Industry Transformation Towards Service Logic

Industry Transformation Towards Service Logic: A Business Model Approach

December working paper from
Cambridge Service Alliance -
'Industry Transformation Towards
Service Logic: A Business
Model Appraoch, by Anna Viljakainen,
Marja Toivonen and Maiju Aikala

The issue of how customer value is turned into profitable business is becoming increasingly important when companies adopt new service-based business models. When moving the focus from making goods or services to assisting customers in their value creation processes, the managerial opportunities to influence value co-creation becomes to the fore. Business models may be used as static blueprints describing how organizations function and generate revenue, or alternatively as tools to address a transformation or change in a firm or in an industry. Our work addresses the latter perspective: what kind of changes are going on in the magazine publishing business as the result of the adoption of service logic. Traditionally the widely-adopted business model frameworks have lacked the attributes that are characteristic of a service logic. Our aim has been to modify the well-known and well-articulated business model canvas by Osterwalder and Pigneur (2010) into the world of services and offer a managerial tool for making the transfer towards a service-based thinking. In effect, we argue that the different building blocks of a business model change dramatically when service-logic is applied instead of goods-based logic. For example, instead of talking about target customers, we should be getting into the context of our customers and partners. Similarly, instead of managing our infrastructure, we should focus on mobilising and integrating resources within our networks. As such, a service-based business model highlights the importance of the understanding of customer context and the fostering of collaborative interaction with customers, as well as the value of a firm’s  internal and external resources. We have used magazine publishing as a case context to illustrate the implementation of a service-based business model in an industry, and we hope this will give you some ideas where to focus when entering the service business.

Blog post created by Anna Viljakainen, Visiting Researcher to the Cambridge Service Alliance