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Co-production and co-creation using self service technology: The application of service-dominant logic

Otago Forum 2 (2008) – Academic Papers

Paper no: 4

Toni Hilton Unitec, New Zealand [email protected]

Tim Hughes Bristol Business School, United Kingdom        

 

Otago Forum 2: Academic Papers

Co-production and co-creation using self service technology: The application of service-dominant logic

Abstract Research on how customers engage in the co-creation processes envisaged by the Servicedominant logic paradigm is currently limited and even less work has been published on frameworks for organizations to manage the co-creation process. This conceptual paper examines a particular aspect of co-creation: co-production as a result of the application of self-service technology (SST). We propose a conceptual framework for co-production, which emphasizes the need to understand productivity from the point of view of the customer, and demonstrate how this can be applied in both consumer (b2c) and interorganizational (b2b) contexts. We conclude that service organizations might benefit from clearly identifying co-production with task-performance, and co-creation with the valueattributing aspects of the customer service experience. Both aspects generate a range of design and management challenges for suppliers particularly the need to understand the cocreation process ‘outputs’ desired by customers and the full costs of moving away from person to person interaction. Key words:

Service-dominant logic; Operant resources; Customer productivity; Co-creation of value; Co-production.

   

Introduction The Service Dominant Logic (SDL) debate has opened up discussion and stimulated new ways of thinking around a number of theoretical aspects and related managerial implications. Vargo and Lusch, (2008a) argue that the creation of sub disciplines such as business-to-business (b2b) marketing occurred in response to the limitations of a discipline based on the goods-dominant logic. The collaborative model of value creation (co-creation) at the centre of SDL is much closer to b2b theory development around the interactive and networked nature of value creation (Achrol & Kotler, 2006; Gummeson 2006; Gronroos 2006). At the same time SDL can be seen to be directly relevant to the way that organizations are developing in mature economies. Maglio and Spohrer (2008) site IBM as an example of a company moving from a manufacturing dominant to a service dominant model. As with any paradigm in its early stages of development there is much to learn. There is limited research to date on how customers engage in co-creation (Woodruff and Flint, 2006; Payne et al., 2008). In particular, there is little work on frameworks for organizations to manage the co-creation process. In this conceptual paper we look at a particular aspect of co-creation: co-production as a result of the application of self-service technology (SST). In making this contribution to SDL development we are mindful of the sub-discipline unifying aspects of SDL and have sought to develop a conceptual framework that encompasses co-production in both business-to-consumer (b2c) and b2b markets. We begin with a discussion on co-production and co-creation in order to establish the relationship between the two within SDL. We then move on to establish the vital role played by self-service-technology (SST) in co-production in the contemporary world. We emphasize the need to understand productivity from the customer’s point of view in order to get the full picture of whether value is being created or in fact destroyed by the application of SST. 22

Co-production and co-creation using self service technology Toni Hilton & Tim Hughes

This leads to a review of the existing literature on customer service using SST and, based on this, we propose a conceptual framework for productivity in co-production from the point of view of the customer. We demonstrate how this can be applied in both consumer and inter-organizational contexts and consider research and managerial implications.

