Value, Variety and Viability: Designing For Co-creation in a Complex System of Direct and Indirect (goods) Service Value Proposition

Purpose While service-dominant logic proposes that all “Goods are a distribution mechanism for service provision” (FP3), there is a need to understand when and why a firm would utilise direct or indirect (goods) service provision, and the interactions between them, to co-create value with the customer. Methodology/ Approach Three longitudinal case studies in B2B equipment-based ‘complex service’ systems were analysed to gain an understanding of customers’ co-creation activities to achieve outcomes. Findings We found the nature of value, degree of contextual variety and the firm’s legacy viability to be viability threats. To counter this, the firm uses (a) Direct Service Provision for Scalability and Replicability, (b) Indirect Service Provision for variety absorption and co-creating emotional value and customer experience and (c) designing direct and indirect provision for Scalability and Absorptive Resources of the customer Research Implications The co-creation of complex multidimensional value could be delivered through different value propositions of the firm. The research proposes a value-centric way of understanding the interactions between direct and indirect service provision in the design of the firm’s value proposition and proposes a viable systems approach towards reorganising the firm. Practical Implications The study provides a way for managers to understand the effectiveness (rather than efficiency) of the firm in co-creating value as a major issue in the design of complex socio-technical systems. Originality/ Value Goods are often designed within the domain of engineering and product design, often placing human activity as a supporting role to the equipment. Through an SDLogic lens, this study considers the design of both equipment and human activity on an equal footing for value co-creation with the customer, and it yielded interesting results on when direct provisioning (goods) should be redesigned, considering all activities equally.