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Cambridge Service Alliance

At the forefront of service transformation in the digital era

Definition of Service-Related Glossary [1]

Back-stage service activities: Activities that do not involve direct interaction with the customer, for example, back office operations of a retail bank or marking of student coursework by a teacher. Information processing is a common back-stage service activity.

Customer service system: A service system from the viewpoint of a customer or consumer. A customer service system searches provider value propositions looking for win-win value-cocreation opportunities. For example, a task the customer currently does (self-service) may be outsourced to a provider, a problem the customer does not have the knowledge, capability, or authority to solve may be outsourced to a provider, or the customer may learn of a novel service offered by a provider that they desire (demand innovation).

Goods-dominant logic: Goods-dominant logic is the traditional economic world view, which considers services (plural) and products as two distinct value-creating mechanisms.

Front-stage service activity: Activities that involve direct interaction with a customer, for example, a doctor talking to and examining a patient or a teacher lecturing to a class of students. Customer communication is a common front-stage service activity.

Organisations: From a service system perspective, an organisation is an accessible non-physical resource that has the ability to establish formal contractual relationships as well as informal promissory relationships. Organisations themselves are either formal (legal entities that can contract and own property) or informal service systems. Organisations that are formal service systems include businesses and government agencies. Organisations that are informal service systems include open source communities, temporary project teams and working groups.

People: From a service system perspective, people are legal entities that have knowledge, capabilities, authority and can create contracts (formal value propositions) and promises (informal value propositions) with other service systems. People can own property (such as technology and shared information). People exist in modern society as role holders (see Stakeholder) in many service systems. People are complex and adaptive, with the ability to learn and change their knowledge and capabilities over time. People have unique life cycles and life spans. People are resources that can be accessed in creating value propositions. They are also the atomic type of service systems, capable of configuring resources and creating value via interactions with other service systems.

Provider service system: A service system from the viewpoint of a provider (see Stakeholder). A provider service system aims to meet the customer’s needs better than competing alternatives consistently and profitably (in business context) or sustainably (in non-business context). Provider service systems seek deep knowledge of customer service systems (their own service activities, their unsolved problems, and their aspirations) to improve existing, and create new, value propositions.

Service or service activity: (1) Archaic: Referring to economic residual; any economic exchange or production process that does not result in a physical product transfer or output; non-productive labour. (2) Modern: The application of competences (knowledge, skills and resources) by one entity for the benefit of another entity in a non-coercive (mutually agreed and mutually beneficial) manner. (3) Modern: Value-cocreation interactions (typically with well-defined customer-provider entities as parties who initiate, directly or indirectly, front-stage and back-stage activities in anticipation of value-cocreation results). (4) Modern: An economic activity offered by one party to another, most commonly employing time-based performances to bring about desired transformation results in recipients themselves or in objects or other assets for which purchasers are responsible. In exchange for their money, time and effort, service customers expect to obtain value from the access to goods, labour, professional skills, facilities, networks and systems; but they do not normally take ownership of any of the physical elements involved.

Many typologies of service exist: external customer (market-based) and internal customer service; direct and indirect customer and provider interactions; automated, IT-reliant and non-automated service; customised, semi- customised and non-customised service; personal and impersonal service; repetitive and non-repetitive service; long-term and short-term service; service with varying degrees of self-service responsibilities.

Service computing: The use of information technology (IT) to support customer-provider interactions. Topics include web services, e-commerce, service-oriented architectures (SOA), self-service technologies (SST), software as a service (SaaS) and IT Infrastructure Library (ITIL).

Service design: The application of design methods and tools to the creation of new service systems and service activities with special emphasis on perceptions of quality, satisfaction and experience.

Service-dominant logic: The service-dominant logic advocates that service (singular) involves value-cocreation interactions as service systems create, propose and realise value propositions. The interactions may include things, actions, information and other resources. Value propositions are built on the notion of asset sharing, information sharing, work sharing (actions), risk sharing as well as other types of sharing that can create value in customer-provider interactions. Service Science embraces the world view of the service-dominant logic.

Service economics: The definition and measurement of service activities in an economy. Typical measures include productivity, quality, regulatory compliance and innovation.

Service engineering: The application of technologies, methodologies and tools to the development of new service offerings and the improvement of service systems.

