1. S-D Logic The Service Ecosystem Reflections upon Systems Theories and Service Research Robert F. Lusch Muzzy Chair in Entrepreneurship & Innovation University of Arizona Stephen L. Vargo Shidler Distinguished Professor of Marketing University of Hawaii June 9, 2010 Naples, Italy Università di Cassino Mid Sweden University Universidad Torcuato di Tella

2. Exchange Systems …

3. S-D Logic ExperiencedKnowledgeable Innovative and Creative Produces /Creates Value InexperiencedUnknowledgeablePassive/Dull Consumes/Destroys Value G-D Logic: A Logic of Separation Producer Consumer Separation

4. S-D Logic S-D Logic: A Logic of Togetherness Sensing & Experiencing Creating Integrating Resources Learning Sensing & Experiencing Creating Integrating Resources Learning Cocreating Firm Customer

5. S-D Logic Evolving Marketing Thought To Market Web Plumbing Marketing To Web 1.0 Retrieve & Read Marketing With Web 2.0 Co-Create

6. S-D Logic Alexa Global Traffic Rankings Rank20052008 2010 1 Yahoo.com Google.com 2 Msn.comGoogle.comFacebook.com 3 Google.comYoutube.com 4 Ebay.comLive.comYahoo.com 5 Amazon.comFacebook.comLive.com 6 Microsoft.comMsn.comWikipedia.com 7 Myspace.com Baidu.com 8 Google.co.ukWikipedia.orgBlogger.com 9 Aol.comBlogger.comMsn.com 10 Go.comhi5.comqq.Com Ranking as of: (1) 12/31/05; (2) 11/24/08; (3) 5/16/10 Source: Alexa Global Traffic Rankings

7. S-D Logic Emergent, Co-created, Resource Integrating, Dynamic WEB 1.0WEB 2.0 Speak to CustomerConversation with Customer Customer is PassiveCustomer is Experiencing Customers Locate ContentCustomers Offered Service Push Messages OutPull Customers In Standardized Mass Produced Messages Customized and Relevant Exchange of Messages Seller ControlEcosystem Control

8. S-D Logic A service ecosystem is a spontaneously sensing and responding spatial and temporal structure of largely loosely coupled value proposing resource integrating social and economic actors interacting through institutions, technology and language to: Co-produce service offerings Exchange service offerings Co-create value Service Ecosystems

9. S-D Logic EMERGENCE OF INTERNET

11. S-D Logic Phase Transition A phase transition is a process where the characteristics of a given medium with given properties is transformed into a medium with new properties.

12. PHASE TRANSITION

13. LONG AND SMALL VIEW Universe expanding from an extremely dense and hot state.

14. CAMBRIAN EXPLOSION HUMAN ARTIFACTS INTERNET

16. Inter- activity Special- ization Modula rization Ex- change Transport Commun- ication Driving the Phase Transition

17. S-D Logic Phase Transition to Ecosystems States Flows Hierarchical Control Rigid Structures Centralized Management Defined Boundaries Secretive Closed Systems Produce & Store Optimizing Planning Grounded Control Flexible Structure Distributed Management Fuzzy Boundaries Transparent Open System On-Demand Adaptive & Learning Improvising

18. S-D Logic Phase Transition Market Place Conversation Dialogue OrganizationEcosystem STATES FLOWS

19. Phase Transition Market Place Conversation Dialogue OrganizationEcosystem STATES FLOWS GOODS PUSH PULL SERVICE

20. S-D Logic Phase Transition to Ecosystems: What it Means for Organizations OldNew BureaucracyLearning Factory ProductionCo-creation Platforms R&D LabsInnovation Platforms Marketing Channels Integration Platforms Push and G-D logic Pull and S-D logic

21. S-D Logic No B2B, B2C, C2B, etc….. Resource Integrating Actor

22. S-D Logic Resource Integrating Actors (RIA) Coordinate Communicate RIA Calculate

23. Coordination Communication Calculation Behavior Meaning ThoughtsSignifiers Signs Language Resource Integration & 3 Cs Source: Loebler & Lusch

24. RI Platforms Unified Communication Platforms Cloud Computing Platforms Mobility Platforms Coordination Platforms Resource Integrating Platforms

25. S-D Logic For More Information on S-D Logic visit: sdlogic.net We encourage your comments and input. Will also post: Working papers Teaching material Related Links Steve Vargo: svargo@sdlogic.net Bob Lusch: rlusch@sdlogic.netsvargo@sdlogic.netrlusch@sdlogic.net Thank You! Mid Sweden University Universidad Torcuato di Tella

26. S-D Logic Some Definitions System = set of interacting or interdependent entities forming an integrated whole. Service = application of resources for the benefit of another actor (Vargo and Lusch 2004) Service System = A dynamic value co-creation configuration of resources, including people, organizations, shared information (language, laws, measures, methods) and technology, all connected internally and externally to other service systems by value propositions. (Spohrer et al.2007) Ecosystem = a system formed by the interaction of a community of actors in an environment that these actors through interaction create.