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This chapter discusses a Unified Service Theory (UST) that has been set forth as a foundational paradigm for Service Operations, Service Management, and now Service Science . The fundamental purpose of the UST is to unify the various phenomena we call “services” (i.e., service processes) in a way that demonstrates both how they are distinct from non-services and how they share common managerial principles. The UST prescribes boundaries for Service Science and reveals a gamut of service topics of interest to designers, managers, and researchers. Although the UST has its origins from a business operations perspective, it draws a common thread between the various perspectives pertaining to service.

The Need for Paradigms

All sciences, including Service Science , are founded on paradigms. A paradigm is “a philosophical and theoretical framework of a scientific school or discipline within which theories, laws, and generalizations and the experiments performed in support of them are formulated” (Merriam-Webster 2008).

For example, physics has a paradigm of quantum mechanics, which proposes that discrete particles possess measurable attributes and exhibit predictable behavior. Quantum mechanics replaced traditional Newtonian mechanics as a foundational paradigm of physics; Newtonian mechanics was found to adequately explain some phenomena but to be inconsistent with others.

Paradigms provide reasonable scope to fields of study. Some physicists have attempted to devise a “theory of everything” that encompasses all known phenomena (at least all known phenomena pertaining to physics). Although such hyper-generalizations are intellectually appealing, rarely do such ideas develop beyond the stage of imagination.

There have been a number of common paradigms associated with the study of servicesFootnote 1. These paradigms have attempted to answer this fundamental question: If one is studying services, what exactly is being studied? For example, in business it is common to express a service paradigm in terms of “goods versus services,” which implies that services are different from goods. If so, the question then becomes how they differ, and if those differences impact how they should be designed and managed.

Some have argued that services, i.e. service processes, apply knowledge and skills to provide benefits to others, and recognize that physical goods are also embodiments of knowledge and skills that provide benefits to others. The conclusion some have espoused is that since goods are service providers then everything is a service. (e.g., Gummesson 1995, p. 150; Vargo and Lusch 2004b, p. 334) That conclusion would lead one to believe that the study of service is the study of everything. Such a broad paradigm provides little discriminatory value in terms of revealing unique managerial insights. Advancement of a Service Science hinges on a belief that service is somehow distinctive and that services possess managerial differences from non-services.

Interestingly, some of the long-held paradigms of service management have been recently refuted – particularly by leading researchers in services marketing and service operations (Nie and Kellogg 1999, p. 351; Grove , Fisk , and John 2003, p. 133; Vargo and Lusch 2004b, p. 334; Edvardsson , Gustafsson , and Roos 2005, p. 115). The researchers have issued a resounding call for new service paradigms. A few new paradigms have been proposed, and in some cases old paradigms have been revived for reconsideration (Lovelock and Gummesson 2004; Vargo and Lusch 2004a).Footnote 2

A well-crafted paradigm can provide great benefits to the formation of a science and to those who are contributors and students of the science. Thomas Kuhn , one of the leading scientific philosophers of the past century, describes paradigms as assumptions shared by members of a given discipline (1970). By knowing these assumptions, participants from various backgrounds can more easily come together within the common foundation.

Paradigms are also useful because they direct the activities within the science. As stated by Lovelock and Gummesson , “A paradigm shapes the formulation of theoretical generalizations, focuses data gathering, and influences the selection of research procedures and projects” (2004, p. 21). A truly useful paradigm will also have practical implications, such as leading to significant managerial insights.

In summary, a “good” Service Science paradigm will need to provide reasonable scope, encapsulate common assumptions, and help identify advancement activities. At a minimum, a Service Science paradigm should help those studying services decide what a service is and how services are distinct from “non-services.”

Unification around an Elephant

Establishing a Service Science paradigm is particularly difficult given the diversity of perspectives that are becoming involved. Individuals come from many different disciplines that generally have their own long-standing paradigms. Thus, an additional goal of a Service Science paradigm should be accommodating the integration and/or interaction of various perspectives (IfM and IBM 2008, p. 10). This implies attaining some degree of unification of the various service perspectives.

Service Science is somewhat unique in that its formation was instigated primarily by applied researchers from industry (IBM ) instead of basic researchers coming from academiaFootnote 3. There has been significant and rapid success in building bridges between academia and industry in this effort. The practitioners expressed great interest in drawing upon the decades of research in service-related topics, and the service academics were glad to have an interested audience for their research as well as conference sponsorship and funding opportunities.

It has been pleasant to see the great cooperation that emerged between practitioners from different and similar industries. Modern economies are founded on gaining and protecting competitive advantages coming from knowledge and innovation , yet the companies involved have seemed eager to share ideas for the common good.

The bigger ecumenical challenge is reconciling differing perspectives within academia. Academic disciplines have a tradition of being insular. Part of this stems from the preconception that when someone becomes a true expert in a given field, it becomes ever more difficult for those with common knowledge to communicate with them. An unfortunate side effect of this is that without interaction among experts in different fields the experts tend to overestimate the vastness of their knowledge and become blind to their biases.

If anyone doubts the unfortunate reality of this academic isolationism, simply ask any university professor who is about to retire how many times during his or her career that he or she had academic discussions or collaborations with professors “across the street” in other colleges, or even two floors down in another department within the college. Do business school professors really know what takes place in information science schools or design schools or engineering schools or law schools? Probably not.

Indeed, bringing academics together in a Service Science is like the proverbial six blind men encountering an elephant. Each man describes the elephant differently—as being like a pillar, a rope, a giant fan, etc.—depending on what part of the elephant they encounter. The blind men do not realize that they are only understanding part of the picture.

