The Progress Economy

Editing below here

Goods are examples of operand resources. Remember that in order to make progress with these types of resources, they must be acted upon. They are usually physical, tangible objects. Although we can have digital goods such as digital films, music, and e-books, etc.

The distinguishing feature of goods in the progress economy is that ownership of them is permanently transferred from the progress helper to the progress seeker.

And it is important to appreciate that goods are simply another component of the progress resource mix. We don’t see any goods vs services debate (as we do in traditional thinking). Imagine, for example, the functional progress you are seeking is to physically travel from point A to B. Then you could:

• buy and drive a car – a mix heavy on goods
• rent and drive a car – a mix heavy on physical resource (ownership of the car is not transferred to the seeker), or
• use a ride share service – a mix comprising employee, physical resource, and systems

These are all equivalent offerings on the progress proposition continuum of enabling to relieving progress propositions.

This thinking is possible because our underlying service-dominant logic informs us that:

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

But what does that mean? To me, that means goods freeze skills and knowledge. Allowing them to be moved through time and space and unfrozen (applied/integrated with) by the seeker as needed. Let’s explore this a little more.

freezing and unfreezing service

Let’s start with a simple example. When you listen to a band perform at a concert, you are experiencing the direct result of the band (employees of a progress resource mix)) putting their skills and knowledge of how to play instruments to use. And you’re doing it where the band is playing and at the same time.

Whereas when you listen to a recording of the band, you are no longer at the same place or time as the performance. Instead, the performance above has been frozen in a recording studio onto tape/cd/vinyl (goods) or as a digital goods. When you press the play button on your playback device, the performance, that has been transported to your when and where, is unfrozen.

However, I’ll admit, that was a simple example. And there’s a little hint in there that goods may not freeze exsctly the same as the equivalent goods-light mix. They might require the seeker to acquire and co=ordinate several goods-heavy mixes. In the above a seeker also needs a playback device. A goods that captures the skills/knowledge on how to take a recording and turn it into audio.

Goods freeze the application of skills and knowledge for distribution…but it can introduce complexity and increase expectations on seekers’ skills and knowledge CLICK TO TWEET

Consider now what turns out to be a much more complex case. The simple functional progress sought of hanging a picture on a wall.

An obvious goods-light mix for this is hiring a handyman. But it’s hard to freeze a handyman’s skills and knowledge into one goods. Instead, they are spread over several goods-heavy propositions:

• Finding an appropriate place in the wall to make a hole -the seeker needs:
  • knowledge of what makes an aesthetically pleasing position to hang a picture 
  • a goods that helps measure and mark where to make a hole 
  • a goods that captures skill of finding hidden water/electric cables in the wall
• Making a hole in a wall – the seeker needs:
  • knowledge of the wall type
  • a goods that captures the skills to make a hole in a wall of that type (often a drill)
• Securing the hook in the wall – the seeker needs: 
  • a goods that freezes knowledge of securing a hook into a wall (let’s call it a wall plug)
  • knowledge that different wall plugs are needed depending on wall type
  • knowledge of wall type and weight of picture since that also determines which type of wall plug

It’s become surprisingly more complex. Now we can see that goods-heavy mixes are often a trait of enabling propositions on the progress proposition continuum. And why the other end of the continuum has what we call relieving propositions.

implications of goods in the service mix

When using goods in the progress resource mix, there are a few things to keep in mind. Several of which are reflected in the progress proposition continuum.

And they are neither good or bad things. As always it depends on what progress – functional, non-functional and contextual – a seeker is trying to make.

An enabling proposition, with its goods-heavy mix, may entice a seeker looking for a sense of self-actualisation or achievement. And, since the seeker will own the goods, they will not be held up or restricted from making progress whenever they want. Compared that to engaging with an employee-heavy mix, where there are likely to be limited times available and frequently waiting lists.

Similarly, goods-heavy mixes place higher requirements on seeker’s having the necessary knowledge/skills. Both to use the goods and to know what other goods are necessary to successfully make progress. And let’s not forget, the seeker needs to know what activities to perform and when. There’s a risk to quickly raise the lack of resource progress hurdle. 

As we saw, goods-heavy mixes place a greater requirement on the seeker’s knowledge/skills. Both on how to use the goods and to understand what other goods are required to make progress. Not to mention that the seeker must understand what activities to perform and when. 

There is a risk of quickly raising the resource progress barrier.

However, this barrier can be lowered by providing instructions (the proposed activities of the progress proposition). Or instructional videos of the goods in use can be made available by the helper (and other forms of education/training depending on complexity/seeker desires).

Again, some seekers may enjoy the challenge of determining how to use the items. This is, afterall, how propositions arise. These seekers might use sites like youtube to show the goods in use.

More risk adverse seekers may prefer propositions at the relieving end of the continuum. There the lack of resource hurdle instinctively, but not necessarily, should be the lowest. The risk of them feeling they will do something wrong is also minimised. 

It’s for the above reasons that misalignment between a proposition and a seeker’s desires on the continuum is a progress hurdle.

Another factor to consider is seekers’ access to latest technology. Offering goods means the seeker is the owner. And, because there is always a service exchange, owning a good entails providing a service to someone. Typically a larger service commitment than, say, using the same good without owning it (a physical resource). Upgrading a product to the most recent technology entails providing even more service. Something the seeker may decide is excessive. This provision of service elsewhere is, indeed, one of our hurdles to progress.