Co-production and co-creation In seeking to apply the refined S-D logic theory to practice, an aspect of particular interest is how value can be co-created with customers in different circumstances. In this discussion it is important to distinguish between co-creation and co-production because the terms are not intended to be interchangeable within S-D logic. Co-creation relates to the value received by the customer through usage, consumption or experience. Co-production is a component of co-creation (Lusch and Vargo, 2006) relating to specific tasks undertaken by customers that may occur prior to or during usage, consumption or experience. The customer is therefore always a co-creator but not always a co-producer: “Value obtained in conjunction with market exchanges cannot be created unilaterally, but always in ves a unique combination of resources and idiosyncratic determination of value… thus the customer is always co-creator of value. On the other hand the in vement in co-production is optional and can vary from non at all to extensive co-production activities by the customer of user.” (Vargo & Lusch, 2008a, p 8). From the customer’s perspective value occurs at the time of use, consumption or experience and is therefore ‘value-in-use’. From the supplier’s point of view the role that the customer plays in this can be an important source of competitive advantage in terms of the customer’s contribution as an operant resource (Vargo & Lusch, 2008b). Operant resources are defined as the knowledge, skills, expertise, capacity and time of people and, in the context of S-D logic, relate to both co-creation parties: customers as well as the service organization. It is the reliance on the operant resources of customers in order to co-create value that warrants further consideration. Brown (2007) notes that S-D logic requires empirical testing to build our knowledge of how consumers participate in ‘cocreating value’, how they make sense of the role they play and how they evaluate their role against that played by the supplier. This raises the question of whether increasing or decreasing the customer’s role influences their overall perception of value gained from use, consumption or experience. It is the act of application by the customer that co-creates the value that they derive from the product or service and the supplying company can often support the customer in this. This applies in both business-to-consumer (b2c) and business-to-business (b2b) contexts. Thus a cosmetics company may provide application advice to consumers buying the cosmetic to improve their application skills and enhance their ability to co-create the value they derive from that product. Grocery stores provide recipe cards or the opportunity to try a ‘dish’ prepared with the raw ingredients on sale. In a b2b context, an equipment provider will frequently provide training and ongoing advice to its customer’s employees to ensure that the equipment is used effectively. These examples demonstrate ways in which the operant resources that customers employ can be enhanced to increase the value they derive from using the products or physical goods. In these examples it is easy to envisage opportunities to adopt creative and innovative ways to improve the operant resources customers draw upon to co-create and maximise the value-in-use of the products and goods on sale. However, the application of S-D logic to the provision of other services is more problematic, particularly when co-creation focuses on the self-service context. 23

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The early years of the 21st century have brought a marked increase in the provision of self-service across b2b and b2c markets. However, the self-service context provides the potential to confuse co-production with co-creation. The transfer of task-performance from employee to consumer (in b2c) or from supplier employee to customer employee (in b2b) increases the role the customer plays as an operant resource in the actual production of the service. Yet while co-production has been extended in these circumstances, from the customer’s point of view the value experienced may have declined. Hence we are reminded of the need to differentiate between co-creation of value and co-production of the service process.

The impact of self service technology (SST) on co-production and co-creation The significance of information technology (IT) in transforming various aspects of customer service is well established. It relates particularly to the following: managing customer information (Evans and Wurster, 1997; Kahan, 1998; Peppers et al. 1999; Day, 2003; Jayachandran et al. 2005); building a dialogue with customers (Blattberg and Deighton, 1991; Baker et al. 1998; Day, 1998); serving customers (Parasuraman and Grewal, 2000); and customising the offering (Mithas et al. 2005). While Peppers et al. (1999) claim that IT has the potential to be more effective than personal service there is limited empirical evidence to support this claim. Indeed a major question that emerges from the literature relates to the effectiveness of formal and remote technologically enabled interactivity compared with face-to-face interpersonal contacts (Coviello et al. 2001). Interactivity in ving electronic service delivery is said to be probably the biggest challenge for service marketers and needs to be studied in depth (Lings et al. 2004). The IT re ution has provided many opportunities for suppliers to introduce self-service technology (SST). This may often be stimulated by the opportunity to reduce costs, but may also be seen as a response to customer demand or a way to reach new customer segments (Bitner et al. 2002). However, the increasing use of SST is changing the nature and scope of the proactive customer input into the service process in ways that might impact upon their perception of the whole service experience. Rather than co-creating the experience with a service provider, the customer is increasingly using technologies provided by the provider to perform the service task, or produce the service himself or herself, as the technologies increasingly replace service employees. In a sense, the service experience moves from a process of co-creation, which combines the operant resources of consumers (in b2c) or the customer’s employees (in b2b) with the resources of service employees to a process where the customer increasingly provides the main operant resource in producing the service. SST provision, then, has the potential to fundamentally alter the nature and scope of the respective co-creation roles of the service organization and the customer, whether it is the consumer themselves undertaking more of the co-production role in b2c or the customer’s employees taking on a bigger proportion of production in b2b. However, as service organizations increase the provision of self-services how much effort has been put into understanding the impact on the cocreation of value compared to the focus on the technology and the support for that technology? The need for technology to facilitate the growth in self-service provision has led to a greater need to integrate IT and engineering perspectives when designing modern services. As a result of this there is a danger that services marketing knowledge is increasingly becoming associated with a fundamental shift in thought which seeks to conceptualise service as a field of study that integrates knowledge from information technology and engineering as well as the traditional business 24

