role (or roles) that the seller plays in helping customers to create value for themselves. This perspective effectively transforms the traditional definition of a client as a customer, for it leads one to consider clients not only as buyers but also, to a greater or lesser extent, as co-producers of their own value-producing activity. It is, of course, their interest in getting help to produce value that leads customers to sellers in the first place. However, the extent of value co-production that clients carry out may mean that customers are not only buyers and co-producers but potential competitors of the seller as well, This implies that the kind of management perspective that “services” calls for is also now relevant in nontertiary economic activities.

Apart from transforming a provider’s relationship with its “market,” this perspective has another, and perhaps more important, result. It is that the traditional distinction of a firm as being either a “services” or a “goods” producer depends at least as much on what it charges the client for as upon its production logic. Thus, from a strategic perspective, the traditional classification of companies into “goods” and “services” categories loses relevance. What is relevant is that the mix of things that a seller offers helps it clients to help themselves in ways that fulfill their expectations. [p. 116]

We thus paradoxically found out that developing the logic of the original service orientation led to dissolving the strategic relevance of the service-good classification. It provided for a strategic vision that is much more dependent upon managing a complex set of variables relating to the client than on defining and meeting predetermined operational objectives. ln this sense, it fits with what Morgan (1982, 1983) termed a “cybernetic” corporate strategy — widening the array of options in order to avoid “noxious“ areas of the environment. This is so because a client-oriented strategy in its ultimate form consists of enabling the client to choose from as many possible value-adding (or, more exactly, self-help-supporting) options as possible. [p. 117]

A company is autonomous from its customers, and can make its own decisions. Since resources at a company are finite, key strategic choices are on (i) clients with which it will engage (i.e. “all and any”, or focused on “mostly core”), and (ii) the array of offerings (as wide or narrow). Normann and Ramirez advocate a client-orientation first, followed by development of an “offering production system” that includes co-production.

lt is important to note that by emphasizing the “widening” dimension of the strategy we do not mean that an offering-producing system should go from providing a few things to either all or a few clients to providing all services to all clients. Being “client-oriented,” which is here taken to mean very “business oriented,” means offering as many services as possible to “core” clients. This means that the successful offering-producing system will tend to be one that has moved into the “B” quadrant of Table 2. Note that the idea of an “offering producing system” allows the strategy to be applicable not only to the single firrn but also to systems of firms such as the “strategic alliances” that are now common in high-tech industries (Astley and Brahm, 1989) and the “syndicates” found in financial services (Venkatraman, 1989). [p. 117]

Table 2. Achieving a Successful Relationship Between a Provider and its Clients
Clients
All and Any Mostly Core
Wide Array of Offerings A ? B
Provider ? ?
Narrow Array of Offerings C D
  • [editorial note:  The table should show a right arrow between A and B, a northeast arrow between C and B, and an up arrow between D and B]

Four factors in the emerging sociotechnical reality support pursuing this suggested client-based strategy. First, clients — particularly if they are businesses — are increasingly better informed vis-à-vis sellers, Therefore, the seller can no longer base its relative advantage vis-à-vis the client on simply having supenor information. Instead of relying on strategic notions such as “market differentiation” (e.g., Porter, 1985), sellers must establish a relationship of continuous mutual co-leaming with their clients (Ramirez, 1983). Sellers collaborate with their clients in developing ever better “offerings” of products and services, allowing the relationship to adapt so that clients are continuously supported in helping themselves under different conditions.

