The new American service economy: Adapt or die

America as Service Economy NORTH

"Unlike products, services are often designed or modified as they are delivered; they are co-created with customers; and service providers must often respond in real time to customer desires and preferences. Services are contextual – where, when and how they are delivered can make a big difference. They may require specialized knowledge or skills. The value of a service comes through the interactions: it’s not the end product that matters, so much as the experience."

The paragraph above is an extract from a paper called Everything Is A Service by Dave Gray of Xplane. It's a good read and, I'd say, it's an essential read for those of us in agencies who work with product-producing brand clients who are also providing service. What does that mean? Well, Gray has this to say

"..Unlike products, services are often designed or modified as they are delivered; they are co-created with customers; and service providers must often respond in real time to customer desires and preferences. Services are contextual – where, when and how they are delivered can make a big difference. They may require specialized knowledge or skills. The value of a service comes through the interactions: it’s not the end product that matters, so much as the experience."


In other words, in a society with the Internet at its fingertips, the empowered customer is co-creating value with the company. The product is only an intermediate step in the value-creation process, as Gray points out.

Embracing the reality of the current consumer-centric universe will require what Gray calls "The great big shift-reset."

Facing a reset is not something new but it may cause difficulties for product-producing companies who don't adapt quickly. The clock is ticking: Richard Florida published The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity back in early 2010, explaining the shift from an economy based on making things to one that is increasingly powered by knowledge, creativity, and ideas. He also pointed to the business opportunities:

We tend to view prolonged economic downturns, such as the Great Depression of the 1930s and the Long Depression of the late nineteenth century, in terms of the crisis and pain they cause. But history teaches us that these great crises also represent opportunities to remake our economy and society and to generate whole new eras of economic growth and prosperity. In terms of innovation, invention, and energetic risk taking, these periods of "creative destruction" have been some of the most fertile in history, and the changes they put into motion can set the stage for full-scale recovery.


Florida suggests that the combined forces of The Great Reset will lead to:

New patterns of consumption, and new attitudes toward ownership that are less centered on houses and cars.
The transformation of millions of service jobs into middle class careers that engage workers as a source of innovation.
New forms of infrastructure that speed the movement of people, goods, and ideas.
A radically altered and much denser economic landscape organized around "megaregions" that will drive the development of new industries, new jobs, and a whole new way of life


Here's a synopsis of Gray's paper:

Our school systems are optimized to create good cogs for the corporate machine, not the creative thinkers and problem-solvers we will need in the 21st century.

Although resets are initiated by failures – sometimes catastrophic failures, like we have seen in the mortgage system – they also lead to new periods of growth and innovation, built on new systems and infrastructure.

New technologies of communication have splintered the channels of mass-communication into tiny fragments. It’s no longer possible for mass-marketers to reach out and touch all of their customers at once.

With the rise of social networks and peer-to-peer communication channels, every customer can have their own megaphone.

If a company ignores your complaint, the world will hear, and if companies don’t respond they will eventually feel the pain, as customers find new places to go to get what they want.

The producer-driven economy is giving way to a new, customer-centered world, where companies will prosper by developing relationships with customers by listening to them, adapting and responding to their wants and needs.

The problem is that the organizations that generated all this wealth were not designed for this. They were not designed to listen, adapt and respond. They were designed to create a ceaseless, one-way flow of material goods and information.

We no longer live in an industrial economy. We live in a service economy. And to succeed in a service economy we will need to develop new habits and behaviors. And we will need new organizational structures.

When people already have most of the material goods they need, they will tend to spend more of their disposable income on services.

Post-industrial revolution is delivering a new kind of abundance – an abundance of information, along with networks and mobile devices for moving that information around, and much faster processing that allows us to do more interesting kinds of things with the information we have.

Throughout the world, city populations are growing much faster than rural populations. We are becoming an urban society and living more urban lifestyles.

Fifty percent of the world’s population today lives on two percent of the earth’s crust. In 1950 that number was 30%, and by 2050 it is expected to be 70%.