Co-production and co-creation using self service technology Toni Hilton & Tim Hughes

disciplines that have previously been associated with service provision. New phrases are emerging to encourage a broad inter-disciplinary approach such as service system, and service science (Maglio, Kreulen, Srinivasan & Spohrer, 2006; Spohrer & Maglio, 2007; Spohrer, Maglio, Bailey & Gruhl, 2007; Maglio & Spohrer, 2008). Some even associate this development with a new field of study called SSME – Service Science, Management & Engineering (Maglio et al, 2006; IfM and IBM, 2007). Maglio & Spohrer (2008) recently defined service science as the ‘study of service systems, which are the dynamic value co-creation configurations of resources (people, technology, organizations, and shared information)’ (p. 18) and suggest that both service systems, and the principles of S-D logic ‘will be fundamental to service science’ (p. 20). If, as S-D logic claims, the fundamental source of competitive advantage is operant resources then the move towards SST is of interest to services marketers because the operant resources being employed are increasingly those of the customer, rather than the service provider’s employees. This creates an imperative for service providers to use the operant resources of their customers as effectively as possible. Therefore understanding how value is created for and experienced by customers in co-production is crucial. Moreover, services marketing theory would suggest greater success if service organizations were to combine the operant resources of their customers with the operant resources of their employees to co-create an enhanced customer experience. These two approaches are not entirely incompatible; it may be a matter of balancing the provider and customer input according to the circumstances and type of customer. The key to success may centre on the need to distinguish very firmly between the co-production, or task-performance aspects, and the co-creation, or value-attributing aspects of the customer service experience. Although the co-production or performance ‘inputs’ that a customer and service provider’s employee might be the same, the desired ‘outputs’ might differ in ways that materially affect the value the customer derives from the service. In b2c the consumer may not be as focused on the speed or efficiency of a service process as a service employee, or employer might be. Consumers may choose self-service options for ‘experiential’ outcomes such as convenience, greater control or more fun. In b2b the value of employee-to-employee interaction to both provider and customer may go far beyond the actual transaction. Relational exchanges can constitute a valuable resource for the organization (Hunt and Morgan, 1995) and relational knowledge comes through interactions (Gronroos, 2000). Therefore, interpersonal dialogue as a result of interactions can be seen to enhance value to both organizations through a process of mutual learning (Ballantyne, 2004). The key point is that there is a need to understand productivity from the customer’s point of view in order to get the full picture of whether value is being created or in fact destroyed by the application of SST. Therefore, in the next section we focus on the extant literature on SST in relation to customer service.

The literature on SST in customer service We have organised the literature under the following headings: the interface (this work considers the point at which the users interacts with the technology); social and psychological factors (work considering the background factors that may influence the interaction; cognitive ability and effort required (covering the effort and ability required from the customer); outputs (what the customer gets in return for operating the technology) and finally, service recovery (what happens when things go wrong). Table 1 lists the references related to each heading.

