Celebrate Life Enterprise

Address

- The New Business Model

Revolution In A Service

Economy

SPEAKER

David KweeCEOTRAINING VISION INSTITUTE

Customer

Producer

All

Stakeholders

Business Enterprise

Eco-System

Transformative Focus – Customer, Producer & All Stakeholders

Transforming Service

• The New Economic World

• Service Dominant Logic; A New Science For

Service Business Model Revolution

2 Key Areas Of This Address

The New

Economic World

It’s A New Economic World

INTANGIBLEASSETS

• GOODWILL

• INVENTORY

• TERMINALS

• PIPELINES

• MATERIALS

• SYSTEMS

• EQUIPMENT

• MACHINERY

• BUILDINGS

• LAND

TANGIBLEASSETS

• BRAND

• INTELLECT

• KNOWLEDGE

• INNOVATION

• TEAMWORK

• AMBITION

• COURAGE

• AGILITY

• SYSTEMS

• PRODUCTS

80% of S&P Assets Today Are Intangible

TALENT

Escalating Value of Intangibles

Year Intangible % Tangible %

1982 38% 62%

1992 62% 38%

2000 85% 15%

Source: Human Capital Institute, USA

“People represent one of the last reliable sources of competitive advantage”

Peter Drucker Business Guru Author, New Realities

Human Capital Is The Key Driver

The Problem Is….

• Thomas Stewart: “All the major structures of companies—their legal underpinnings, their systems of governance, their management disciplines, their accounting—are based on a model of the corporation that has become irrelevant.”

• David Norton: In the New Economy, human capital is the foundation of value creation. This presents an interestingdilemma: the asset that is most important is the least understood, least prone to measurement and the least susceptible to management.”

Why the Bottom Line Isn’t

“ The bottom line means business. It is about the hardnumbers that tell it like it is. It is the way to measure success.It is clear precise and understood. But, in fact, the bottomline isn’t what business is all about. It isn’t the rightscorecard for business success anymore. There is a newbottom line in which the soft stuff is as important as the hardstuff. Leaders need to discover a new bottom line, onefocused on creating value through people and organization.”

• How do you set measures of value for the intangibles in

the New Economy? Example how would you measure:

- Innovation

- Collaboration

- Other intangibles

Speakers Challenge 1

Service Dominant Logic;The New Service Science

For The 21st Century

Service-Dominant Logic Provides A Common Language & Framework

Source: www.amazon.com (For Class Discussion Use Only)

The Service Excellence Program

Source: http://data.worldbank.org/indicator/NV.SRV.TETC.ZS% of Service Sector in GDP

Growth of “service economies” across globe

Service Is The Future

Country Agriculture

%

Industry % Service % (2010

est)

World 5.8 30.8 53

Singapore 0 27.2 72.8

United States 1.2 22.2 76.7

China 9.6 46.8 43.6

Germany 0.8 27.9 71.3

Hong Kong 0.1 7.6 92.3

India 16.1 28.6 55.3

Japan 1.5 22.8 75.7

Philippines 13.7 31.7 54.6

Russia 4.2 33.8 62

United Kingdom 0.9 22.1 77.1

Growing recognition that all economies are service economies

Source: https://www.cia.gov/library/publications/the-world-factbook/index.html

GDP –

Composition by

Sector (%)

Service Is The Future

Premise Predecessor

FP1 Service is the fundamental basis of exchange.

Goods is the basis of economic transactions

FP6 The customer is always a co-creator of value

The producer defines its value proposition and finds customers who will pay for it

FP9 All economic and social actors are resource integrators

Scarcity of resources implies a need to focus on one’s core competence and targeted market segments.

Core Foundational Premises of

Service-Dominant Logic

Steve Vargo’s foundational premises of SDL

Stated Alternatively…

GOODS LOGIC IS ABOUT NOUNS

Restaurants, hospitals, tours, automobiles,

airplane, university, insurance etc

SERVICE LOGIC IS ABOUT VERBS

Enjoyment, healing, caring, relaxing, travelling,

learning, providing etc

Service Dominant Logic

Organizations

with the New

Service Science

builds on

fundamental

premises which

contain the latest thinking and research in

Service Management for Business Transformation

Organizations

with the New

Service Science

builds on

fundamental

premises which

contain the latest thinking and research in

Service Management for Business Transformation

Co-Value Creation

Integrated Resourcing

Service-for-Service Exchange

Service innovation for Business Competitiveness

Organizations

with the New

Service Science

builds on fundamental

premises which contain

the latest thinking and research in

Service Management for Business Transformation

Value-in-context

Value-in-use

Value-in-exchange

Co-Creation of value

Co-Production

• The nature of human value creation

• Co-creation of the value proposition

Value = Benefit (beneficiary specific)

