Service Mix

What is the service mix?

The service mix is a crucial tool sitting in the operational layer of progress economy.

the service mix: the resources a progress helper offers up for integration within progress attempts.

It comprises varying amounts (including none) of employees, systems, physical resources, goods.

Together with a proposed series of activities it makes up a progress proposition. And altering the service mix is fingerprint of many innovations. Including servitization, digitisation, digital twins, moving online etc.

Each element of the mix is seen as being the same level. That is to say, there is no goods vs service thinking here. Goods enable service to be distributed in time and place.

Take quenching thirst, it can be achieved by drinking the bottle of water in a fridge. Or drinking from a tap/faucet. One we traditionally see as a goods, the other as service – but they can be swapped for each other.

That swap is not always so simple. Consider using a handyman to hang a picture. That is a relatively simple service. But thought of as doing yourself requires quite a few different goods – drills, wall plugs, hooks and knowledge of what to use and how.

Understanding and crafting the right mix is the skill of the progress helper. Requiring understanding of progress sought, what can be offered, and where progress seekers want to be on service-service continuum of enabling to relieving propositions.

Let’s take a look at each of the four service mix elements.

Employees

I use employee as a term to mean a person working on behalf of/representing a progress helper. That could be the owner of a one-person entity. Or someone within a hundreds of thousand strong organisation. What they have in common is they have a set of learnt knowledge and skills that when integrated with results in progress.

Our underlying service-dominant logic tells us:

Operant resources are the fundamental source of strategic benefit

service-dominant logic premise #

Employees are adaptable, autonomous, are situationally aware and can react correspondingly.

They also can (should) play a key role in attempting to reverse or minimise value co-destruction. That is to say in the case of progress being hampered by misuse of resource. At a minimum consider customer service handling complaints. Or a social media team minimising a PR problem.

You don’t need to search hard to find many examples of business leaders that credit their employees:

Clients do not come first, employees come first. If you take care of employees, they will take care of the clients

Richard Branson

or

We built Starbucks brand first with our people, not with consumers. Because we believed the best way to meet and exceed the expectations of our customers was to hire and train great people, we invested in our employees

Howard Schultz

or

It doesn’t make sense to hire smart people and tell them what to do; we hire smart people so they can tell us what to do

Steve Jobs

These are, perhaps, slightly hyperbolic statements. Of course understanding the general progress being sought needs to come first. But that is powerfully backed up by having the right people. And giving them the flexibility to react appropriately.

Gallouj & Weinstein discuss one thing to be aware of. In ”Innovation in Servces”, we see how beneficial employee behaviour can be codified by progress helpers as routines.

Systems

In the service mix, systems relates to those systems accessible to the seeker. That’s to say, the systems they integrate with. 

There may be other systems involved in a progress attempt, internal to the helper. And sometimes we might refer to processes and routines as “systems”. But these are not part of the service mix. You may wonder about the process of making progress. Surely that is a system? Yes, but not part of the service mix (it’s why we defined proposition as service mix plus proposed activities).

When it comes to systems as interfaces, we traditionally think of a range of systems such as dialling (press 1 for….), web sites, mobile apps, etc. Some of those will also codify routines and perform controls.

Although emerging nowadays are artificial intelligence and machine learning systems. These start to straddle the line between systems and employees. Like employees they encapsulate and apply skills and knowledge. And they can be automative (replacing employees) or augmentative (enabling better employee performance). [https://www.businessexpertpress.com/books/service-in-the-ai-era-science-logic-and-architecture-perspectives/]

Physical resources

Physical resources are those physical items owned by the progress helper and used in the activities involved in making progress.

These might be physical resources where the progress is made. Such as buildings – the hospital where operations take place, for example. Or physical resources the seeker uses to make progress that the helper retains ownership of. For example, the hire car in a hire car service.

I would also include digital assets here, unless they truly are to be owned by the progress seeker. Digital goods – streaming songs, books, video etc – despite the name goods, are often not owned by the seeker. Remember when Amazon deleted books users thought they owned? Similarly, digital twins I would list here.

Goods

Goods in the service mix are similar to the second type of physical resource just described. That is, something given to the seeker to help make progress. Except that, in this case, the seeker retains ownership. Instead of renting a car, you purchase one.