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As summarised in Table 1 much of the existing literature focuses on the interface between the user and the technology. Speed, control, reliability and ease of use are consistently found to be important components of success in applying SST (Meuter et al. 2000; Dabholker et al. 2003; Shamdasani, 2008 for example). However, perhaps surprisingly, the importance of fun also is mentioned extensively in the literature in relation to usage of the interface (Dabholker and Bagozzi, 2002; Dabholker et al. 2003; Curran and Meuter, 2007 for example). We have included these studies in Table 1 under the rather broader heading of “Enjoyment/satisfaction”. The question of security is not strongly featured, but does come out in one study (Gilbert, et al. 2004). It may be that the emphasis on fun/enjoyment over security reflects the b2c context of most of the SST research. For example much of the research features usage of supermarket scanning technology where the novelty of the new technology may be an element and where security is of less a concern to customers. Further research in sectors such as financial services and b2b may find security to be more of an issue. Much of the research on the interface downplays differences in terms of age and demographics in playing a role in forming the individual’s perception when using SST. The role of demographics and other social/psychological factors in acceptance and use of technology is acknowledged, though, in some studies (see Table 1) and, in particular, age and gender have often been seen as important determinants of acceptance (Zeithamal and Gilly, 1987; Moutinho and Curry, 1994; Langeard et al. 1981; Elliott and Hall, 2005; Ding et al. 2007). Other social and psychological factors, such as need for self-control and preference for human contact (Bateson, 1985) and social anxiety and need for social interaction (Dabholker, and Bagozzi, 2002) have also been identified as being of importance. Again, the extant SST literature focuses on the consumer context and there is little discussion of how the b2b context may mediate between individual social and psychological factors and the use of SST by the customer’s employees. Furthermore it ignores the role of other factors that have been established to be important in b2b, such as social networks (Achrol & Kotler, 2006; Gummeson 2006; Gronroos 2006).   Table 1: Literature on SST

  The interface: Speed, control, reliability, ease of use

Bateson (1985) [speed and control] Hoffman and Novak (1986) [control] Evans and Brown (1988) [reliability] Davis et al. (1992) [ease of use] Dabholker (1994) [control] Dabholker (1996) [ease of use, control] Anselmsson (2001) [ease of use] Childers et al. (2001) [ease of use] Dabholker and Bagozzi (2002) [ease of use and performance] Dabholkar et al. (2003) Salomann et al. (2006) [ease of use] Ding et al (2007) [time saving and control]

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Co-production and co-creation using self service technology Toni Hilton & Tim Hughes

Anitsal and Schumann (2007) [degree and quality of customer labour required] Shamdasani reliability]

et

al.

(2008)

[speed,

control,

Enjoyment/satisfaction Dabholker (1994) Dabholker (1996) Wolfinbarger and Gilly (2001) Childers et al. (2001) Dabholker and Bagozzi (2002) Dabholkar et al. (2003) Marzocchi, G.L. and Zammit, A. (2006) Curran, J.M. and Meuter, M. L. (2007) Shamdasani et al. (2008) Security Gilbert, et al. (2004) Social and psychological factors: Demographics and psychographics

Zeithaml and Gilly (1987) Moutinho and Curry (1994) Langeard et al. (1981) Elliott and Hall (2005)

Consumer traits

Dabholker, and Bagozzi, (2002)

Cognitive effort and ability required:

Davis (1989) Bitner et al. (2002) Meuter et al. (2003) Elliott and Hall (2005) Jayasimha and Nargundkar (2006) Simon and Usunier (2007) Zhu et al. (2007)

Outputs: Need satisfied •

Speedily and conveniently

Meuter et al. (2000) Karjalouto (2002) Ding et al. 2007

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•

Cost effectively

Service recovery:

Ding et al. 2007

Anselmsson (2001) Gilbert, et al. (2004)