Service experience and service outcome: The customer’s perceptions of the process and result of a service interaction or relationship. The perceptions are based in large part on customer expectations and hence there is always a subjective as well as objective component to the customers’ evaluation of the process and result. Expectations may inflate over time, resulting in degradation of service experience even when objective measures have not changed. Exceptional recovery from a service failure has been shown, under certain conditions for repeated service, to lead to greater customer lifetime value for a provider.

Service human resources management: The application of human resource management to service activities.

This term is rejected by many social scientists and those who do not believe it is appropriate to talk about people as resources. The term human relations management is sometimes seen as a more appropriate alternative. Many service firms have the motto to treat employees like they treat valued customers.

Service innovation: A combination of technology innovation, business model innovation, social- organisational innovation and demand innovation with the objective to improve existing service systems (incremental innovation), create new value propositions (offerings) or create new service systems (radical innovation). Often radical service innovation will create a large population of new customers (public education – students; patent system – inventors; money markets – small investors). Service innovation can also result from novel combinations of existing service elements.

Examples of service innovation include: On-line tax returns, e-commerce, helpdesk outsourcing, music download, loyalty programs, home medical test kits, mobile phones, money market funds, ATMs and ticket kiosks, bar code, credit cards, binding arbitration, franchise chains, instalment payment plans, leasing, patent system, public education and compound interest saving accounts.

Service management: The application and extension of management methods and tools to service systems and service activities, including capacity-and-demand management that integrates insights from service operations (supply capacity) and service marketing (customer demand).

Service marketing: The study of value-creating customer-provider interactions, outcomes and relationships. It uses and extends the tools and methods of marketing. It is gradually replacing ‘services marketing’, with the emphasis on the outcome of all economic activity being service (or value) whether the service/value comes from things (‘goods’) or activities (‘services’).

The notion of service marketing is supported by relationship marketing and customer relationship management, both primarily focused on the two-party relationship between customer and provider, and the new concept of many-to-many marketing (a network and stakeholder perspective).

This discipline places special emphasis on quality and customer satisfaction, demand forecasting, market segmentation and pricing, customer life-time value, and the design of sustainable value propositions.

Service mindset: An orientation geared towards the innovation of customer-provider interactions (service systems and value propositions), combined with interactional skills to enable teamwork across academic disciplines and business functions. It is one of the characteristics of adaptive innovators.

Service operations: The study of value-creating (work) processes, which include customer-input as a key component. It uses and extends the tools and methods of operations research, industrial engineering, management science, operations management, human resource management, lean methods, six sigma quality methods, logistics and supply chain management.

Service networks: Also known as service system networks. As service systems connect to other service systems, they form networks of relationships, which may have one or more associated value propositions. Social network analysis (people as service systems) and value network analysis (businesses as service systems) are tools that can be used to analyze service networks for robustness, sustainability, and other properties.

Service Science: An umbrella term for the emerging discipline of Service Science, Management and Engineering (see SSME below), it is named as a symbol of rigour in pursuing the truth. Service Science is the study of service systems and value propositions. It is the integration of many service research areas and service disciplines, such as service economics, service marketing, service operations, service management, service quality (especially customer satisfaction), service strategy, service engineering, service human resource management (especially in a professional service firm), service computing, service supply chain (especially e-Sourcing), service design, service productivity, and service measurement.

Service sourcing: The make-versus-buy decision for service activities, including the study of outsourcing, contracts, service level agreements, and business-to- business on-line markets. Service system: Service systems are dynamic configurations of resources (people, technology, organisations and shared information) that can create and deliver service while balancing risk-taking and value- cocreation. The dynamics are in part due to the ongoing adjustments and negotiations that occur in all systems involving people. People are the ultimate arbiters of value and risk in service systems (in part because people are legal entities with rights and responsibilities).

Service systems are complex adaptive systems. They are also a type of ‘system of systems’, containing internal smaller service systems as well as being contained in a larger service system (see Stakeholder). They typically interact with other service systems via value propositions, which may form stable relationships in extended value chains or service networks (see Service networks).

Formal service systems are legal entities that can create legally binding contracts with other service systems. Informal service systems cannot create contracts, though individual people within them may be able to do so.

