Value Co-Creation in a World of Goods Dominant Logic

Value Co-Creation in a World of Goods Dominant Logic

figures-96101_640Back in March Wim Rampen posted a very readable article titled Value is Always Co-Created In Use. I must say that I agree with the main thought of value not being created by the companies that deliver a service or product  – but by the customer when using them.

But then I regard a (business) world that decouples products/services from value as a kind of Utopia. Basic premises for this concept to work on a grand scale are that

–       resources are readily available to everyone

–        and/or everyone is created equal.

Neither of them is fulfilled. We live a world of limited resources; everybody’s skills are different; negotiation powers differ as well.

Additionally people and organizations do not always act rationally, or in the interest of a greater good. Instead they have their own interest in mind, which is often very short termed.

I have a challenge to see the world embracing this thought of value being created in use, because it means changing the way business works – even the way humans work. The challenge is that, as long as an exchange of “something” is involved in a transaction of sorts, I as the customer) have to have a lot of trust into the other party (the vendor, service provider, …) that the good or service that I gets to create value is worth the expense that I incur beforehand – and often it is not.

Now, our whole economic system is built around exchange. I would like to leave private interactions un-discussed here, as I believe that we have a different notion of “value” in private life than we have for business interactions. There e.g., regularly is no notion of a transaction in private life.

In business life we are bound to a system that we cannot change on our own accord. There are transactions. In order to create value I give away something (money, time, labor, skills, knowledge, …) to get the something else that I need to create and realize my value. As I am not so altruistic I do not want to give more than I perceive to co-create/realize as value in use. Actually, I want to realize more value than what my “spend” is. Still I bear the risk because I must invest before I get a return, if any! After all I might fail in my venture of co-creating value: The tiramisu I want to make and bought the mascarpone for utterly fails; I suffer an accident during my Maldives vacation that prevents me from scuba diving, … possibilities are countless.

As Maz Iqbal states in a reply to the same post: We are talking a paradigm change, and one on grand scale, of the whole economic system and of each and every human.

Even companies like giffgaff, Build a Bear, or Threadless, that are undoubtedly applying value co-creation principles, still do this in a transactional world. Their only objective is the generation of income for their owners. They do this by “outsourcing” corporate processes in a way that (hopefully) makes their product/service more desirable and attractive or affordable to the customer than their competitors’ products or services.

Just to not be misunderstood: This is not a bad thing!

But still the foundation is laid upon goods dominant logic – because this is the context these companies operate in.

After all value proposition, value creation, and its capturing are all interrelated and cannot be independently changed.

And as long as there is only one human remaining to pursue a transactional logic, looking into the own advantage, this paradigm change is not going to happen.

Where does this lead us?

There are concepts. There are fairly small implementations of them, and there is research going on about how to make it all work on large scale, like the HAT project.

In my eyes we are heading to a mix of goods dominant logic and service dominant logic implementations. Both have their justification.

What do you think?