Source: Authors’ interpretation of the literature on SST

The cognitive resources available to the individual have also been identified as pertinent to how the technological interface is approached and interacted with (see Table 1). It has long been recognised that individuals have varying degrees of enthusiasm and capability in using new technologies (see Davis’s [1989] Technology Acceptance Model). Bitner et al. (2002) find that customers will use SST when they understand their role and what they need to do. Meuter et al. (2003) stress the importance of technological anxiety as a predictor of usage. This provides a challenge for companies that seek to introduce new technologies where the appeal needs to go beyond those who are technically savvy (Salomann et al. 2006). Lack of experience with the technology will provide a barrier to uptake (Gilbert, et al. 2004). Some individuals will be more willing to experiment with new technologies than others. In this context, Simon and Usunier (2007) stress the importance of different cognitive styles. Their research on services where there was a person-to-person alternative to SST confirmed that individuals stronger in rational engagement preferred SST while those stronger on experiential engagement tended to prefer interactions with service personnel. This relationship is moderated by service complexity. If the service is perceived as requiring less cognitive effort SST will be more widely preferred. This is an important point relating to the balance between the individual’s cognitive ability and the cognitive effort required. Jayasimha and Nargundkar, (2006) argue that literature has underplayed functional literacy versus functional illiteracy in considering SST. The functionally illiterate will undergo significant emotional cost in trying out SST. This theme is taken up by Zhu et al. (2007) who stress that the effectiveness of SST features relates to the match between the cognitive resources available to the customer and cognitive resources demanded by the features of the SST. Again the existing research tends to focus on b2c customers and does not consider the b2b context where the cognitive resources of the individual may be supported and developed through their employer and their colleagues. SST is used as a means to an end and therefore consideration needs to be given to the outputs from usage. It is important that there is a perceived benefit of using SST (Bitner et al. 2002). The primary output supported in the literature is that the customer need is satisfied better than the nonself service alternative (see Table 1). This may relate to speed and convenience, as when the customer is able to get something urgent done quickly at anytime of the day or week when the alternative is not available (Meuter et al. 2000) or is able to save time (Ding et al. 2007). It may also relate to cost savings over the alternative (Howcroft et al. 2002; Karjalouto, 2002; Ding et al. 2007), thus the importance of price. This, of course, assumes the existence of alternatives and ignores situations where a change is forced upon a customer, as in b2b situations where a powerful supplier imposes a new SST system. The final category in Table 1 relates to service recovery. What back up is provided when the system fails? There is a limited amount written about this in the recent SST literature, although it would seem to relate important interface factors such as the reliability and ease of use of the interface. For example, in self-scanning, Anselmsson (2001) stresses the importance of having 28

Co-production and co-creation using self service technology Toni Hilton & Tim Hughes

helpful staff available. We know how important service recovery is (the way the service organization responds when things go wrong) from the general services literature (Johnston and Clark, 2005). Given the opportunities for failure in SST both because of failure of the system or because the customer is unable to operate the system, service recovery would intuitively seem to be an important area that is currently under researched.

A conceptual model of customer productivity As demonstrated in the previous section and detailed in Table 1, there exists a considerable body of work on the b2c customer and self-service technology (but little on b2b customers) that is useful when considering the nature of customer co-production in self-service. However, theory development relating to co-production from the point of view of the customer remains limited. Production and the closely related idea of productivity have traditionally been viewed from the perspective of the producer and predominately within the manufacturing sector. As a result productivity is generally associated with efficiency: the quantitative relationship between inputs and outputs of the process (Sink, 1985). When considered in services there is more emphasis given to effectiveness as well as efficiency (Sheth and Sisodia, 2002), but the focus has remained from the point of view of the provider rather than the consumer. Customer productivity has been defined by Parasuraman (2002) as the relationship between the service output experienced and the inputs provided by the customer. More recently, Anitsal and Schumann (2007) have proposed a model of inputs (the degree and quality of customer labour) and outputs (customer savings, quality of service, degree of customer’s service recovery effort, service fairness). Our conceptual model encapsulates these ideas of consumer inputs and outputs, but draws upon the self-service technology literature to encapsulate the range of ways in which customers experience efficiency and effectiveness in co-production. In attempting to understand value from the customer’s point of view we have to recognise the phenomenological nature of co-creation (Shemebri, 2006). Vargo and Lusch (2008a) accept that value is experienced (and therefore will be different for different people). Further to this the nature of customers and their needs will vary greatly particularly in considering both b2c and b2b customer relationships. The conceptual framework developed by the authors in Figure 1 is designed to aid the examination of co-production by providing a systematic way of considering different examples of self-service technology (SST) as a range of customers may experience them. The elements of the model are discussed below.