The ecumenical task is even more difficult given the penalties assessed for cross-functional research. Occasionally one hears at academic conferences or university meetings a call for more cross-functional research, but it is invariably couched, either explicitly or implicitly, in a restriction to those who have no impending need for getting tenure or promotion! Even those who have received all of the standard promotions available from the academy are subject to disincentives for cross-functional research – such as getting beaten up by journal reviewers for not upholding the specific biases of a journal’s discipline.

This bias blindness exists in industry as well. People in healthcare speak healthcare lingo. People in auto manufacturing speak auto manufacturing. People in software engineering speak software engineering. People in garbage collection speak garbage collection.

A prominent illustration of industry-speak is how different industries talk about “service.” In healthcare, service relates to ideas of “bedside manner.” In auto manufacturing , service pertains to repairing defective products. In software engineering, service pertains to loosely coupled software interfaces – so-called “Service Oriented Architecture” (SOA ). And in garbage collection, service seems to have something to do with whether or not they pick up your empty garbage can if it falls over during emptying, instead of just leaving it lying in the street.

The unification objective of the Unified Service Theory is to provide a basis for unification within Service Science on multiple dimensions. One is to identify the commonality between service that occurs within seemingly disparate industries – to reveal the common service basis for healthcare, auto repair, SOA , garbage collection, etc. Another is to provide a common foundation for Service Science that various disparate disciplines can relate to and identify with. Much of the strength of the unification will come from not only demonstrating commonalities within the Service Science umbrella, but also emphasizing how markedly different service manifestations are from non-service manifestations.

The Unified Service Theory

In previous recitations this theory has been called The Unified Services Theory, meaning a theory which unifies otherwise distinctive service processes. It is hoped that using the singular term “Service” will portray similar meaning.

In presenting the Unified Service Theory, I do not claim to be exempt from the propensity for disciplinary bias. My background is in service operation management, and by habit I take a production and operations perspective. This implies that I view the world as series of production processes – each converting some inputs into some outputs with the intent of producing value in terms of need-filling potential.

There are three conditions that hopefully can help mitigate the effects of disciplinary bias. The first is what seems to be my attention deficit disorder that has enabled me to wander among various disciplines over the years. Although my graduate training and professorial position is in business management and operations, my undergraduate degree is in human resource development, I have consulted in computer technology for many years, my hobby is legal work (IP ), and I own a small engineering firm. My current interest is molecular biology and DNA, which is manifest in my more recent theories of service systems (Sampson, Menor, and Bone 2010)

The second is the fact that my recitation of the Unified Service Theory (UST) is not original, but is simply a packaging and presentation of ideas that great thinkers in other areas taught many years ago. The UST may sit on an interesting precipice between those who discount it as being outside of their discipline’s traditional paradigm on one side, and those who think their discipline came up with it years before on the other side. I cite a number of the prior allusions to the UST below. Doubtless there are others who formulated UST concepts many years ago, but that I cannot acknowledge because I have not been able to find their published recitations. I offer a blanket acknowledgement and wish to give them full credit for their valuable contributions.

Third, by acknowledging the bias I wonder if the bias might be somehow lessened. I would hypothesize that the most biased individuals tend to be those who think they have no biases. Nevertheless, I am sure I must have an operations management bias.

Arguably, the central principle of the operations management discipline is the I/O model: inputs are transformed into outputs through production processes, as depicted in Figure 1. Operations management people believe that this is universal—all processes can be described in terms of the I/O model. The model applies to service processes just as well as non-service processes, but the UST premise is that the application to service processes is universally distinct from the application to non-service processes.

Figure 1.
figure 1

Traditional I/O Model

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Traditional business perspectives on service focus on what service providers provide to customers. People refer to “service delivery ” of “service products” which makes one think of service as being something customers get from service providers. Many researchers, including me, emphasize that services are really processes—that service is something service providers do more than give. Such services (i.e., service processes) may not involve tangible components, but usually do. Operations management people would contend that everything is a process, service or otherwise. But again, we are cautious about considering any perspectives that claim that everything is the same.

The UST is unusual in that at the elemental level it is not founded in what service providers provide, or even the processes they use to deliver the service. Instead, the UST is based on the distinction of what customers provide to the service provider and to the service process. It is succinctly stated as follows:

The Unified Service Theory:

Services are production processes wherein each customer supplies one or more input components for that customer’s unit of production. With non-service processes, groups of customers may contribute ideas to the design of the product, but individual customers’ only participation is to select, pay for, and consume the output. All considerations unique to service are founded in this distinction.

The UST asserts that the universally distinguishing feature of services is the involvement of customers in production processes by involving process inputs that are controlled and supplied by customers (Spohrer and Maglio 2008). In Riddle ’s (1986) words, “services are activities that produce changes in persons or the goods they possess.” Or, restating Lovelock (1983), customer inputs include customers’ selves, their belongings, and/or their information. Customers are therefore suppliers to service processes, as depicted in Figure 2. This customer-supplier service paradigm (the UST) holds that customer inputs are a necessary and sufficient condition for a service process to be a service process, and the lack of customer inputs characterizes all non-service processes (Sampson 2000). The UST has broad managerial significance: processes that involve customer inputs possess management concerns similar to one another, but involve different concerns from processes not dependent upon customer inputs (Sampson, Menor, and Bone 2010).

Figure 2.
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Service I/O Model

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In order to understand the UST service paradigm, a few definitions are in order: inputs, customers, and production processes…

Inputs (i.e., input components) are things (tangible or intangible resources) that come into a process and are used by the process to produce some benefit. In this context we refer to inputs as components for specific units of production, not payments after production and not “customer input ” in the sense of general feedback or ideas about the process or outcome.

Customers are individuals or entities that determine if the organization shall be compensated (or rewarded) for production, which customers may be consumers (beneficiaries) or may just be decision makers. For example, college students buy textbooks but it is the instructors who decide whether to use a given textbook in a course.

