The Progress Economy

DRAFT

Service (singular) is the application of capabilities to make progress; distinguished from services (plural) the dual of goods.

Throughout The Progress Economy, we use service in the singular rather than services in the plural. The distinction is deliberate and fundamental.

Traditionally, organisations divide their offerings into two product categories: goods and services. Services are treated as a particular type of output, distinguished from goods by characteristics such as intangibility, inseparability, inconsistency, and perishability. In this view, goods and services are different types of products that organisations produce and sell.

The Progress Economy adopts a different perspective. Following Vargo and Lusch, we distinguish between services (plural) and service (singular). As Bo Edvardsson and colleagues observe, service should be understood as “a perspective on value creation rather than the product category of ‘services’ (plural).” (Edvardsson, Gustafsson and Roos. (2005) “Service portraits in service research: a critical review”).

Vargo and Lusch define service (singular) as:

the application of competences (knowledge and skills) for the benefit of another party

Vargo & Lusch (2008) “From Goods to Service(s): Divergences and Convergences of Logics”

Instead of asking What products or services does the organisation sell?, we begin asking What competences can we offer to help others make progress?

Extending the definition

The Progress Economy builds directly on Vargo and Lusch’s insight but broadens it in three important ways.

First, service is not limited to helping another person. Some forms of progress involve self-service, where individuals apply capabilities to improve their own well-being. This reflects Vargo and Lusch’s earlier formulation of service as benefiting “another entity or the entity itself.” (Vargo & Lusch (2004), “Evolving to a new dominant logic for marketing”, Journal of Marketing, Vol. 68, pp. 1-17).

Second, service involves more than the application of knowledge and skills. Progress may equally depend upon physical capabilities, such as strength; natural capabilities, such as the movement of wind or flowing water; or abstract capabilities, such as time and availability.

Third, within the Progress Economy, the idea of benefit becomes more precise. To benefit someone is to help them improve their well-being – that is to make progress towards a more desirable state.

For these reasons, The Progress Economy broadens Vargo and Lusch’s definition by replacing competences with the wider concept of capabilities and by making progress explicit.

Service is the application of capabilities to help oneself, or another party, make progress.

For a Progress Helper, the managerial question also changes. It is no longer, What products or services should we offer? Instead it becomes, What capabilities can we apply to help another party make better progress? The next question naturally follows: How should those capabilities be packaged? In the Progress Economy, that package becomes the Progress Resource Mix.

Once service is understood as the application of capabilities, the longstanding goods-versus-services debate disappears. Goods are no longer the opposite of services. They are the mechanism through which service is transported across time and space. Capabilities are frozen in the goods, to be unfrozen when a it is integrated into progress-making activities.

Different ways of understanding service

Once service is understood as the application of capabilities, it becomes useful to classify it in different ways.

One particularly useful distinction concerns who applies the capabilities.

Sometimes the Seeker performs almost all of the work themselves. At the other extreme, a Helper performs almost all of the work on the Seeker’s behalf. Most real-world offerings sit somewhere between these two extremes.

This gives rise to the Progress Proposition Continuum, ranging from enabling propositions, where the Seeker performs most progress-making activities, to relieving propositions, where the Helper performs most of them.

Moving an offering along this continuum is one of the most powerful innovation levers available to organisations.

The second useful classification comes from Lovelock and Wirtz (Lovelock & Wirtz’s four types of service processing (from ”Services Marketing”), who categorise service according to what is being transformed.

They identify four broad forms of service:

• People processing, where capabilities are applied directly to people (such as healthcare, fitness, or hairdressing).
• Possession processing, where capabilities are applied to physical possessions (such as repair, transport, or storage).
• Mental-stimulus processing, where capabilities influence thoughts, learning, or emotions (such as education or entertainment).
• Information processing, where capabilities manipulate information or data (such as banking, insurance, or IT services).

Viewed through the lens of the Progress Economy, these are simply different classes of functional progress that organisations help Seekers achieve.

This shift changes the unit of managerial thinking, from products to capabilities. Once capabilities become a primary unit of analysis, goods, software, employees, platforms, ecosystems, and even artificial intelligence can all be understood using the same underlying logic.