Our classic, economic and marketing, view of value is driven by the notion of value-in-exchange. Of successive manufacturers embedding or adding value. And of end users destroying/using that up; perhaps being able to restore/reclaim some value, but having to do so themselves. A combative world of manufacturers and users or customers; producers and consumers.
Here’s the problem…
This classic view encourages us to become myopic (short-sighted). We focus on the point of exchange. And, in order to create the value for that exchange, we focus on goods and manufacturing.
This results in a goods versus services rift. Where we describe services as poor relations to goods – they are intangible, inseparable and inconsistent, we can’t create an inventory, and they need customer involvement.
That limits our solution space…despite evidence that shows service is eating the world.Value-in-exchange thinking stunts our economic growth, causes the innovation problem and closes our mind to the circular economy Click To Tweet
And this preoccupation on achieving the value-in-exchange moment leaves us with little incentive or interest in what happens afterwards. Our economy acts in a take, make and waste manner. The absolute opposite to the circular economy.
Whilst this classic view has undoubtedly been successful; growth is stalling, and innovation is failing.
…and the solution
Our best alternative is the progress economy. Where we believe that value emerges from the amount of potential progress and progress made. Rather than being set by manufacturers.
Its roots are in the quotes at the top of this section. Work in the ’60s and ’70s by Drucker and Levitt, that we seem to have forgotten. Taken further by the likes of Christensen. And unlocked by the service-dominant logic of Vargo & Lush.
Thinking in terms of progress sought minimises myopic thinking. We search for various ways to help make progress. Our solutions (progress propositions) make use of the full range of a company’s potential service mix – varying levels of employees, goods, physical resources, and systems.
This broadens our solution space even more. We no longer look to add yet another blade to the razor. And redefines our view of markets.
Making progress is a joint endeavour. So now we observe value-in-use and value co-creation in place of value-in-exchange.
And by removing the limit on our visibility, that was encouraged by value-in-exchange, we opening our thoughts up to the circular economy (if that is progress being sought).
At the heart of the progress economy is our definition of progress:
progress: moving, over time, to a more desirable state.
and that everyone is trying to make progress with everything in their lives. This definition has a wealth of detail behind this simple insight.
Most progress attempts need someone to help since seekers often lack the needed resources. And this fact naturally leads us to the following high level definition of progress propositions:
progress proposition: an offer to help progress seekers make some specific progress.
in the old days we might have called this service. But we’ll usually refer to it as progress proposition to avoid an unnecessary, and it turns out incorrect, debate around goods versus services. In the progress economy, goods are distribution mechanisms for service – just one element of a service-mix.
Making progress is therefore often a joint endeavour.
And that leads us to an insight on value. In the progress economy, value is not embedded or added by manufacturers. Rather, it emerges from making progress:
value: emerges as a judgemental measure whenever a progress seeker determines amounts of progress achieved and/or (remaining) potential progress
This is the true basis of value co-creation and value-in-use concepts. Both really being terms for progress.
There’s yet further benefits of our progress lens. Our definition of Innovation becomes clear and actionable. Flowing neatly from our definitions, together with understanding how progress seekers decide to engage with propositions. It is:
innovation: creating and executing new – to the firm, market/industry or world – progress propositions that offer some combination of:
i) helping progress seeker to make better progress
ii) helping progress seeker to make progress better
iii) reducing the six hurdles to engaging.
whilst maintaining, or improving, the survivability of the progress helper (entity/ecosystem)
It’s a compelling progression of definitions!
potential markets: groupings of progress seekers who seek sufficiently similar progress
actual markets: potential market that also see hurdles to engagement as sufficiently low
Note how we are not interested in traditional segmentation variables (e.g. age, sex, incomes etc).
Removing our usual constraining value-in-exchange thinking and shifting to progress propositions with service mixes and value co-creation and actionable is what fixes the innovation problem, restarts growth, and fires up the circular economy.
The deeper overview…
In the progress economy we believe that all actors are constantly seeking to move to more desirable (as defined by them) states. In other words, they are attempting to make progress in all aspects of their life. We call these actors progress seekers. And the more desirable states they seek are known as progress sought.