Production processes are sequences of steps that provide value propositions and therefore warrant compensation. Organizations may have other processes that simply prepare for production, such as maintaining equipment, that do not directly warrant compensation but are nevertheless necessary. Details and examples of these three essential concepts are described in the article by Sampson and Froehle (2006).

Clarification through a Process Paradigm

As mentioned, the concept of services being reliant upon customer inputs is not new, but has been cited in passing in research literature and other publications (Silvestro , et al. 1992, p. 66; Bitner , et al. 1997, p. 195; Wright 1999, p. 5; Lovelock 2001, p. 37; Chervonnaya 2003, p. 335; Fitzsimmons and Fitzsimmons 2004, p. 21; Zeithaml , Bitner, and Gremler 2006, p. 393). However, the central, defining power of the concept has not been widely recognized. One reason for this might be that various researchers tend to categorize firms or industries, not individual processes within firms (Wemmerlöv 1990, p. 24).

The paradigm shift provided by the customer-supplier service paradigm (the UST) is this: Customer inputs are the defining feature of service as long as we identify the customer (relative to the service provider) and specify the process being analyzed. The paradigm is a process perspective—all businesses, “service businesses” or otherwise, are composed of processes that transform inputs into outputs. The customer-supplier paradigm proposes that the one core factor which distinguishes traditional make-to-stock manufacturing Footnote 4 processes from service processes is not the occurrence of processes nor the nature of process outputs (which may be tangible or intangible), but the distinct nature of process inputs. The nature of the acts differ, as does the nature of the output, but that is primarily due to the nature of the inputs—customer inputs lead to processes and outputs that are distinct in character from those devoid of customer inputs (Sampson, Menor, and Bone 2010).

Consider the example given by Rathmell in his 1966 article titled “What is Meant by Services?” Rathmell follows the phrase “a good is a thing and a service is an act” with the statement, “If a product is purchased, it is a good; but if it is rented or leased, the rentee or lessee acquires a service” (pp. 33–34). The UST perspective would say that a product is a good (i.e., a thing) regardless of whether it is purchased or rented (Hill 1977, p. 320). Customers observe the goods rental process, but rarely observe the goods manufacturing processes. If a manufacturing process does not involve customer inputs yet the rental process does, then the rental process, as a service process, will in all likelihood be less efficient than the manufacturing process, will be subject to greater variability, will experience lower utilization, and so forth. Service processes and outputs are fundamentally different from non-service processes and outputs due to the dependence upon customer inputs.

Therefore, one part of the existing confusion over terms comes from comparing service processes (acts) to manufacturing outputs (goods). The process of home construction is an act, whether it is building large quantities of tract homes for future sales or building a one-of-a-kind custom home for a meticulous client. The outputs of car manufacturing, car sales, car repair, and car rental are all cars. The distinguishing question of the UST is, “What are the customer input components to the given process?” Those processes without customer inputs are very different from those involving customer inputs, and the degree and nature of customer inputs provide further insights.

Another form of confusion comes from studying complex aggregations of service and non-service processes, such as companies or industries. Attempting to classify an entire company or industry as either “service” or “non-service” can lead to confusion. Even defining a particular line of business can become convoluted. One might ask, “Is a restaurant a service?” A restaurant is a business comprised of a wide variety of processes. You need to indicate which restaurant process you are considering in order to identify if it is a service process. The process of a chef designing new food offerings is not normally dependent upon customer inputs (other than a consideration of general customer opinions) and is not a service process—unless it is outsourced, in which case the restaurant is the customer of the outsource provider (Hill 1977, p. 320). The same is similar for the supply-procurement process. Seating customers and taking customer orders requires customer inputs, and is a service process. Preparing food for customers is a “back-office” service process, as is preparing the check. Restaurants involve goods, and involve both service and non-service processes.

Service Systems and Supply Chains

The other important key to comprehending the UST is realizing that rarely do processes occur in isolation. Rather, processes exist in systems and supply chains, wherein each process feeds other processes. The field of operations management approached a renaissance in recent years with the realization that analyzing and managing a given process without consideration for “upstream” supplier processes or “downstream” customer processes leads to suboptimal decisions. The field (or sub-field or meta-field) of Supply Chain Management is primarily concerned with understanding interactions between such interrelated processes.

The concept of supply chains originates from the manufacturing context. It is based on the idea that outputs from a given production process (see Figure 1) become inputs to other production processes. Supply chains are examples of systems, which include various types of interacting entities.

As Ellram , Tate , and Billington point out, the representation of services in Supply Chain Management literature is sparse and inadequate (2004). Some writers claim that supply chain concepts are relevant to manufacturing and service, but then proceed to focus on manufacturing examples–a manifestation of traditional operations management bias. The service examples tend to be appendages to manufacturing supply chains, such as retail. Some services have major goods components, and thus benefit from approaches such as supplier certification and selection, synchronous production, and supplier integration. It is not at all clear how to apply such approaches to services that do not have major goods components.

The UST sheds light on service supply chains by showing how they involve customers both as suppliers of inputs and consumers of outputs (Sampson , 2001, p. 135). Such supply chains are not conveniently linear, but are bidirectional (Sampson 2000). The most effective supply chain management for services will involve understanding the function, capabilities, and disposition of customers as suppliers. Just as manufacturing supply chains benefit when suppliers operate in harmony with the given firm, so service firms (i.e., firms replete with service processes) benefit when customer-suppliers act in harmony with the firm.