Social and psychological factors Everyone brings their own ‘baggage’ to a service encounter which will impact on their willingness and ability to engage with it and their perception of its effectiveness. This would seem to apply in both b2c and b2b situations, although in b2b it might be expected that willingness to engage and perceptions of effectiveness might be moderated by the attitude of their employer. Furthermore, in inter-organizational situations, where there is a network of interrelated actors between two or more organizations (Moller and Halinen, 2000) the interactions of the different actors in ved can be very complex (Dwyer et al. 1987; Sheth et al. 1988; Gronroos, 1990; Gronroos, 1994; Hunt and Morgan, 1995; Coviello et al. 1997).

Operant resources required This is the link between social and psychological factors and the SST technology, where the individual’s prior perceptions are confronted by the SST interface. The success of the SST will 29

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depend on the match between the cognitive resources available to the customer and cognitive resources demanded by the features of the SST. Support and training may be particularly important and this highlights a potential area of differentiation between b2c and b2b contexts in terms of the support that can be drawn upon within the organizational context. Figure 1: Conceptual framework of co-production in SST from a customer’s point of view  

Input effort

Output value

     

Social &  psychological  factors    Demographics & psychographics Consumer traits Social networks

The interface 

Operant resources required

 

 

 

 

Speed   Control Reliability Ease of use  Security

   

Outputs  Need satisfaction (Transaction completed or problem solved): • Speedily & conveniently • Cost effectively Note: Delivery of service (may in ve 3rd party) Emotional and social Enjoyment/satisfaction Frustration M

    Customer and fulfilment support

 

  Source: Authors’ interpretation of the literature on SST

The interface There exists a lot of academic discussion around the need for speed, control, reliability and ease of use as important features of self service systems, as outlined in Table 1. Ease of use can be seen to have a number of components and relates particularly to the cognitive resources required of the customer. When multiple features are incorporated into the SST the customer’s cognitive resources are more likely to become exhausted (Zhu et al. 2007). Thus, in designing the interface, getting the right balance between high technology and customer friendliness is a major challenge (Salomann et al. 2006). We also add security (relating to personal and company information and financial security) as an important feature of the interface. This is less stressed by the SST literature, perhaps because much of the research has been in the context of self-scanning technology. However, as discussed in the previous section, security may be important in particular sectors and in the b2b context.

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Outputs First, the outputs relate to the ways in which a need is satisfied in terms of speed, efficiency and cost effectiveness. In some cases the satisfaction of the need may also depend on a third party where separate delivery is required (for example ordering railway tickets online can in ve postal delivery of the tickets to your home). However, these utilitarian outputs are not the only outputs. We include a range of additional emotional and social outputs as well. The idea of enjoyment being a significant feature in determining uptake of SST is well supported by the literature outlined in Table 1. This is found to be the case in activities as diverse as self-scanning (Marzocchi, and Zammit, 2006); online shopping (Childers et al. 2001) and self-service banking (Curran and Meuter, 2007). While fun or enjoyment is usually classed as a feature of the interface we include it as an output, recognising that enjoyment of the process itself is often part of what the customer gets out of it. This may be an important consideration for organizations designing self-service systems. Conversely, frustration or anger may be the emotional response arising from a bad experience with SST. This may have an effect on self-image, particularly if the bad experience of SST is public, such as in the work place. The role of emotional response and memories are both prevalent in literature around consumer experiences (Pine & Gilmore, 1998 and 1999; Schmitt, 1999) and would be expected to constitute outputs from the SST process for b2c customers. We do not believe that these emotional and social outputs are confined to b2c customers. Work by the Industrial Marketing and Purchasing (IMP) group (Ford, 2002) on the interaction process in inter organizational buying demonstrates the importance of social exchanges. These social exchanges may be very important in reducing uncertainties between the two parties (Hakansson and Ostberg, 1975) assessing each other’s capabilities, negotiation, adaptation and dealing with a crisis (Turnbull, 1990). Commitment and trust are recognised as key variables in b2b relationships (Morgan and Hunt, 1994) and these develop as the parties in ved in the relationship learn what to expect from each other (Lewicki and Bunker, 1995). Therefore, good interpersonal relationships result in the build up of trust between individuals (Rose and Shoham, 2004), and this in turn builds into inter-organizational commitment over time (Narayandas and Rangan, 2004). The perception of the output from SST will have both individual and company dimensions and the emotional and social outputs should not be ignored in b2b contexts.

