Coevolving Innovations

… in Business Organizations and Information Technologies

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.

June 29th, 2012

Posted In: services, systems

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In the pursuit of gaining a stronger understanding of a science of service systems through systems science, I’ve been working my way through the works of Richard Normann, Rafael Ramirez and Johan Wallin. There’s a long evolution of thought there, with a depth that may not be obvious to readers who aren’t systems scientists. Thus, phrases such as coproduction, interactive value, offering and value constellation have a specific meaning within the systems science community that the layman may not appreciate. Let me try to bring together some of the ideas, across the references.

  • 1. A service system includes a supplier with a customer (and possibly subcontractors) as coproducers of outcomes
  • 2. Interactive value is actualized not in coproduction of the supplier with customer, but in coproduction of the customer with his/her customer / counterparts
  • 3. Offerings are interactions that provide benefits in the form of (a) physical product, (b) service and infrastructure and (c) interpersonal relationship
  • 4. An offering can be either an output of coproduction, or input into coproduction
  • 5. A value constellation includes the supplier, customer and subcontractors as coproducers

The systems flavour comes out not only in recognizing parts within the service system, but in emphasizing the interactions between parts. It’s worth re-examining these writings in the context of a new science of service systems.

May 15th, 2008

Posted In: services

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