Similarly, the UST suggests that service systems be defined as configurations of entities in which a given entity is a provider of resource components and simultaneously or subsequently the beneficiary of the processed components. This captures the idea of services being entities that process other entities (or process their belongings/information). A non-service system is conversely a configuration of entities such that in a given interaction the individual entities are either providers of input resource components or beneficiaries of the improved output components, but not both. Note that most productive systems are hybrids in that they contain both service configurations and non-service configurations—and that each configuration type should be managed accordingly.

Also note that contrary to some views, most activities in modern economic systems are not the exchange of service for service, but rather the exchange of service for a generic resource (money) which can later be exchanged for service as necessary. This “indirect exchange” of service is the foundation of productive economies.

Service systems , as with supply chains, contain many interactions between various entities, some of which are service interactions and some of which are non-service interactions. It is important to remember that the UST is a process paradigm: it is a given process or interaction within a system that exhibits or does not exhibit the service characteristic.

Customer Intensity and Coproduction

A concept that is a companion to the UST is customer intensity, which recognizes that input components provided by customers can impact the production process to different degrees. In a basic sense, customer intensity is the degree with which variation in customer input components causes variation in the production process. Variation in production processes often translates into increased costs and usually causes increased complexity. Input components coming from customers can vary in many ways, including the timing of their provision, the condition of the inputs, the degree to which the inputs need to be improved, and whether/how the customer inputs include a labor element (i.e., customer effort).

Labor inputs coming from customers are often called “coproduction .” Customer coproduction is not a necessary condition for a service, but it is a sufficient condition (since effort qualifies as an input component). Coproduction can be a significant cause of customer intensity, since coproducing customers vary in skill and in willingness to comply with procedures specified by the service provider. Service providers may attempt to reduce customer intensity, and thus reduce the cost effects, by training customers and providing them with structured automation. This is easier said than done, since customers lack the incentives and economies of scale (e.g., experience-curve effects) of non-customer labor.

The UST as a useful paradigm

The one significant change to the UST since it was first introduced in 1998 was replacing “nearly all” with simply “all” in reference to “managerial themes unique to services [being] founded in the customer-input distinction” (Sampson 2001, p. 16). A motivation for this change is that a counter-example has yet to surface. Perhaps an easier justification is to consider the UST as a normative theory, which renders it a tautology. Nevertheless, it is an extremely useful tautology for various reasons.

First, the UST provides a reasonable scope to Service Management and Service Science . The UST says that services are not everything, but simply those productive interactions that involve customers as suppliers of component inputs.

Second, the UST justifies the study of seemingly disparate service business under a unified science. For example, although lawn care and dentistry fill very different customer needs, they both involve processing customer input components and therefore both experience numerous managerial issues that are implied by that condition. Some of those issues will be discussed the subsequent sections of this chapter, and others can be found in publications by Sampson (2001) and Sampson and Froehle (2006).

Third, the UST has the potential to integrate and connect the perspectives of a wide variety of disciplines contributing to Service Science . The integrating element is differentiating on customer input components. As we have seen, the application to business operations is the following:

  • Business operations are processes that transform input components to produce more valued output products.

    • Service operations are processes involving input components that come from each individual customer. Service operations management is largely about managing customer influences on the ability to produce.

    • Non- service operations are processes that are performed independent from customers. Non-service operations have few time and space constraints on production, at least relative to typical service operations.

This UST perspective can be applied in any number of other disciplinary paradigms. Here are examples for other business disciplines.

  • Business marketing is the process or technique of promoting, selling, and distributing a product or service (to customers) (Merriam-Webster 2008).

    • Service marketing is marketing in which the customer is engaged in the production process by virtue of providing component inputs. This implies that we are promoting, selling, and distributing an interaction experience.

    • Non- service marketing is marketing in which the customer is buffered (in time and space) from production, instead focusing on promoting, selling, and distributing the output of production.

  • Human Resource Management (HRM) is the function within an organization that focuses on recruitment of, management of, and providing direction for the people who work in the organization.Footnote 5

    • Service HRM is HRM in which customers work in the organization, by providing either labor or other component inputs. The distinctive challenge is accommodating variation in customer efforts, contributions, and interactions with employees, which customer variations can be difficult to direct and control.

    • Non-service HRM is HRM in which the labor in the organization is comprised of non-customers (employees), who are more susceptible to direction than customer labor.

Here are a few examples of the UST applied to engineering.

  • Software architecture is the structure or structures of the system, which comprise software components, the externally visible properties of those components, and the relationships between them. (Wikipedia)

    • Service-oriented software architecture is software architecture in which the customers (routines calling externally visible procedures) provide inputs to routines in terms of loosely-coupled process requirement requests.

    • Non-service oriented software architecture is software architecture in which calling routines (customers) are expected to conform to predefined application program interfaces (APIs).

  • New Product Development (NPD) is the complete process of bringing a new product or service to the market. (Wikipedia)

    • Service NPD (aka New Service Development) is NPD in which the product involves a process that is contingent upon customer input components, therefore must consider the uncertainties surrounding customer influence on the production process. This customer intensity usually warrants increased robustness in process design.

    • Non-service NPD is NPD in which the product will subsequently be produced independent of customers, thus allowing tight specification of product attributes.

Fourth, the UST is a useful paradigm because it encapsulates and explains the wide variety of perspectives on service discussed in the extant literature. For example, one popular perspective on service from the marketing literature is and has been the so-called IHIP , which is that services are characterized (defined) by four attributes: Intangibility, Heterogeneity, Inseparability, and Perishability. Lovelock and Gummesson (2004) described how IHIP have been commonly accepted as the paradigm for services, but they also point out flaws in IHIP. Others have likewise refuted IHIP. Grove , Fisk , and John surveyed a panel of service experts and found some inclination to drop IHIP and to “eliminate the goods versus services distinction altogether” (2003, p. 113). Vargo and Lusch (2004b) argue that IHIP characteristics “(a) do not distinguish services from goods, (b) only have meaning from a manufacturing perspective, and (c) imply inappropriate normative strategies” (p. 324). Edvardsson , Gustafsson , and Roos (2005) assert that “We could conclude that the IHIP characteristics should not be used in the future as generic service characteristics,” which they follow by a declaration that “service characteristics [i.e., IHIP] are outdated: therefore, when are we going to stop using them when teaching?” (p. 115).