Servitization (Servicisation): A process whereby manufacturers moves from product-led towards a service-oriented business model. For example, instead of selling jet engines, manufacturers develop service offerings in which customers are charged for propulsion usage.

Shared information: From a service systems perspective, an accessible conceptual resource that does not have the ability to establish formal contractual relationships. It includes language, laws, measures, methods, process descriptions, standards, and others. It can be codified and turned into explicit information. If people can talk about it and name it, then from a communication perspective, it is a type of shared information.

Stakeholders: Stakeholders include participants in service systems and others who are indirectly affected. Stakeholders who are ‘named participants’ are also known as role holders, who can be people or other service systems that fill named roles in service systems.

The two main roles in any service system are customer and provider. To create successful value propositions, it is also important to consider authority and competitor roles. Examples of role holders are employees and customers in businesses, politicians and citizens in nations, teachers and students in schools, doctors and patients in hospitals, and parents and children in families.

SSME: Service Science, Management and Engineering (SSME), or in short Service Science, is an emerging field. It includes curricula, training, and research programs that are designed to teach individuals to apply scientific, engineering, management and design disciplines that integrate elements of computer science, operations research, industrial engineering, business strategy, management sciences, social and legal sciences, and others in order to encourage innovation in how organisations create value for customers and stakeholders that could not be achieved through such disciplines working in isolation.

STEM: The Science, Technology, Engineering and Mathematics (STEM) fields are widely considered to be the driving force behind a modern society. The STEM workforce is viewed by many governments, academic and business organisations as the key to a nation’s innovation capacity and long-term competitiveness.

Systems and systems world view: Systems are dynamic configurations of entities (elements or components) that interact over time and result in outcomes (internal changes to entities and external changes to regions of the system and the system as a whole). The study of physical, chemical, biological, computational, cognitive, economic, legal, social, political, service or any other type of systems, typically begins with a statement of the entities, interactions and outcomes of interest. Reductionist science attempts to discover more fundamental building blocks out of which the entities of the system are composed (new architectures), often with the goal of finding simpler or more parsimonious explanations of observed variety.

In complex adaptive systems, entities have life spans and the types of entities change over time in ways that are difficult to predict. Service Science studies the evolution of entities known as service systems, which interact via value propositions and result (normatively) in value- cocreation outcomes. Understanding the evolution may shed light on the shifts from social to economic, political to legal, and cognitive to computational systems. The shift seems to depend heavily on an increasing amount of shared information to solve motivation and coordination problems.

Technology: From a service systems perspective, technology is an accessible physical resource that does not have the ability to establish formal contractual relationships. It includes any human-made physical artefact or portion of the environment accessible to service system stakeholders.

Technology (physical) and shared information (codified conceptual) are two important types of properties that service systems can own and provide access rights to others in value exchanges.

Value proposition: A specific package of benefits and solutions that a service system intends to offer and deliver to others. Division of labour is at the root of many value propositions. By traditional economic and marketing definitions, value propositions may be confined to either products (things) or services (activities). However, the modern meaning of service is value-cocreation that involves both products and services.

Value proposition emphasizes key points of difference in comparison to competing alternatives. They may be rejected because a potential customer does not trust the provider’s capabilities or believes the proposal violates a law or policy. They may also be rejected in favour of self service, a competitor’s proposal, or other options. Designing, proposing, negotiating, realising (actualising), and resolving disputes around value propositions are an integral part of the formation and improvement of service systems.


Reference: [1] IfM and IBM. (2008), Succeeding through Service Innovation: A Service Perspective for Education, Research, Business and Government. Cambridge, United Kingdom: University of Cambridge Institute for Manufacturing. ISBN: 978-1-902546-65-0.ive for Education, Research, Business and Government. Cambridge, United Kingdom: University of Cambridge Institute for Manufacturing. ISBN: 978-1-902546-65-0.

Cambridge Service Alliance

Welcome to the Cambridge Service Alliance…

  • A unique global alliance between the University of Cambridge and some of the world’s leading businesses.

  • Help organisations to address the challenges they will face in the next three to five years, through rigorous research, practical tools, insights and education programmes.

  • Learn how other innovative organisations are developing new services through our events

  • Since its inception in 2010 industrial partners have included CEMEX, GEA, IBM, Pearson, Zoetis, HCLTech, Bouygues UK among others.