Second, because of this co-learning process, the “commercial role” of the successful offering-providing system must be defined according to client perspectives and not on client-independent criteria “what it does.” Because of the capacity that each offerer has of putting a price on different items in its own way of relating to its clientele (in ways which are explored later), the classification of offering-producing activities based on any client-independent criteria will, as Gershuny and Miles (1983) showed, be subject to much error. [p. 117]

Third, the sociotechnical changes in the relationships among stakeholders transform not only the commercial roles of individual offering systems but also the “rules of the game” whereby sustained profitability is obtained. For example, because of the importance of meeting client expectations, firms are collaborating in new and unexpected ways. Competing fiercely in one situation, they will join forces in another to help their clients in ways that their respective competitors cannot match. An example is the collaboration between Siemens and Ericsson to produce mobile phones in Nordic countries while at the same time competing for telephone switching contracts elsewhere. (See Perlmutter and Heenan [1986] for a good overview of this phenomenon.) [pp. 117-118]

Finally, the intensification of the “information content” of almost all business processes due to microprocessing technology implies that “new” assets need to be understood and managed. Two of these new assets are control over customer bases and control over access to the relationships among different customer bases. Dun and Bradstreet, for example, manages to treat wholesalers as information sources for retailers (a customer base) while at the same time using the knowledge it has from in relationships with retailers as a resource lor providing value to wholesalers (which in effect is another customer base).

From this strategic perspective, the so-called “moment of truth” (Normann, 1978, 1984) — a physical and psychological meeting between a customer and an offering provider — becomes an element in a larger, more complex, continually evolving “process of truth.” In such a process, the relationship between seller and buyer before and after the moment of truth establishes the long-term viability and sustainability ol that relationship. This means that a lot of attention will have to be given to the “pre-core” and “post-core” moments of truth that make up the client’s survival process. ln the air transport business, for instance, this implies that a lot of attention must be given to what happens on the ground — as Jan Carlzon, the president of SAS and perhaps the most important figure in making the moment of truth concept extensively known, recently put it in describing his business in the 1990s. [pp. 118-119]

The four factors can serve as a description of changes for which an “industrial” business strategy should be altered to become “neo-industrial”. Even with that change in relationship between a business and its clients, the offering-providing system is seen as coevolving, and “co-learning”.

5. Offerings can be viewed in three strategic dimensions of depth (of coproduction), range (of products and services), and choice (as bundled to unbundled)

As a way of dissolving the “service” and “nonservice” companies, Normann and Ramirez describe the pricing strategies of a company as based on the design of offerings in three dimensions: depth, range and choice.

Depth

The deepening-shallowing dimension of an offering is the one along which the extent to which a company helps its clients to create value for themselves is determined. The “shallower” the offering, the more the company helps the client to be a co-producer; the “deeper” the offering, the less a company does in helping clients to do things for themselves (instead doing it for them). Thus, the strategy followed by the Swedish furniture company IKEA was one of “shallowing” its furniture offering by creating a system that relies heavily on customer self-service. As should be evident from this example, there is nothing negative about developing a “shallowing” relationship with the client through the offering; shallowing often is a successful way to adapt the offering in situations where self-help is attractive or acceptable for the relevant clientele. [p. 119]

By contrast, offerings in which complex or “tightly coupled” elements must be made to interact under carefully controlled conditions that are normally difficult to obtain, as is true for the production of steel alloys, may not permit “shallowing.” This is also the case in situations where the capital/labor or know-how/labor ratios are high. [pp. 119-120]

As a consequence, it can be seen that “depth” is positively correlated with doing things for clients, increasingly with client-defined specifications. “Shallowness,” on the other hand, is positively correlated with managing a set of learning and support relations with clients.

Range

A second dimension to consider (always from the client’s point of view) is the range of offerings that an offering provider is able and/or willing to make available to the client. The greater the range offered by a seller, the more products and services the client will be able to choose from it. This second dimension can be called the broadening-narrowingdimension. The greater the range, the “broader” the offering; the smaller the range, the “narrower” it is.