Might I suggest that the reason IHIP is popular yet refutable is because IHIP is an inadequate paradigm for service marketing or Service science in general. As an alternate paradigm, the UST can be used to explain both the popularity of IHIP and the misperceptions of IHIP. In the next section we will explore this application of the UST.

UST and IHIP

As just mentioned, Lovelock and Gummesson (2004) reviewed service management literature and showed that IHIP was the incumbent paradigm. Within the broader field of marketing, they highlight the widespread tendency among authors of introductory marketing management texts to use IHIP as the basis for identifying services. Lovelock and Gummesson describe the development of each characteristic and show how each fails as a definitive characteristic across businesses commonly held to be services.

The UST states that “All managerial themes unique to services are founded in [the customer input ] distinction.” That means that if a characteristic is unique to service processes, that characteristic will be explained by the reliance on customer inputs. Correspondingly, if a characteristic is not explained by customer inputs, then it is not a characteristic that is unique to service. Let us consider each of the IHIP characteristics in this regard.

IHIP #1: Intangibility

The most prevalent misconception coming from IHIP is the assertion that services are defined by intangibility (Lovelock and Gummesson 2004, p. 25). Various researchers have also refuted that assertion and concluded that it is without merit (Laroche , Bergeron , and Goutaland 2001; Vargo and Lusch 2004b). The UST both supports that conclusion and provides a possible explanation for the confusion. Some customer inputs are intangible, such as customer minds (e.g., in education) and customer information (e.g., in tax accounting). But many customer inputs are tangible, including customers themselves (e.g., as a patient or passenger) and their belongings (e.g., yard for landscaping, clothes for tailoring, documents for shredding services, etc.).

How is it conceivable that individuals can so easily ignore the tangible nature of most services? One possible explanation is that when customers provide the primary tangible inputs to the process, those inputs may not be perceived as being an integral part of the product (Sampson , 2001, p. 100). Consider dentistry as an example. Dentistry is considered by some to be an intangible service. Patients leave dental offices having been acted upon, but with no physical product except perhaps a new toothbrush and a floss sampler. Yet, such a view ignores a highly tangible output of the process: the patients’ cleaned and repaired teeth. Even though the teeth were provided by customers as process inputs, they are tangible nonetheless. If a factory produces false teeth from ceramic material, those teeth are certainly considered tangible, but no more tangible than the cleaned and repaired teeth which emerge from dentists’ work. When we consider the tangibility of customer inputs we see that the apparition of intangibility of service largely dissolves.

This is not to imply that highly intangible services do not exist. The UST provides for intangible customer input components such as customer information. Such inputs can be manipulated in purely intangible ways and delivered back to the customer in an intangible form. Lovelock and Gummesson (2004) cite examples of Internet-based services in banking, insurance, news, research, etc. (p. 26). They note how the emergence of Internet-based services “sharpens our recognition of just how much physical tangibility exists in most other services” (p. 27).

Further, there are numerous examples of intangible products that are not services. One example is prepackaged software, such as operating systems produced by Microsoft. Even though the software is delivered on physical disks, the software product itself is an intangible set of codes and information. Microsoft’s production of operating systems is not a service process, since it does not involve any customer inputs . Customers merely select, pay for, and consume the output, and occasionally provide general feedback about product features.

IHIP #2: Heterogeneity

The term heterogeneity has been used to describe service in different ways such as variability in service providers and their operations, as well as variability in the execution of a given service process (Lovelock and Gummesson 2004, p. 25). Morris and Johnston (1987) identify two causes of service variability: variability in service resource s and variability in customer inputs . The UST argues that the variability in customer inputs is the one that is unique to service (Sampson 2001, p. 108). The UST argues that the reason heterogeneity is attributed to service in IHIP is due to heterogeneity of customer inputs. Other sources of heterogeneity are not unique to service.

Indeed, variability in non-customer inputs such as employed labor occurs both in service and in manufacturing . Non-services, such as make-to-stock manufacturing processes, can put systems in place to limit the impacts of labor variability. With services, employee labor that interacts with customers is particularly subject to interpersonal interaction variability, which is likely to be attributed more to the variability of customers (who change from one transaction to the next) than variability of employees (who change less during a work shift).

IHIP #3: Inseparability

Inseparability is the characteristic in which production and consumption are temporally linked. The characteristic is also called “simultaneous production and consumption,” or simply “simultaneity,” implying that service consumption occurs at (or near) the same time as service production (Fitzsimmons and Fitzsimmons 2004, p. 23).

The UST explains inseparability by customer inputs being essential to service processes, implying that the service production process cannot be accomplished without those essential inputs. The presentation of customer inputs generally corresponds to the presentation of demand, which is motivated by a desire to consume the service. In theory, a customer could provide inputs for future demand, allowing the service provider to produce in advance of demand. In reality, customers typically do not provide inputs until they are ready to demand the service.

Although services cannot typically produce without customer demand, the “consumption” process of receiving benefits from the service might occur during or after production. In some cases the extraction of benefits does not happen during production, implying that production and value-extracting consumption do not occur simultaneously. For example, a man may have his tuxedo dry cleaned in anticipation of the next time he wears it, which may be months in the future. Demand for dry cleaning occurs before the process, but arguably, consumption may not occur until some time later.