Entities/ecosystems form – we’ll call them progress helpers – offering to help progress seekers make specific progress: progress offered. That is, progress helpers offer progress propositions.
There is an clear relationship between progress sought and offered. But it is not required to match. A helper can offer to help make more or less progress than that sought. This is captured in the progress diamond tool. And is an area for innovation.
Progress, as a verb, means moving over time to a more desirable state. Where that state comprises functional and non-functional elements; informed by context. “I need to get somewhere 100km from here [functional] as quickly as possible [non functional] during morning rush hour [contextual]”.
As a noun, progress is something that is overwhelmingly and phenomenologically determined, repeatedly, by a progress seeker as progress achieved and potential progress. When compared to progress sought, the idea of value emerges.
When engaging a progress proposition, progress is jointly made through a series of activities that are mostly a) intangible and b) the act of integrating seeker and helper resources.
Seekers’ resources often include, but are not limited to, their time and knowledge. Whereas helper’s resources reside in what we call the service mix.
Where the service mix comprises of varying levels, including zero, of progress helper’s employees, physical resources, goods, and systems. Adjusting the service mix is an area for innovation (servitisation, product as a service, digitalisation, digital twins, applying artificial intelligence/machine learning, etc, can all be mapped to service mix changes).
The progress zip and service as characteristics tools help us explore how progress is made. The later also helps us explore the impact of innovations on an entity.
Who drives the making of progress?
Who drives the activities/integrations reflects where the progress proposition sits on the service-service continuum.
It’s usually the progress helper in a so-called relieving service. In an enabling service, on the other hand, integrations are most usually driven by the progress seeker. Moving the proposition to a new position on the continuum is an innovation move. And doing so usually results in a change to the service mix.
It is progress seekers who overwhelmingly determine amounts of progress. Doing so before, and during, engaging with a progress proposition. And the decisions are unique and phenomenological (based on lived and living experience).
Before engaging with a progress proposition, seekers determine if there is enough potential progress. And as they progress, they are constantly determining whether there is a) sufficient achieved progress and b) sufficient remaining potential progress. They also determine in those decisions whether six hurdles are low enough to begin and continue engaging.
These ongoing judgments are most likely made at the end of each activity in the process of advancement. This coincides with the availability of new information to the seeker. Which may also be used by the seeker to evolve their view of progress sought.
The Six hurdles tO engagement
When engaging a progress proposition, the seeker also determine whether six hurdles are low enough to engage. This view is captured in the engagement decision tool.
And these six hurdles are:
- Lack of seeker resource
- Adoptability of progress proposition
- Resistance to progress proposition
- Mis-alignment on service-service continuum between progress proposition and seeker
- Confidence in progress helper’s proposition
- Gaining required service credits (rather too simplistically: price)]
Interestingly, the first hurdle – lack of seeker resource – is inherited from our understanding of progress. And it is a driver for seekers to look for progress propositions. The five other hurdles then arise related directly to a proposition.
We don’t see value as being set by the manufacturer. Which then gets translated as price to be paid in a value-in-exchange moment.
Instead, in the progress economy, value is an emergent property. It emerges whenever a progress seeker judges the amount of progress they have made so far (progress achieved) and progress still possible (potential progress).Value is an emergent property – not set by manufacturers. It emerges whenever progress seekers judge amounts of progress made so far (progress achieved) and progress still possible (potential progress) in progress they are seeking Click To Tweet
These judgements are unique and phenomenological. Which explains why some progress seekers see more value in progress propositions than others.
And because making progress is often a joint endeavour, this why we say there is value co-creation and that we observe value-in-use. That is to say, progress is made together (co-creation) and through actions that integrate seeker and helper resources (in-use).
Finally, we deviate from service dominant logic by saying the progress helper may also determines progress (value). Because progress with a proposition is a joint effort, then it can be determined by both parties. A helper may, for example, identify that the progress seeker is hampering progress, or worse that value co-destruction is occurring. And in rare occasions they may decide to terminate service.