Finally, offering goods in the progress resource mix can also obscure progress made (or not) from the progress helper. Because the helper is involved in fewer, if any, of the activities involved in making progress. As a result, the progress helper misses out on useful in-use feedback. And misses opportunities to recover from, or reduce, value co-destruction. The helper needs to find other routes to do that. And seekers are not shy at finding ways to complain about their misuse of resources as a problem of the helper…such as on-line review sites or social media.

goods innovation

There’s always room to innovate existing goods or to find new goods. Though care needs to be taken to not fall into the “add yet another razor blade” syndrome. 

Hopefully you can see from our discussion here that goods innovation should be a relatively small part of your focus.

Now we’ll shift to the last element of the service mix – physical resources. And we’ll see that goods may also be a part of that, with a key change.

Physical resources

Physical resources are goods where control is temporarily transferred to a seeker

Ownership of physical resources has sparked interesting discussions, particularly in relation to digital assets like streamed songs, videos, and books. Many seekers might consider these goods. However, instances like when Amazon deleted e-books from users’ devices revealed that ownership was not transferred to the users in that case. Similarly, music streaming sites typically license music to users rather than transferring ownership.

THE CURIOUS CASE OF GOODS

In the progress economy, our perception of goods is different from what you’re probably used to. For centuries, goods have been seen as the main driver of growth, while services were considered less important.

Adam Smith, in his “Wealth of Nations” promulgates the idea that goods are good and that services do not create wealth. Further, we often define services in relation to goods, using problematic terms like Zeithaml, Parasuraman, and Berry’s IHIP framework (see “Problems and Strategies in Service Marketing“) or the 5Is framework, where services are:

• Intangible
• Inconsistent
• Inseparable

• require Involvement
• cannot create an Inventory

Additionally we read that McCarthy’s 4Ps marketing mix (product, price, promotion, place) needs to be updated to handle problematic services. Now we forced into 7Ps, 8Ps, or 4Cs and more, even up to Gummesson’s 30Rs (relationships). For a comprehensive discussion on this topic, I recommend reading “The Marketing Mix Revisited: Towards the 21st Century Marketing”.

But Lush & Vargo’s “The Four Service Marketing Myths” argue that these negative attributes of services should instead be seen as benefits. And from there the seeds of service-dominant logic are born.

What if we think differently to convention. What if we believe service is primary driver in the economy, and explore where goods fit into that basis?

thinking differently

Let’s agree with ISIP and Vargo & Lush over the definition of service (see our discussion on service exchange for why):

Service is:

i) “The application of competences (knowledge and skills) for the benefit of another party”*

ii) “the application of knowledge to co-create value”*** Vargo & Lush (2008) “From Goods to Service(s): Divergences and Convergences of Logics” 
** International Society of Service Innovation Professionals ISSIP.org

Now we’re no longer talking about an output – like goods or services (plural). Rather we’re talking about the process to make progress. A handyman, for example, applies their skills to help you progress with hanging a picture on a wall. 

But recall Peters et al’s definition from earlier that defined resources as:

Resources are carriers of capabilitiesPeters et al (2014) “Theorizing about resource integration though S-D Logic”

Well, the handyman is a carrier of capabilities (which we can also refer to as skills and knowledge). In fact we’ll later refer to them as an employee offered as part of a proposition’s progress resource mix. They have the knowledge and skills required to hang a picture on the wall.

They do so using goods: a drill, wall plug and a picture hook. Which themselves are carriers of capabilities, capturing the skills and knowledge required for certain tasks. For example, a drill carries the knowledge of how to drill a hole, a wall plug carries the skills of how to affix something of particular weight securely to a particular type of wall, and a picture hook serves the specific purpose of knowing how to interface with the wall plug and picture frame.

Goods, in this view, become distribution mechanisms for service provision. Service dominant logic takes this view, seeing:

Goods are distribution mechanisms for service provision#3

I like to look at it this way. Goods freeze service provision allowing it to be transported in location and time. The service is then unfrozen, when needed, in an act of resource integration. Sometimes the goods is one-use, often for multiple uses, and sometimes for ever.

Importantly, goods are therefore interchangeable with other competence carrying resources (such as sytems, or employees). This is a key understanding for the progress resource mix. Although it may not be a one-one replacement. And it often impacts the resources a seeker must have; impacting the lack of resource progress hurdle.

still not convinced?

Let’s consider listening to a band. You can directly experience their skills and knowledge by attending a live concert. Alternatively, you can listen to their CD or digital stream. In this second case, their performance (application of skills and knowledge) have been “frozen” in a recording studio onto a CD or digital recording, transported to your location, and “unfrozen” when you press the play button.

Now think about quenching your thirst. You can turn on your tap and pour a glass of water. The water has been captured, purified, and delivered through a system of pipes to your home. Alternatively, you can open a bottle of water. In this case, the skills of capturing, purifying water have been “frozen” into the bottle of water, and distributed through a supply chain into your fridge. Sound familiar? Once you open the bottle, you’re essentially “unfreezing” those skills for consumption.