Choice

The breadth of the offering range is (from the client’s perspective) not necessarily equivalent to the number of options provided by a seller. The number of options among which a client can choose given a fixed range (which in effect is a ratio of choices to range) is what the third and last dimension of the offering measures. We term this dimension thebundling-unbundling dimension. lf there is a small number of options from which to choose, the offering is “bundled”; if there is a relatively large number of choices, the offering is “unbundled.”

lt should come as no surprise that the bundling dimension is closely related to how the offering is priced. In an unbundled offering, clients can freely choose which options they want, without being obliged to buy “A” if they only want “B” (e.g., choosing flavors at a Baskin and Robbins ice cream shop). An unbundled offering means that a price is attached to each item chosen, allowing clients not only to “tailor make” their choices but also implying that they will pay for each and every item chosen while not paying for what they do not want.

On the other hand, the same range of offerings can be available but bundled into packages, Thus, if you want you can have it — but only with “B.” Even if you do not want “B” you still pay for “A” and “B” in order to buy “A” only. An example would be a bank offering only checking-savings accounts. If you want only a savings account, you also get — and pay for — the unwanted checking account. [p. 120]

The bundling-unbundling (or choice) dimension, therefore, is not only a way of “packaging” the offerings but also a way of determining both market niche (Freeman and Hannan, 1985) and, importantly, pricing strategy (Normann and Haikola, 1985). The “leveraging” of one money-making item that may not sell well on its own with another that does, and pricing both together, is illustrative of this approach. An example is offering “free” car washes with a gas fill-up. [pp. 120-121]

It’s worth noting that these three “strategic dimensions” in the 1989 chapter take a perspective different from the 2000 Prime Movers book by Ramirez and Wallin. There, the emphasis is on the “delivery package” of the offering in three dimensions of (i) physical content, (ii) service and infrastructure content, and (iii) interpersonal relationship content. The 1989 three strategic dimensions are not necessarly incompatible with the 2000 three delivery package dimensions, but instead a variant.

6. Transformations in a neo-industrial business strategy can be enumerated as single, dual and triple changes in the three strategic dimensions

The current design of offerings by a company could be described as a business model, and in the 2006 Business Orchestration book by Johan Wallin, related to value creation. Of more practical interest is how offerings (and possibly business models) can and should change over time. In the 1989 chapter, Normann and Ramirez outline “illustrative conditions” of 26 possible changes to the clientele situation.

The three strategic dimensions — deepening-shallowing, broadening-narrowing and bundling-unbundling — can be combined into one integrative framework we call the offering cube (see Figure 2). In total, the offering cube allows for 26 possible ways of transforming the offering: 6 single changes (keeping two dimensions fixed), 12 dual changes (keeping one dimension fixed), and 8 triple changes (keeping no dimension fixed). [p. 121]

In Table 3, one strategic dimension is fixed, while the other are changed.

Table 3. The Twelve Possible Composite (Dual) Changes in the Offering Cube
Strategic Dimension That is Fixed Change in Remaining Dimensions Effect of Change on Clients Examples of Applicable Business Situations
1. Broadening-Narrowing (Range Unchanged) Deepening and Bundling Do more for client but with fewer options while range unchanged Some options unprofitable, but needed, profitable opportunity to do more for client without broadening range
2. Broadening-Narrowing (Range Unchanged) Deepening and Unbundling Do more for client, more options, range unchanged Little cross-option subsidization, difficult to broaden range yet profitable opportunity to do more for client
3. Broadening-Narrowing (Range Unchanged) Shallowing and Bundling Do less for client, fewer options, range unchanged Some options profitable, self-help movement strong, cannot broaden range
4. Broadening-Narrowing (Range Unchanged) Shallowing and Unbundling Do less for client; more options, range unchanged Little cross-option subsidization, strong self-help movement, cannot broaden range
5. Bundling-Unbundling (Options Unchanged) Deepening and Broadening Do more for client, expand offerings, options unchanged Clients have less time to consume but more money to spend, want to shop on least number of occasions
6. Bundling-Unbundling (Options Unchanged) Deepening and Narrowing Do more for client, fewer offerings, options unchanged Client demands more help on fewer things, client heterogeneity has not changed
7. Bundling-Unbundling (Options Unchanged) Shallowing and Broadening Do less for client, expand offerings, options unchanged Strong self-help movement and profitable opportunity in separate field (not “bundleable”) or included in existing bundles
8. Bundling-Unbundling (Options Unchanged) Shallowing and Narrowing Do less for client, fewer offerings, options unchanged Strong self-help on fewer things, existing bundling too attractive to change
9. Deepening-Shallowing (Depth Unchanged) Bundling and Broadening Expand offerings, narrow options, depth unchanged Profitable opportunities with high cross-option subsidization, need to organize clients into “clubs” to restrict access
10. Deepening-Shallowing (Depth Unchanged) Bundling and Narrowing Narrow offerings and options, depth unchanged Unprofitable offerings and high cross-option subsidization
11. Deepening-Shallowing (Depth Unchanged) Unbundling and Broadening Expand offerings and options, depth unchanged Profitable opportunities and little cross-option subsidization
12. Deepening-Shallowing (Depth Unchanged) Unbundling and Narrowing Narrow offerings, expand options, depth unchanged Unprofitable offerings but little cross-option subsidization