Customer and fulfilment support The availability of support that may or may not include access to staff is included in our model as an important facilitator that may be required at any stage of the process. One important aspect is the fulfilment process, so it is not just about having customer support for system/customer failure but also the potential to provide customers with more information (e.g. order tracking). This relates particularly to b2b contexts where the availability of often-complex information on an ongoing basis can be crucial.

Research and managerial implications The conceptual framework we have developed and discussed in the previous section is designed to provide a model of productivity in relation to SST that relates to the complexity of the customer service experience and moves our understanding on from ideas of productivity based on efficiency 31

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of economic inputs and outputs. As such it is hoped that the model will stimulate further research and provide “food for thought” for organizations developing and extending SST offerings. Particularly worthy of consideration is the nature of the operant resources available to and offered by the customer. As technology facilitates an ability to leverage the operant resources of customers, service organizations will need to articulate exactly what knowledge, skills and capabilities their customers require, how they will acquire them, from where or who, and what the associated learning curve will in ve. Service organizations will need to factor in the time and costs associated with the learning curve as customers develop the operant resources they will need in the same way that they would have to train and develop their own employees. As Frei (2008) notes, companies have more control over employers than customers and customers are harder to train, so tasks need to be dramatically simplified. Asking customers to perform complicated tasks produces anxiety and therefore issues relating to managing and motivating customers to modify behaviour need to be addressed. Frei (2008) suggests that this works with flight check-in kiosks because they provide added value like seeing seating maps and alternative to long queues. Where self-service provides customers with additional value then, presumably, the technologies that facilitate selfservice will represent valuable co-creation by the service organization and customers will be more than happy to perform the tasks required to ‘produce’ the service. In part this will depend upon the ability of the service organization to ‘fulfil’ customer generated requests as competently as those generated by employees. The need to ensure the internal visibility of fulfilment processes presents a challenge to service organizations when service orders and requests become less visible as a result of self-service provision. The learning curve for customers needs to be considered along with customer adoption and diffusion processes and the impact of customer churn. Self-service provision may in fact cost some service organizations more than maintaining service employees where there is high customer churn, where the number of ‘novice’ (Bateson, 2002) or new customers, outweigh returning or ‘expert’ (Bateson, 2002) customers and where a large number of service employees are needed to develop the operant resources of those novices. The nature of the operant resources may be closely related to the usage of the service. First time usage requires the ability to navigate and work it all out. Successive usage requires the ability to recall previous experience and (sometimes) the passwords and personal identification numbers for access. Therefore there may be separate issues around the ability to access and use the SST. Service organizations, and academics, might also consider the impact that increasing the co-production role might have on consumers who are unable, or unwilling, to bring the required level of operant resources to bear and which consumer groups might consequently become disadvantaged. The inclusion in the model of emotional and social outputs in addition to the more utilitarian outputs of value brings to attention the need to understand the full complexity of the customer experience in understanding the impact of SST. In this the customer’s memory of the experience can be seen to feedback into their future willingness to engage with the SST and into the availability of that customer as an operant resource. The conceptual framework introduced in this paper is designed to be as relevant to interorganizational SST as it is to consumer SST. The great majority of the marketing literature on SST, outlined in Table 1 focuses on end consumers and yet there is plenty of evidence that the application of SST has also been rapid within the b2b sphere. For example, in commercial financial services pressures for efficiency have resulted in the widespread use of technology to deliver service alongside reorganization into centralised units (Tyler and Stanley, 2001). Hughes et al. (2007) found many cases where local commercial relationships had been abandoned and 32

