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March 01, 2010

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Chris

OK quick example using John Deere:

Product - an Agricultural machine manufactured by John Deere. Take the STS Series High Octane Combine (http://www.deere.com/servlet/ProdCatProduct?tM=FR&pNbr=9570SH). Farmers "hire" this product to get the job done of "Harvest a Crop". There are a number of functional outcomes that farmers need to get done when harvesting a crop using this Product and by which they "measure" or judge its value-in-use. These outcomes or activities encompass crop collection, separation, yield management, safety, monitoring, equipment cleaning, residue disposal, grain handling etc. etc.

Service - John Deere provides the GreenStar™ Harvest Doc™ system within the Combine. Harvest Doc is a yield mapping system which gathers the yield and moisture information as the farmer uses the combine. The system allows the operator to record yields, moisture, and productivity on the go then store information and download data into their personal computer to create comprehensive yield and moisture maps, along with productivity reports of their fields and operations to better manage inputs and make better management decisions. This is the mechanism that provides knowledge about the farmer's operations to John Deere and also learning for the farmer to improve his/her capability to get the job done better - to derive superior value-in-use. John Deere also offer the Agris agricultural management suite, a system which helps farmers streamline their processes in key functional areas including commodity management, agronomy management, grain processing, accounting & financials, retail sales, and petroleum management.

Experience - the sum of the functional and emotional value derived from the Product and the Service by the farmer.

Chris

To add to my above post, my perspective is rooted in the knowledge-based view of the firm.

Firms exist because they can integrate and coordinate specialized knowledge held by individuals into collective, organisational knowledge. In turn, that leads to advantage because with all things being equal, knowledge is difficult to copy, is causally ambiguous and typically, beyond the grasp of rivals. When knowledge is valuable and used appropriately, firms can enjoy sustained competitive advantage. In short, firms are better than markets at integrating and applying valuable knowledge to business activity.

As customers also have knowledge, firms that harness their knowledge through Co-Creation mechanisms or Service (as in definitions below) gain advantage. Customers become knowledge-creating actors in the value-creation process for firms and therefore for other customers. Firms that develop and refine Service using their and their customer's knowledge or learning derived from interactions with customers are the firms that are co-creating value.

It is the knowledge / learning mechanisms embodied in the Service between firm and the customer that defines co-creation. These learning mechanisms give birth to new dynamic capabilities (both firm and customer) which lead to the evolution of firms and the evolution of value-in-use - or innovation for customers.

Chris

Hi Graham
I can make three quick definitions of product, service and experience to add to the above:

- Product: the object, thing or platform provided by a Firm that allows a customer to derive value from its use; or value-in-use. Products are goods which users "hire" or deploy to perform activities and achieve goals, or "jobs-to-be-done"; firms only make value-propositions :-)
- Service: the interactions or processes that exist between the Product, the Firm and the User to derive the value-in-use or to get a job done. Users may interact directly with other users or alone with products without the firm's involvement of course. Such interactions require knowledge, attention, cash, capabilities to perform - or operant resources by both firms and customers. These are the mechanisms of co-created value which are of value to both firm and customer. The firm needs learning from customers to innovate successfully (customer knowledge); the customer needs learning from the firm to derive superior value-in-use.
- Experience: the sum functional and emotional Value-in-use derived from the Product and the Service by the customer. This may include improved know-what, know-how, emotions, feelings, judgments, relationships and functional performance.

Example to follow....

GrahamHill

Hi Chris

An interesting series of statements leading to an equally interesting conclusion.

But you sweep past a few important questions?

1. What exactly is value? And from whose perspective?

2. Why make the huge leap from product to experience without first considering services, (or 'service' with a service-dominant logic perspective) first

3. And what exactly is an experience anyway?

The questions you ask during the journey ultimately determine the destination you reach.

Graham Hill
Customer-centric Innovator
@grahamhill

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