Evaluation = Perception of benefit

Co-production is relatively optional Value is always co-created

Value as a Central Concept

Customers as Co-Producers: Five Phases

– Through advertising & promotion engage customers emotionally,

if not physically, in the act of co-production

– Involve customers through self-service; transfer work from the firm

to the customer

– Stage an experience where the firm constructs the context and the

consumer is part of it

– Empower customers to navigate a firm's system to solve a problem

– Engage customers as co-producers

C.K. Prahalad, "The Cocreation of Value," In Invited Commentaries on Evolving to a New Dominant Logic for Marketing, Journal of

Marketing, v.6., January 2004, p.23

The Service Dominant Logic Paradigm

Coca-Cola Happiness Machine

Coca-Cola Happiness Truck

Customer Co-CreationCoca-Cola’s Experience

• “Accept that consumers can generate more messages than you

ever could”

146 million YouTube views of content related to Coca-Cola.

Only 26 million views were of content that Coca-Cola created.

• “Accept that you don’t own your brands; your consumers do.”

“Coca-Cola’s Facebook fan page has more than 25 million likes.

The fan page was launched by two consumers in Los Angeles as

an authentic expression of how they felt about Coca-Cola.”

Source: Joe Tripodi, Coca-Cola Marketing Shifts from Impressions to Expressions, HBR Blog Network, April 27, 2011

Customer Co-CreationCoca-Cola’s Experience

• In what ways would value co-creation be possible in your

business?

- Co-creating curriculum and customer experience

- Co-creating your brand value proposition

- Co-creating your products

- Other ideas

Speakers Challenge 2

Resource

Integrator/

Beneficiary(“Firm”)

Resource

Integrator/

Beneficiary

(“Customer”)

Resource IntegratorsInstitutions

Resource Integration & Service-for-Service

Exchange within the Market System

Source: Prof Robert Lusch, University of Arizona

Market-facing

Resource

Integrators

Private

Resource

Integrators

Public

Resource

Integrators

Resource

Integrator (individual,

family, firm,

etc.)Value

Economic

Currency

Social

Currency

Public

Currency

New

Resources

Source: Prof Robert Lusch, University of Arizona

Resource Integration

Dental Service for Nutrition Service

Service For Service Exchange

SERVICE FOR SERVICE EXCHANGE

Resource Integration

“We saw an opportunity to enter the market place

with a new product offering & identified a small

company that was interested in working with us to

manufacture the product. Unfortunately, the small

company that had the capability we needed, had

limited resources and their product did not meet

our flavor, stability or quality requirements. We

arranged for the company to leverage the unique

technical expertise from a team of YourEncore

Experts. YourEncore quickly resolved the issues

and allowed us the opportunity to capture this new

business opportunity.”

- Peter Erickson, General Mills

Relatively self-contained, self-adjusting systems of

resource-integrating actors connected by shared

institutional logics & mutual value creation through

service exchange.

Service Eco-system

Apple’s Ecosystem

To Market

WebPlumbing

Market-ing To

Web 1.0Retrieve &

Read

Market-ing With

Web 2.0Co-Create

Market-ing System Evolution

“A state arises, as I conceive, out of the needs of

mankind; no one is self-sufficing, but all of us have

many wants. . . Then, as we have many wants . . . and

many persons are needed to supply them, one takes a

helper for one purpose and another for another; and

when three parties and helpers are gathered together

in one habitation, the body of inhabitants is termed a

state. And they exchange with one another, and

one gives and another receives under the idea that

exchange will be for their good.”

Plato, The Republic, 380 BC

“the great economic law is this: Services are exchanged for services… It is trivial, very commonplace; it is, nonetheless, the beginning, the middle, and the end of economic science…”

Frederic Bastiat, 1860

• Identify a new area of opportunity in your business that

you think or feel you could capitalize if you adopt a

integrated resourcing strategy.

- new products

- new customer segments

- new business

• What new competencies/resources do you need to

capitalize on the new opportunities and/or markets?

Speakers Challenge 3

Training Vision Institute Pte Ltd

11 Eunos Road 8, #06-04/05

Singapore 408601

Paya Lebar, Hougang, Jurong

East, Tampines, Woodlands

T. +65 6325 1068

F. +65 6325 1065

david.kwee@trainingvision.com.sg

trainingvision.com.sg

Thank you.