Perhaps a more accurate depiction of inseparability is that production is tied to demand, which, as implied by the UST, is that demand precedes production (Sampson 2001, p. 52). Service providers have processes that prepare for production without customer demand and inputs, but cannot actually produce in a revenue-generating sense without customer inputs .

IHIP #4: Perishability

The perishibility element of IHIP has been described in two major ways. The first pertains to the perishability of the service process output, which is not generalizable, and can be easily refuted (Sampson 2001, p. 82). We have already described how service output can be consumed at a time well after services are produced. Furthermore, that output might be consumed over a great deal of time, with little or no diminishment of the output. One would hope that education services fit in that category—that students extract the benefit of the knowledge output for many years after completing an education program. Some surgical procedures, such as hip replacement, produce an output that lasts longer than the lifetime of the patient.

Indeed, some service output is more durable than typical manufacturing goods. We see that other services have output that is extremely perishable, such as massage services where the relaxation effect may wear off in mere hours. Manufacturing also produces products that are highly perishable, such as foodstuffs. Perishable output is a poor differentiator between services and non-services (Lovelock and Gummesson 2004, p. 30; Vargo and Lusch 2004b, p. 331).

The second manifestation of service “perishability” is the accurate observation that service capacity is perishable (Sampson 2001, p. 60). More precisely, it is that service capacity without corresponding demand is lost forever (Fitzsimmons and Fitzsimmons 2004, p. 24). Conversely, manufacturing capacity without corresponding demand is not lost forever, but can be easily employed producing for future demand. Services do not have that luxury, due to the production requirement of customer inputs (Sampson 2001, p. 52, 310). A hotel example will be given below.

The perishable capacity concept has major implications for capacity planning and utilization. It may be true that both services and non-services are concerned about utilization, but the management context is quite different.

A bed manufacturer can achieve a target of near-100% utilization of production capacity during both high-demand and low-demand seasons. During periods of low demand the manufacturer produces beds to inventory, and during high demand sells from inventory and from production. This makes it possible to design plant capacity to meet average demand across the seasonal cycle. If a bed manufacturer desires to produce to full capacity at times of low demand, typically the only constraints are needs for maintenance, repair, and changeover (assuming other process inputs are readily available and that inventory holding costs are tolerable). Demand is not a capacity utilization constraint (although Just-In-Time production might be desirable for cost reasons). Uncertainty or expectations of reduced demand can lead to decisions for lower utilization of capacity, but that reduction is a decision, and not a constraint.

The hotel manager faces a very different problem of capacity management. If demand is seasonal (which it usually is), the hotel will have lower utilization during slow times and perhaps have excess demand during busy times. If the times of excess demand have more customers than available rooms then the result will likely be lost sales. It would be nice if the vacant room capacity during slow times could be used to produce “hotel stays” for customers during busy times, but such cannot happen unless the customer inputs (selves and belongings) are shifted to the slow times. The hotel capacity during slow times is perishable, and cannot be utilized to meet future demand. The hotel can prepare for future demand, such as by cleaning rooms, training staff, and other tasks that are not contingent upon customer-self inputs (thus defined as “non-service” tasks). But such preparation has limits, and falls short of actually satisfying future demand in a productive (e.g., revenue generating) way. Therefore, just-in-time production for the hotel manager is inadvertent, and not a cost-based decision (Sampson , 2001, p. 310–312). What the manager does need to decide is how to plan capacity given the inevitable times of low utilization, and perhaps decide about providing incentives for customers to shift their inputs (and demand) from high-demand periods to low-demand periods.

The bottom line is that even though service output may or may not be perishable, the service capacity is perishable in that without corresponding demand and customer inputs that capacity is lost. This is an important implication of the UST.

IHIP as Symptoms

Although it is easy to reject IHIP as the defining elements of service, we need not go so far as to discard them as useless. The UST explains the IHIP phenomena and shows that IHIP represents symptoms of services which, when understood correctly, provide insight about service processes (Sampson 2001, p. 49). Understanding the UST increases the practical value of IHIP. Just as studying the symptoms of an illness benefits from understanding the cause of the illness, so also does understanding the symptoms of services benefit from understanding the defining core of service processes (i.e., reliance upon customer inputs ).

Other UST Implications

Lovelock and Gummesson (2004) described various issues besides IHIP which relate to service management and which should be encompassed in a service paradigm. In this section we will review some of those issues and show that the service reliance on customer input components—which is the crux of UST—leads to useful managerial insights.

1. Service inventory

The service output perishability fallacy is related to a misconception that service output cannot be inventoried (Lovelock and Gummesson , 2004, p. 29). Manufacturers produce components or end items which are stored for future production and consumption. Service processes can produce output for future consumption, as long as customers have provided the requisite inputs prior to production. But, since providing customer inputs is typically equated with demand, there is usually little justification for the service provider keeping service production in storage for future needs. In other words, it is not that it is impossible to keep service output in inventory, but it is impractical to do so (Sampson , 2001, p. 90).

There is an aspect of “inventory management” which is both relevant and important for services, which comes from the UST focus on customer inputs . In one sense, inventory represents a delay between the timing of production and demand. For manufacturing , inventory “fills the time gap” between production and demand. With services, demand precedes production due to the reliance on customer inputs. If customer inputs arrive well in advance of production—for example, in a case of insufficient capacity—then those inputs might wait in “inventory.” Such customer-input inventory is often called a waiting line or a queue (Fitzsimmons and Fitzsimmons 2004, p. 428; Lovelock and Gummesson 2004, p. 30).

Customer inventories, or queues, are like manufacturing inventories in that both are caused by a timing difference between production and demand. However, customer inventories typically have much higher holding costs, measured in minutes instead of months. The holding costs are incurred directly by the customers (Sampson , 2001, p. 318) and indirectly by the service provider (e.g., lost sales). The holding costs for manufacturing inventories are incurred directly by the producer and indirectly by the customers (e.g., higher prices).

