We propose that designing a manufacturers equipment-based service value proposition in outcome-based contracts is the design of a new business model capable of managing threats to the firms viability that can arise from the contextual variety of use
that customers may subject the firms value propositions. Furthermore, manufacturers need to understand these emerging business models as the capability of managing both asset and service provision to achieve use outcomes with customers, including emotional outcomes such as customer experience. Service-Dominant Logic proposes that all goods are a distribution mechanism for service provision, upon which we propose a value-centric approach to understanding the interactions between the asset and service provision, and suggest a viable systems approach towards reorganising the firm to achieve such a business model. Three case studies of B2B equipment-based service systems were analysed to understand customers co-creation activities in achieving outcomes, in which we found that the co-creation of complex multi-dimensional value could be delivered through the different value propositions of the firm catering to different aspects (dimensions) of the value to be co-created. The study provides a way for managers to understand the effectiveness (rather than efficiency) of firms in adopting emerging business models that design for value co-creation in what are ultimately complex socio- technical systems.
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. 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. We found the nature of value, degree of contextual variety and the firms 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. 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 firms value proposition and proposes a viable systems approach towards reorganising the firm. 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. 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.
