S-D Logic

What S-D Logic Might Be

Presentation for the Otago Forum on Service-Dominant Logic

November 23, 2005

Robert F. Lusch, University of Arizona Stephen L. Vargo, University of Hawaii at Manoa

S-D Logic

What S-D Logic Might be Foundation of a paradigm shift in

marketing Basis for a General Theory of

Marketing Reorientation for economic theory Foundation for theory of the firm Perspective for understanding role

of markets in society—Theory of Markets

S-D Logic

Co-creation at Core of S-D Logic

All institutions co-created Market Values Norms Language

From Operand to Operant Resources Market Exchange Shapes Institutions Exchange Creates Change

S-D Logic

Marketing Assists Change & Evolution

Division of Labor

Exchange Change

Increasing Degree of Change in Society

S-D Logic

Commercial Society

G oo ds M o n ey O rg an iza tio ns

M a rke ts

D iv is ion o f L a b or

C o m m e rc ia l o rC iv il S o c ie ty

Institutions Institutions

Institutions Institutions

Institutions Institutions

Service for Service

Goods, Money, Organizations are

Intermediaries

S-D Logic

Intermediaries

Goods = Tools & Appliances

Money = Option on Service(s) & Relationships

Organizations = Service Aggregators, Integrators & Transformers

S-D Logic

Commercial Relationships

Relationship CommercializationSelf Books, Seminars, Counseling, Apparel,

Beauty, Spirituality

Family Eating, Entertainment, Childcare, Eldercare

Friends Romance, Clubs, Apparel, Church

Work Jobs, Education & Training, Childcare, Healthcare, Retirement

Neighbors Gated Communities, Clubs, Architecture, Shopping

Strangers Security Systems, Charitable Giving, Insurance, Credit, Investing

S-D Logic

Reversing Fundamental Assumptions

The Old Thinking S-D Thinking

Profit Maximization Performance Improvement

Uncontrollable External Environments

External EnvironmentsAre Resources

Market To Customers Market With Customers

Value-in-Exchange Value-in-Use

Exchange is Fundamental

Co-creation is Fundamental

S-D Logic

CollaborateWith

Customers &Partners

Collaborate:Customers &

Partners

Overcome

Resistances

Co-CreateServiceOffering

Co-CreateValue

Proposition

Co-CreateConversation& Dialogue

Co-CreateValue

Processes &Network

Draw UponResources (internal & external)

S-D Logic as a

Theory of Marketing

S-D Logic

The Nature & Scope of Marketing

Commercial Society

World of Work

World of Consumpti

on

Condition SpecializedCompetence

s

Specialized Competence

s

Specialized Competence

s

Means Exchange Labor Market

Consumer & Business Market

End Change Value Value

S-D Logic

Toward an S-D Curriculum

S-D View of Markets & Marketing

Competency Building and Competitive Advantage

Collaborating on Cross-Functional

Processes

Co-Creating Value

Propositions

Co-CreatingConversation &

Dialog

Co-Creating Value Processes

&Networks

Co-Creating the

Service Offering

Consumers as Resource

Integrators

Marketing and Society

S-D Logic

Frontiers in Research

Co-Creation & Collaboration

Dialog & Conversation

Value Propositions &

Networks

ConsumerCentric

Thinking

Business Processes &

Service Flows

Knowledge & Competitive Advantage

Meaning of Consumption &

Work

Theory ofMarkets

Marketing, Macromarketin

g & Public Policy

S-D Logic

Concluding Observations Should we develop an open-source S-D

L Theory of Markets, Marketing, and Society? By embracing:

Cocreation Transparancy Dialog Resource Development Value-in-use

How do we? Will we?

S-D Logic

Thank You!

For More Information on S-D Logic visit:

sdlogic.org

We encourage your comments and input. If you would like your working papers or teaching material and/or links to your research displayed on the website, please e-mail us

Steve Vargo: svargo@sdlogic.net Bob Lusch: rlusch@sdlogic.net

S-D Logic

How Foundational is S-D Logic?

• To a general theory of the firm?

• To a general theory of markets & marketing?

• To a general theory of society?

S-D Logic

Individuals

Work as Co-creation

Consumption asCo-creation

Applying Mental& Physical Competences

Organizations

S-D Logic and a Theory of Organizations Primary

Functions = Aggregation, Integration,

Transformation

What is Purpose of Firm?

S-D Logic

Management Tools Needed Because of Intermediaries

Credit Management

Branding Decentralized

Organization

Planning & Control

Systems

Marketing Concept

Profit Sharing

Total Quality Management

Supply Chain Management

Customer Relationship Management

Goods Logic

Goods

Tangibles

Operand Resources

Asymmetric

Propaganda

Value Added

Transactional

Maximize Profits

Service Dominant

Services

Intangibles

Operant Resources

Symmetric

Conversation

Value Propositions

Relational

Financial Feedback

GlobalSustainability

CustomerAlienation

Respect forMarketingIn Firm

Less

More

Less

More

Less

More

The Emerging Reform of Marketing

S-D Logic

Markets and the Family Institution:Transforming Relationships

Tribal Society Age is paramount Gender determines role Children are producers Property rights limited Marriage is controlled Credit is limited Success is granted People do not try to

advance

Market Society Youth is valued Gender relatively

unimportant Children are consumers Property rights widespread Marriage is open Credit is pervasive Success is earned People try to advance