2. Pseudo-services

The previous section on intangibility gave prepackaged software production as an example of a pseudo-service, which is a non-service process that has a significant intangible element and thus is sometimes mistaken for a service process even though it does not rely on customer inputs (Sampson 2001, p. 154). Lovelock and Gummesson (2004, p.31) give other examples of processes we would call pseudo-services:

  • Entertainment delivered through prerecorded and edited means

  • News or religion services broadcast by radio or TV

  • Prerecorded self-study educational services

  • Other intellectual property , such as software

It is possible for entertainment, religious services, and education to be delivered as services. However, if they are “prerecorded” (recorded before the customer experience s them) then the recording process does not depend upon customer inputs (assuming the customer is defined as the viewer). Consider the example of motion picture production. The production process involves producers, directors, writers, grips, set designers, actors and actresses, and other personnel turning intangible ideas into an intangible video representation. Movie producers generally produce movies with no inputs from customers, and few of the typical characteristics of service apply to movie production processes. In many regards, the movie production process is more akin to manufacturing processes than it is to service processes. Movie producers add value by assembling content into a viewable product.

Live entertainment, conversely, is a service, in that the artists on the stage cannot produce in a value-adding and revenue-generating sense without the input of customer minds and attention. It is interesting to note that live theater “service product” might be considered quite tangible (facilities, props, actors) whereas the non-service movie-production product (recorded image) might be considered intangible. Service entertainment may be more tangible than “manufactured” entertainment.

One other example of a pseudo-service is electricity generation (Schmenner 1995, p. 1). Some people think of electricity generation as “electric service,” but it is not a service according to the UST. Electricity generation, as with other energy production processes, generally occurs without any inputs from customers. The difference between electricity production and the production of other energy types, such as gasoline, is that it is presently extremely expensive to store electricity for any period of time. It would take an enormous number of batteries to store the electricity needed to power even a small city. A few characteristics of service are observed in electricity generation (primarily simultaneity), not because electricity generation is a customer-input–dependent service, but because it is costly to store electricity.

3. Customer evaluation of services

Lovelock and Gummesson (Lovelock and Gummesson 2004, p. 27) refer to and question Zeithaml ’s (1981) and Nelson ’s (1974) classifications of service or good product features based on how easy they are to evaluate prior to purchase. The concept is that company offerings may possess three types of attributes:

  • Search qualities, which can be precisely assessed by customers prior to purchase,

  • Experience qualities, which cannot be precisely assessed prior to purchase but can be assessed through consumption,

  • Credence qualities, which cannot be precisely assessed even after purchase and consumption (thus requiring customers to rely on experts for assessment).

These three qualities supposedly lie on a continuum from easy to difficult to evaluate. The point is that search properties tend to dominate for goods, whereas experience (and credence) properties tend to dominate for services (Zeithaml 1981).Footnote 6 This distinction is based on an assumption of mental intangibility, in that services are supposedly more difficult to define, formulate, and understand (Lovelock and Gummesson 2004, p. 26).

Lovelock and Gummesson point out that there is no basis for belief that mental intangibility will persist after repeated experience with a service (2004, p. 27). However, it is easier to justify the significance of mental intangibility when considering potential customers with no prior experience with the given service provider. The UST says that customer inputs are central to service production and not to non-service production such as manufacturing goods to stock. A potential customer can review the published features of a manufactured good and be quite confident that the good they will receive will be as described. Even better, a friend can objectively describe the good to the potential customer with confidence that the good will have the same characteristics for the potential customer, even if the potential customer does not share an appreciation for those characteristics.

Services involve customer inputs that can be very unique from one customer to the next. Therefore, if a friend objectively tells a potential customer about his experience with a service provider, there is no guarantee that the potential new customer, who provides different inputs, will have the same experience (Sampson , 2001, p. 282). A hypothetical example is shopping at a home improvement store. A friend says “I like Home Depot because when I go there they always have the answers to my gardening questions.” The potential new customer goes to Home Depot and discovers that they do not have answers for her questions—perhaps because she is more experienced at gardening and thus asks more difficult questions than her friend. The “has answers” quality does not have a discrete and consistent manifestation, but varies based on the inputs (and experience) of individual customers.

Both manufactured goods and services experience variance in customers’ subjective evaluations of outputs; an item may be valued by one customer and not valued by another. Where manufactured goods and services differ is in the objective assessments of production and outputs, due to the absence or presence of stochastic customer inputs . Objective assessment of manufacturing output can be reliability communicated, which is the essence of search qualities.

4. Ownership and customer competition

Lovelock and Gummesson proposed nonownership as an alternate paradigm for studying services, but, unlike the UST, they “make no claim that the proposed new paradigm offers a panacea with necessarily general properties” (Lovelock & Gummesson, 2004, p. 34). A nonownership perspective on service was presented by Judd in 1964, but for some reason it never attained the prominence of IHIP (Lovelock and Gummesson 2004, p. 23). Judd himself acknowledged that the nonownership definition has “the defect of any definition by exclusion in that, from the definition itself, nothing can be learned about what are the essential characteristics of a service” (Judd 1964, p. 59), which may or may not be true. Judd looked instead to some future development of a positive definition of service.

The UST, as a positive definition, reveals important issues about ownership in services. Applied to service, the ownership concept means that customers own their inputs prior to production, and usually own their inputs after production. Customers may also come to own physical items attached during production. The production facility and production equipment are typically owned by the service provider, before, during, and after production, which is not wholly different from manufacturing , where the plant and equipment are owned by the manufacturer. The significant difference regarding ownership is that with services a component of the output was previously owned by the customer.

