2007/11 Services Engineering and Management, Value Coproduction, and Situated Practices


David Ing


Service businesses are not new. For many services businesses, however, the “world is flat” context (Friedman, 2005) of globalized scale and ubiquitous information and communication technologies (ICT) is new. The “world is flat” viewpoint sees global economics and politics as reshaped by three great flatteners: (a) new players (i.e. India, China and other developing countries rather than local competitors); on (b) a new playing field (i.e. global marketplaces and resources rather than regional) that are (c) coordinated through horizontal collaboration (i.e. inter-organizational alliances rather than vertically-integrated firms). The provision of services described in service-dominant logic (Vargo & Lusch, 2004) that are based on invisible and intangible resources – e.g. competences or processes – may be impacted more in this new context than the delivery of physical goods. Physical goods with distribution costs mean that local providers have a cost advantage over remote providers. Services that take advantage of ICT, however, can relocate work at flat or near-zero costs. The decision to assign many service production activities to another continent is practically as easy as assigning it across town. Value coproduction that does not require face-to-face coordination can be rethought in this new frame.

Thirty years ago, the idea of service from an automated banking machine (ABM) was new. Over the past five years, customers phoning a toll-free number are no longer surprised to be served by a pool of company representatives that are half a world away. If the more automated alternative of self-service over a secure connection on a web browser is chosen, the location of the originator and service provider is even less relevant. The research into management and engineering of customer experiences of this type is far from mature.

This paper proposes adding two additional contexts for consideration into the emerging framework for service engineering and management:

  • value coproduction in a global business ecosystem adds dimensions of dynamic cooperation, competition and coexistence across companies, regional cultures and communities of practice; and
  • situated practices, mediated in a “Web 2.0” infrastructure resurfaces the influence of background cultural habits and predispositions on the “right” way(s) of getting things done, both in asynchronous and synchronous person-to-person negotiations over ICT and in predefined interorganizational computer-to-computer protocols.

Engineering service businesses for a “world is flat” context requires designing business architectures in which networks of customers, suppliers and alliance partners maintain consistent levels of quality, while allowing for minor variances in ends and means. Resources managed through ICT mediation can instantaneously (re-)route the work of service delivery personnel, intelligent information infrastructures and distributed physical locations for handling. Computer-supported cooperative work (CSCW) introduces both benefits of and challenges to distributed expertise and their coordination. Principles of management and engineering that do not directly deal with the capability to electronically automate or relocate work may require revision for this new paradigm.

Offshore call centres have become an everyday way of doing business in the first decade of a new millennium. Examples of similar impacts in services across many other industries can be listed. In media and entertainment businesses, the production and distribution of digital content — in music, movies and video — is making physical media irrelevant. Retailing in product categories ranging from books to consumer electronics has drawn volume away from “bricks and mortar” infrastructure towards web portals on the Internet. Academic education and professional training, scheduled as e-learning conducted asynchronously and at a distance, reduces attendance at campus facilities. Health care no longer needs to be bounded by the memory of a local physician, as diagnoses and prescriptions can be digitized and distributed across a virtual team. All of these examples point to opportunities and challenges for service businesses, as leaders transform through their business models to leave laggards behind.


David Ing, "Services Engineering and Management, Value Coproduction, and Situated Practices", in Research Perspectives in Service Engineering and Management, Volume 1, (Saara A. Brax, editor), Innovation Management Institute, report number 20, 2007, pp. 151-166