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replaced with a more transactional approach supported by remote servicing. Automation and centralisation of the transactional and operational elements of the financial service offering had been applied across the board. This trend raises a number of issues relating to managing the vast majority of commercial customers that are not large enough to get the personal service offered to key accounts (Piercy and Lane, 2003). Relational exchanges constitute an important resource for organizations (Hunt and Morgan, 1995) and the interaction process is recognised as central to relationships (Gronroos, 2000; 2004; Ballantyne, 2004). However, while relationship marketing predicates the importance of interaction, some of the technology employed in managing customers actually creates distances among the firm and its customers (Tzokas and Saren, 2004). The impact of SST on inter-organizational relationships will vary greatly depending on how it is organised and implemented. A customer focussed approach needs to take into account input factors such as the social and psychological make up of their users within the customer’s workforce and the available operant resource. This requires consideration of the cognitive resources available and the support and training that may need to be made available to the customer’s workforce. One challenge for organizations in moving elements of the production process from their own employees to those of their customers is that the true costs may be hidden. The long term cost in terms of deterioration of inter-organizational relationships as a result of inept introduction of SST may not be immediately apparent. Moreover, the literature is full of examples of organizations struggling to utilise technology effectively in the context of existing organizational structures, cultures and processes (Rigby et al. 2002; Dowling 2002; Payne and Frow, 2004). In the continued drive for efficiency, managers need to understand the full implications of co-production. In this respect relationship factors need to be very carefully considered in the light of the trend towards outsourcing service and in particular to global outsourcing. Through taking customer service outside the context of the supplying organization and outside of the local culture there is likely to be a significant impact on the support that our model suggests needs to be available at all stages of the process. When things go wrong with the process, through the fault of either party, and a problem needs sorting out the customer’s employees need to get access to knowledgeable people who understand the customer’s individual situation.

Conclusions The discussion above suggests there is a need to ensure that the customer perspective does not get lost as service organizations and academics fall over themselves to ‘apply scientific understanding to advance our ability to design, improve, and scale service systems.’ (Maglio & Spohrer, 2008). Academics and practitioners in ved with the provision of both consumer and inter-organizational services may need to act with caution when using the language and adopting the principles of S-D logic. These, particularly the role of operant resources to co-create value-in-use, may actually provide a more effective way of bringing the customer into sharper focus within a product manufacturing or a physical goods context than within a consumer services environment. It is relatively easy to demonstrate how manufacturers, or the providers of physical goods, might improve the value that consumers derive from their product through creative and innovative enhancement of their operant skills when using or consuming the products. This is particularly the case where they work in conjunction with retailers who can provide a tangible place for ‘upskilling’ the consumer. The greatest opportunities and challenges, though, reside in the provision of consumer and inter-organizational services. In services co-production means more than simply enhancing the customer experience. It has the potential to move productive capacity from the supplier to the customer presenting new challenges for service organizations as they increase their reliance on the operant resources of their customers rather than their employees. 33

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How can they leverage the operant resources of their consumers to achieve and sustain a competitive advantage? Unfortunately it is easy to envisage the allure of adopting SST without balancing the need to understand the implications for customers where co-creation requires greater co-production by them. This risk can be seen to apply in both b2c and b2b markets. In both it is important to understand the impact on the individuals being used as operant resources and the full implications of substituting remote contact for personal contact. The difference between the two is that in b2b environments there are usually opportunities to work with the customer (eg the employer) to provide training and a supportive environment for the customer’s employees in easing the transition. This may be crucial in maintaining the range of inter-organizational relationships that are so important in b2b. The key to success may be to ensure that service organizations clearly differentiate between coproduction, or task-performance, and the co-creation process, or the value-attributing aspects of the customer service experience. Both aspects generate a range of design and management challenges for suppliers and there is a need to gain a better understanding of the co-creation process ‘outputs’ desired by customers and the full costs of moving away from person to person interaction. The focus of S-D logic on operant resources as the basis for competitive advantage carries with it the implication that supplier organizations may need to pay great attention to the potential of their customers as co-producers. This may ultimately disadvantage customers with fewer resources to invest into the value co-creation process either because they are unable or unwilling to contribute more.

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