Another perspective of ownership is also interesting to study: with many services, the customer has the alternative of purchasing necessary equipment and producing the service himself or herself (Bitner , et al. 1997, p. 198). For example, a Chinese restaurant customer can purchase a wok and cook at home, an investment broker customer can purchase investment analysis software and self-invest, and an airline customer can purchase a motor home for vacation travel. In these cases the customer can replace a service provider with a combination of owned manufactured goods and self-service (Sampson 2001, p. 148).

This alternative leads to the significant phenomenon in which customers are themselves the chief competitors for many services (Sampson 2001, p. 202–205). Service providers sometimes need to convince do-it-yourself customers that they would be better off using the service provider. For some services, such as reconstructive surgery, the convincing is easy. For other services, such as personal tax accounting, the convincing may be much more difficult. Customers have the advantage of owning and controlling their inputs, and may have the advantage of increased levels of customization (getting it exactly how they want it). Service providers, on the other hand, usually have advantages of economies of scale and expertise.

This customer-as-competitor issue is mostly distinct to services, and rarely seen in manufacturing . Manufacturers are connected into supply chains and are so efficient that self-production is not a reasonable option for most customers, such as end consumers. Only NASA would be willing to spend the tens of thousands of dollars to design and produce one screwdriver, whereas the rest of us are content with simply purchasing one at a hardware store. A few manufacturers, such as strawberry jam producers, compete with people willing to make and bottle their own blend of jam. But such examples are not very common in this day and age.

5. Manufacturing service appliances

The customer-as-competitor issue has implications for manufacturing strategy. Lovelock and Gummesson (p. 35) assert that manufactured goods can form the basis for service delivery , as just discussed. Vargo and Lusch (2004b) are a bit bolder in their assertion that physical goods are “merely the distribution vehicle…for service provision.” (p. 330). They refer to such goods as “appliances” which only create value when they are used to serve customer needs. Vargo and Lusch correspondingly reject the notion that value creation can occur in factories (2004b, p. 331,333); plant managers may disagree (but it is a semantic issue).

The UST posits that service processes add value to customer inputs . Manufactured goods are “service providers” in that they can be used by self-serving customers or service businesses to add value to customer inputs. In this sense, manufacturers become “service-provider providers”—providing products that provide service (Sampson 2001, p. 148). This concept has major implications for the provision of manufactured goods; manufacturers do not serve customers directly, but serve them indirectly through their products. The goods-products are thus representative agents of the manufacturer.

The “service-provider provider” concept implies that manufacturers would be wise to consider the service processes that will occur with their products. One example of this is the simplification of user instructions accompanying various consumer goods such as digital cameras, computers, and microwave ovens. There was a time when such items came with complex operating instructions—a great burden to all but the most disciplined consumers. The rest of us rely heavily on the single-sheet “getting started” instructions that may be the only instruction that we ever read.

Lovelock and Gummesson (2004) discussed other managerial considerations of service, such as pricing (p. 35), in which the UST also provides valuable insights (Sampson 2001, p. 297). Space does not allow further elaboration, so the reader is referred to other recitations (Sampson 2000; Sampson 2001; Sampson and Froehle 2006; Sampson 2010).

ServiceInnovation

One area not discussed by Lovelock and Gummeson, but which deserves the penultimate comment, is the tremendous value of the UST in directing service innovation efforts. We previously mentioned how the UST distinguishes New Service Development (NSD) from New Product Development. The key to successful NSD is understanding the impact of customer components on service processes. Customers can assume many roles in service processes, including supplier, labor, specification provider, quality inspector, and sometimes the customer is the product. The UST prescribes that valuable and effective service innovations will be found by looking for ways to enhance customers’ roles in service processes. This often involves providing new tools or procedures for customers, or making a process more robust to variation in customer-provided components.

For example, personal investment services have experienced numerous innovative transformations in recent years. There was a time when most investors visited a stock broker, provided personal information and financial objectives (i.e., customer as supplier), then left it to the broker to identify suitable investments. Innovative investment services such as Charles Schwab started providing customers with information about different investments that allowed customers to do their own research (i.e., customer as labor). Subsequent innovations include tools that allow customers to track the performance of investments (customer as quality inspector), and even allow customers to initiate investment transactions immediately (minimizing customer as inventory waiting for transactions to occur). The innovative evolution of personal investment services demonstrates how service innovation tends to focus on enhancing customer roles of supplying inputs, labor, etc.

Chapter Summary

The UST formalizes a concept that other researchers have alluded to for many years. Lovelock and Gummesson state, “without customers who require service at a specific time, either to themselves or their possessions, there can be no output at most service organizations” (2004, p. 30). The UST proposes that this concept be recognized as definitional, perhaps restated as, “without customers who require service at a specific time, providing themselves and/or their possessions as input components, there can be no production and output coming from service processes” (which emphasizes the production process perspective).

Further, the UST demotes IHIP characteristics from being definitional to simply being symptoms of service. Two major implications are (1) that IHIP characteristics may occur in non-service processes by reasons other than the reliance on customer inputs , and (2) that the occurrence of IHIP characteristics changes as the nature of customer inputs change. Generally, as customer inputs increase in intensity, so also do the IHIP characteristics.

Also, comparing “goods” with “services” is a confusing correlation. It is clearer and more useful to compare service processes (which involve customer inputs ) with non-service processes (which do not involve customer inputs). Making this distinction leads to numerous managerial insights pertaining to inventory management, customer competition, service pricing, and so forth.

This chapter primarily focused on applying the UST paradigm to business management contexts. However, the UST has application to a wide variety of service systems . For example, the UST has been applied to software architecture (Sampson 2010). As a re-framing of traditional issues, the UST provides a useful paradigm on which to build Service Science .