Rethinking Public Sector Value
Rethinking Public Sector Value
The Impact of Service-Dominant Logic
Happy Tuesday, Transformation Friends. Another week, another opportunity to go Beyond the Status Quo.
Today, we're looking at Service-Dominant (S-D) logic. It’s a paradigm that strongly emphasizes the exchange of value through services. It represents a shift from a more traditional approach called Goods-Dominant (G-D) logic, which in contrast, views goods as the primary medium for the exchange of value.
I think these are exciting paradigms to examine in the context of public sector service delivery and service transformation as they provide a reference point for what value really is.
Today, we'll look at the ten foundational principles of S-D logic and how they contrast with G-D logic. We'll then discuss how these principles can be applied to public sector service delivery to maximize the value we can deliver to our citizens.
Grab your morning coffee, and let’s get started.
Understanding S-D Logic and G-D Logic
Let's start by getting to know these two paradigms.
Goods-Dominant (G-D) logic is a more traditional approach. It views goods as the primary medium of exchange, with value embedded in these goods during production and then delivered to the customer. This perspective often leads to a focus on tangible outputs and a one-way delivery of services. The customer is seen as a passive recipient of value, rather than an active participant in its creation.
Service-Dominant (S-D) logic, on the other hand, is a newer perspective first written about in 2005 by Vargo and Lusch. It sees service, not goods, as the fundamental basis of exchange. It believes that value is co-created with citizens, transforming them from passive recipients to active participants in service delivery. This means that when we talk about value, we're really talking about the application of skills and knowledge for the benefit of another party.
S-D logic is built on ten foundational principles, each contrasting with the corresponding view in G-D logic:
Service is the Main Thing Exchanged: S-D logic says we should focus on the service provided, not the physical goods. This differs from G-D logic, which focuses on the actual goods exchanged.
Indirect Exchanges Can Hide the Real Value of Services: According to S-D logic, indirect exchanges, like paying fees or taxes for public services, can make it hard to see the real value of services. G-D logic sees these exchanges as simple trades for goods.
Goods are Just a Way to Provide a Service: S-D logic sees physical goods as a way to provide a service. This differs from G-D logic, which sees the goods themselves as the main value.
Skills and Knowledge are the Most Important Resources: S-D logic values the resources that perform actions, like skills or knowledge. G-D logic values the resources that are acted upon, like raw materials.
All Economies are Service Economies: S-D logic sees all economic activity as providing a service. G-D logic sees it as making and exchanging goods.
Customers Help Create Value: S-D logic sees customers as active participants in creating value. G-D logic sees companies as the main creators of value.
Organizations Can Only Offer Potential Value: S-D logic says that organizations can only offer potential value. G-D logic says that businesses deliver value through the goods they make.
A Service-centered View Focuses on the Customer and Relationships: S-D logic focuses on the customer and relationships. G-D logic focuses on the company and transactions.
Everyone Plays a Role in Creating Value: S-D logic sees everyone as playing a role in bringing together resources to create value. G-D logic sees companies as the main ones who bring resources together.
Value is Personal and Subjective: S-D logic believes that value is a personal and subjective concept. G-D logic believes that value is embedded in goods during production.
The principles of S-D logic emphasize that all economies are essentially service economies, even in industries that seem to be all about goods.
The service those goods provide is the real thing of value.
They also highlight the shift from the traditional view that the business or organization is the sole creator of value, to seeing the customer as a co-creator of value.
We're increasingly seeing a move from G-D logic to S-D logic in the context of service delivery. This shift is driven by a growing recognition that value is not just something that's delivered to customers but something that's co-created with them. It's a shift towards seeing customers as active participants in the service process rather than passive recipients.
This shift and these principles have valuable implications for how organizations, especially those in the public section, operate and how they interact with citizens. It changes how we think about value, the role of the citizen, and the nature of service delivery.
Now that we've got a handle on these concepts let's investigate how they can influence public sector service transformation.
Applying S-D Logic to Public Sector Transformation
As we look toward the future of public sector transformation, the principles of S-D logic provide a roadmap for maximizing the value we deliver to citizens.
Here’s how:
Service is the Main Thing Exchanged: In public sector service delivery, this principle encourages us to focus on the services we provide to citizens, not the physical goods or outputs we produce. It's about understanding that the actual value of the public sector lies in its ability to serve citizens, meet their needs, and improve their lives. This shift in focus can lead to more citizen-centric services, more effective resource allocation, and, ultimately, a more impactful public sector.
Indirect Exchanges Can Hide the Real Value of Services: This principle suggests that indirect exchanges, like paying taxes for public services, can make it hard to see the real value of services. By making these exchanges more transparent, public sector organizations can better communicate the value they provide and build stronger relationships with citizens.
Goods are Just a Way to Provide a Service: This principle encourages public sector organizations to see physical goods or outputs as a means to provide a service, not the primary value. For example, a public transportation system isn't just about the buses or trains, but about the service of getting citizens from one place to another.
Skills and Knowledge are the Most Important Resources: This principle values the resources that perform actions, like the skills and knowledge of public sector employees. By investing in these resources, public sector organizations can enhance their service delivery and create more value for citizens.
All Economies are Service Economies: This principle sees all economic activity as providing a service. It encourages public sector organizations to see themselves as part of a service economy, with the potential to create value through the services they provide.
Customers Help Create Value: This principle sees citizens as active participants in creating value. It encourages public sector organizations to involve citizens in the design and delivery of services, leading to higher citizen satisfaction and better outcomes.
Companies Can Only Offer Potential Value: This principle suggests that public sector organizations can only offer potential value. It's up to the citizens to realize this value, highlighting the importance of understanding and meeting citizens' needs.
A Service-centered View Focuses on the Customer and Relationships: This principle focuses on the customer and relationships. It encourages public sector organizations to build strong relationships with citizens, to understand their needs, and to design services around these needs.
Everyone Plays a Role in Creating Value: This principle sees everyone as playing a role in bringing together resources to create value. It encourages collaboration and partnership in the public sector, with the potential to create more value through the integration of diverse resources.
Value is Personal and Subjective: This principle believes that value is a personal and subjective concept. It encourages public sector organizations to focus on the outcomes that matter to citizens, rather than the outputs produced by the public sector.
In essence, the principles of S-D logic provide a new way to think about and approach public sector service delivery. They encourage us to be more service-oriented, more collaborative, and more outcome-focused. And in doing so, they pave the way for a more transformative, more impactful public sector.
Wrap up
As we've seen, the principles of S-D logic provide a new way to think about and approach public sector service delivery. They encourage us to be more service-oriented, more collaborative, and more outcome-focused. By applying these principles, we can pave the way for a more transformative, more impactful public sector. It's a shift that requires us to go beyond the status quo, to challenge traditional ways of thinking, and to embrace a new, service-centered mindset. But the potential rewards – in terms of citizen satisfaction, social impact, and public sector performance – are well worth the effort.
Until next time, I'll see you Beyond the Status Quo.
References
Vargo, S. L., & Lusch, R. F. (2004). Evolving to a New Dominant Logic for Marketing. Journal of Marketing, 68(1), 1–17. https://doi.org/10.1509/jmkg.68.1.1.24036