However, it is critical to understand that goods are simply another component of the service mix. You could buy a car, rent one, take an Uber, teletransport…these are all equivalent offerings – on the service-service continuum – for the functional progress of getting from point A to point B. We don’t see any goods vs. services debates like the ones that occur in a value-in-exchange model of value.Goods are simply another component of the service mix. You could buy a car, rent one, or take an Uber…these are all equivalent offerings in the progress economy CLICK TO TWEET

Offering a service mix that only includes goods is the strictest form of enabling service (on the service-service continuum). And this places the highest expectations on the progress seeker’s resource. That is, the seeker must have the necessary skills and knowledge to use the goods-only mix. It may also not offer the complete progress sought. And so require the seeker to find additional propositions.

Again, it is service-dominant logic that informs our view.

Goods are distribution mechanisms for service provisionservice-dominant logic foundation premise #3

But what does it mean to be a distribution mechanism for service provision? It means, to me, that goods freeze a service – the application of skills and knowledge. Allowing it to be moved through time and space and unfrozen by the seeker as needed.

Freezing and unfreezing service

What is frozen, however, may not be the same as the equivalent “service.” This is best demonstrated with two examples.Goods freeze service – but it may not be a one-one mapping; introducing complexity and increasing expectations on a seeker’s skills and competence. CLICK TO TWEET

Let’s start with a simple example. A digital stream freezes a band’s performance as a digital good. That can then be transported to the location and time of the listener via networks. And the service is simply unfrozen when the listener clicks play.

Hanging a picture on a wall, on the other hand, is more complex. Using a handyman is the equivalent relieving service. Where my involvement is just saying where I want the picture hung. And the handyman does all the work.

However, a handyman is not a service that can be easily frozen as goods. Rather, several stages of the service are frozen into distinct goods. And the seeker needs to plug it all together.

First, the ability to make a hole in the wall is usually frozen in a drill. Perhaps I also require a product that captures knowledge that when unfrozen allows me to avoid drilling near a water pipe or an electric cable. And then the knowledge of how to secure something to a wall is captured into wall plugs. But there are many different types of wall plugs. Some capture how to secure something in a brick wall. Others how to secure to plasterboard. And then there is different knowledge captured in plugs for different weights being hung.

As a seeker, I must integrate my knowledge of how to use a drill with the hole-making skills frozen in the drill. When I pull the trigger, those are unfrozen. I also need to know what kind of wall I have and how much weight I’m hanging. These are combined with my knowledge of wall plugs to help me choose the right one. Then I unfreeze the skills and knowledge that was frozen in the correct wall plug by installing it and hanging my picture. What could go wrong?!

Luckily the skills that make beer frozen in the cold beer I open after hanging that picture are quickly unfrozen just by pulling the tab on the top of the can!

Typical service mixes

Let’s take a few examples of service mixes to solidify the above and see some differences. And we’ll pick the functional progress of getting some food in the evening. We’ve plenty of choices and offers. But let’s pich three: cooking ourselves, going to a buffet restaurant and enjoying a gourmet restaurant.

Three example mixes for the functional progress of “getting food in the evening”. 
You can cook yourself, visit a buffet restaurant or a gourmet restaurant. Each requires a different service mix.

Cook ourselves means we have to get the ingredients (goods). So we’re looking for a progress proposition who’s service mix is predominantly goods based. All sorts of non-functional progress, such as convenience, opening hours, comfort, etc might steer my choice of where/when/how I get my goods. But we’ll try not to over complicate our example.

Whereas if I go to, say, a Chinese buffet restaurant, then now I’m moving towards the relieving part of the continuum. I’m still going to do some of the work, mainly collect and assemble my food. But the cooking part is done by someone else. So their service mix now has to include employees – chefs, greeters, cleaners etc. There are also some systems involved – how the food is cooked, presented etc. And there are the physical resources of the building I will eat in.

The gourmet restaurant is similar to the buffet. But now employees are a bigger part of the mix. Not in terms of numbers, but in terms of the skills of the chefs to wow me. And attentiveness and knowledge of the waiting staff etc.

Altering the service mix

The ability to offer differing mixes to meet similar progress sought is a source of innovation. Altering the service mix – the amount and types of employees, systems, physical resources and goods offered by a progress helper to help make progress – is an innovation opportunity CLICK TO TWEET

And we can readily express yesterday’s and today’s key approaches as alterations of the service mix.

Approach“from” Service Mix“to” Service Mix
Servitization (Product as a Service)predominantly goodsphysical resources, systems and employees 
Digitizationemployees and paper systemsdigital systems
Artificial IntelligenceKnowledge held in and applied by small number of employeesKnowledge captured by scalable digital systems
Digital Twinsgoodsgoods, perhaps repositioned as a physical resource. Introduction of systems (the digital twin) and employees to monitor
Bricks to Clicksphysical resources (locations) and employeesreduction in physical resources, increase in systems
Wrapping up

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