Note: “Triple changes along the dimensions of the offering cube would involve the following 24 combinations of “dual” changes: 1 and 5; 1 and 6; 1, and 10; 2 and 5; 2 and 6; 2 and 11; 2 and 12; 3 and 7; 3 and 8; 3 and 9; 3 and 10; 4 and 7; 4 and 8; 4 and 11; 4 and 12; 5 and 9; 5 and 11; 6 and 10; 6 and 12; 7 and 9; 7 and 11; 8 and 10; and 8 and 12.

The following among these 24 possibilities are equivalent, leaving eight possible “triple” changes. They can be respectively denoted by the following eight letters (see text): 1 and 9, 1 and 5, and 5 and 9 (A); 6 and 10, 1 and 5, and 1 and 10 (B); 2 and 5, 5 and 11, and 2 and 11 (C); 2 and 5, 6 and 12, and 2 and 12 (D); 3 and 7, 7 and 9, and 3 and 9 (E); 3 and 8, 3 and 10, and 8 and 10 (F); 4 and 7, 7 and 11, and 4 and 11 (G); and 4 and 8, 4 and 12, and 8 and 12 (H). [pp. 122-123]

In Table 4, the triple changes — reflecting changes from one apex in the offering cube to its opposite — are listed.

Table 4. “Triple” Changes Using the Offering Cube
Type of Strategic Change From To
A shallow-narrow-unbundled deep-broad-bundled
B shallow-broad-unbundled deep-narrow-bundled
C shallow-narrow-bundled deep-broad-unbundled
D shallow-broad-bundled deep-narrow-unbundled
E deep-narrow-unbundled shallow-broad-bundled
F deep-broad-unbundled shallow-narrow-bundled
G deep-narrow-bundled shallow-broad-unbundled
H deep-broad-bundled shallow-narrow-unbundled

[p. 125]

This 1989 chapter closes with a direction to quantify the dimensions — with bundling-unbundling seen as the easiest to measure — to correlate the mixes of strategic options with profitability and characteristics of the business actors and dimensions. Generalizability was seen less on the kinds of companies to which this approach would be applied, but in terms of international situations. History has shown the the work of Normann and Ramirez has generally been better accepted in European companies than North American companies. The rediscovery of this 1989 chapter may help researchers to better understand offering as a theoretical foundations, yet may or may not influence greater adoption in application.

References

Normann, Richard. 1984. Service Management: Strategy and Leadership in Service Businesses. Wiley. http://books.google.ca/books/about/Service_management.html?id=gT4UAQAAMAAJ.

Normann, Richard, and Rafael Ramírez. 1989. “A Theory of the Offering: Toward a Neo-Industrial Business Strategy.” In Strategy Organisation Design, and Human Resource Management, ed. Charles C. Snow, 111–128. J.A.I. Press. http://books.google.ca/books/about/Strategy_organization_design_and_human_r.html?id=FChHAAAAMAAJ.




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