Business = service

This is important.

Read my friend Dave Gray’s post, Everything is a Service.

Unlike products, services are often designed or modified as they are delivered; they are co-created with customers; and service providers must often respond in real time to customer desires and preferences. Services are contextual – where, when and how they are delivered can make a big difference. They may require specialized knowledge or skills. The value of a service comes through the interactions: it’s not the end product that matters, so much as the experience. To this end, a company with a service orientation cannot be designed and organized around production processes; it must be designed and organized around customers and experiences. This is a complete inversion of the mass-production, mass-marketing paradigm that will be difficult for many companies to adopt.

Right on. Of course.

This was my passion in the mid-1970s. Until recently, I didn’t appreciate how fortunate I’d been to land in classes at Harvard B-School where folks like Earl Sasser, Ted Leavitt, Jim Heskett, and Daryl Wycoff were creating the foundations of looking at service as a way of business. Since my grasp of how business worked was thin, I didn’t realize that this was a phenomenal reset in the way we look at the function and mechanisms underpinning all business.

For the last three years, I’ve been preaching that business has entered a new era. The industrial age is over. The network era is upon us. The Cluetrain has arrived. Dave expresses this sentiment cogently:

The producer-driven economy is giving way to a new, customer-centered world, where companies will prosper by developing relationships with customers by listening to them, adapting and responding to their wants and needs.

The problem is that the organizations that generated all this wealth were not designed for this. They were not designed to listen, adapt and respond. They were designed to create a ceaseless, one-way flow of material goods and information. Everything about them has been optimized for this one-directional arrow, and product-oriented habits are so deeply embedded in our organizational systems that it will be difficult to root them out.

It’s not only companies that need to change. Our entire society has been optimized for production and consumption on a massive scale. Our school systems are optimized to create good cogs for the corporate machine, not the creative thinkers and problem-solvers we will need in the 21st century. Our government is optimized for corporate customers, spending its money to bail out and protect the old infrastructure instead of investing in the new one. Our suburbs are optimized to increase consumption, with lots of space for products and plenty of nearby places where we can consume more stuff, including lots of fuel along the way.

In the industrial era, the prime activity was running a factory. Management practices were geared to running the factory efficiently. Old-style companies still rely on managers to plan, organize, decide, and control as if manufacturing methods never change. Workers are treated as if they were cogs in the machine. This is the curriculum of MBA programs and so-called leadership development.

It makes me sad to see managers and workers struggling (and suffering) to play today’s game with yesterday’s rules. This is particularly striking in the learning and development sector. Companies conduct workshops as if one size fits all, as if management can decide what people need to learn, and as if corporations are like schools. No wonder very little of what people supposedly learn in training programs ever shows up as changed behavior on the job.

The best place to learn the job is on the job, not in a classroom. The pace of change demands the everyone be learning all the time. Learning and working are becoming the same thing. For the past three decades, I’ve focused on the learning part of the equation. Seeing the convergence of working and learning, I took a few months off in the fall to investigate what managers and workers need to do to prosper in the network era. It’s a bundle of behaviors I call Unmanagement.

Dave’s article links my concepts of Unmanagement to the fundamental shift to a service economy. It cut on a lightbulb in my head. I picked the themes of unmanagement simply because they appeared to be working. Dave gave me the logic of why:

In Evolving to a New Dominant Logic for Marketing, Stephen L. Vargo and Robert F. Lusch describe a new paradigm they call service-dominant logic, a fundamental shift in worldview and orientation toward marketing as a social process, where products are not ends in themselves but means for provisioning services, the customer is seen as a co-producer, and knowledge is the source of competitive advantage.

In product-dominant logic, production is the core of the value-creation process, while customer service is a cost to be minimized. But in service-dominant logic, products are the cost centers, and services become the core value-creation processes.

Ah ha. That’s why we have to Delight Customers, Share Control, and Be Agile.

“Markets are conversations,” wrote Doc Searls in The Cluetrain Manifesto. Later, he revised that to “Markets are relationships.” It takes a while to get your head around this. In the network era, value is co-created by the customer and the company. (Forget the word consumer.)

In a service-oriented company, it makes sense to consider every aspect of the company as a service. Managers provide a management service. Engineers provide an engineering service. Designers provide a design service. Marketers provide a marketing service.

We have developed a tendency to think of flows in terms of process, but services and processes are not the same. Processes are linked, linear chains of cause and effect that, when managed carefully, drive predictable, reliable results.

A service is different. Processes are designed to be consistent and uniform, while services are co-created with customers. This difference is not superficial but fundamental.

The network era demands that everyone in an organization shoulder responsibility for change and leadership. We’re all in this together. I find this uplifting. It challenges us all to be all that we can be.




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