Value & Worth: Creating New Markets in the Digital Economy [Kindle Edition]
Author: Irene CL Ng
This is a must read book for anyone who wants a clear understanding of service as value co-creation.
Also the implication for “innovation in the age of digitally connected service systems” is wonderfully addressed.
Irene Ng shares her personal journey of discovery in her new book “Value and Worth,” in what is a tour de force of systems thinking. For the first time, Ng makes leading edge service science and service-dominant logic thinking accessible to everyone. From students to faculty to executives, from academics to practitioners to policy makers, not only is the concept of “value co-creation” clearly explained, but the surprising implications for innovation in the age of “digitally connected service systems” is also easily accessible for the first time to the broadest audience of readers. A must read for all those who want a deep understanding of service innovation, as well as a glimpse into the future and why the best is yet to come.
My favorite extracts from Irene’s new book are below…
…I will call this exchange value worth. The difference between utility and ‘use’ or value-in-use is
important. Utility is concerned with the buying of the object i.e.
utility is the unit that drives how we choose: e.g. I choose A over
B because A gives me more utility. So the notion of utility does
not really concern itself with the actual use of the object, it only
concerns itself with how useful I think it might be at the point of
choosing and buying i.e. during its exchange. So utility is
actually a unit for deciding worth. If you subsequently use the
object and find it useless (no value-in-use), that is not relevant
…The focus then, is not on use or experience but on worth and exchange.
In essence, firms and their marketing perspectives became servants to worth.
Implicitly, everyone now believes that objects have worth by
themselves, without considering how the value is created from
…This means that two major forces are acting at the same
time; the virtualisation/digitisation of the offering (from a CD to
just an mp3 file) and the convergence of purchase and use. This
means we don’t need to buy and then use later, but buy only
when we want to use.
…Why did this happen? To be honest, ownership is a rather
ineffective idea. Think about it. You have to actually think about
what you might want as an outcome in the future, and buy the
item before you use it.
…To know what might be useful, and be marketable, would
require us to think about offerings before they exist and. how
they might come to that existence to begin with. This would give
us a way to think about the future, in terms of the latent needs as
we go through our day-to-day lives. Understanding value in this
manner can help us develop a method for innovation.
…The arrival of digitization, however, demands that we revisit our
understanding of Value and accept that ‘value is the goodness
we create out of the experience with something or someone’.
This contextual experience or interaction – this ‘Value-in-Use or
value-in-context’ – can be described as an enactment of our
social and cultural values.
But however we choose to describe it, this shift towards an
appreciation of the context in which something is being used has
been set free by digitization. It has escaped from nuanced
academic debate into the everyday world of products, services
and the way we live and work.
…They suddenly realise that they have completely forgotten their
own role in creating that experience; that they, as customers, cocreated
value with the cafe. It dawns upon them that for
attributes to become outcomes, they have to realise the value
proposition of the cafe to achieve benefits. And more
importantly – and this is a key point – they need to access their
own resources to co-create that value, whether these resources
are their ability to choose the right company with whom to go to
the cafe, or even their basic resource of being able to see, hear
and feel. Customers implicitly design themselves and their
contexts so that they can co-create value with the firm.
…In essence, it’s a lot to do with whether the individual is able to
access the resource to achieve their outcomes, and whether the
firm takes for granted what the customer is able to access.
…but the education is basically a means towards giving
your customer the right type of skills and competencies (develop
their resources) to use your product. So these skills and
competencies are one type of resources needed to co-create
…If you are still not convinced, think about the servicing and
support of a nuclear weapon to achieve value-in-use for the
customer. It is the availability-for-use and availability-asdeterrent
that is valued and paid for. We all hope it would never
actually be used.
…’Use’ is therefore a misleading term to describe value created in
…So a combination of functional and emotional outcomes is the
combination of the firm and the customer’s resources in creating
value that is of both meanings – driven and functional.
…Yet, much of what I have discussed is only the role of the
customer and the firm in co-creating value. The actual value (co)
creation occurs in context i.e. where and when it actually
happens. This means we need to understand the time and space
…Today’s firms are not very creative in offering contextual choices. This will
change with digital technology and competition.
…The success of these innovations hinges on consumer
convenience and competence.
…However, when we focus on value in context, we need
to shift our attention away from the individual, to what
Normann3 would call activity sets i.e. the context of the
experience. Instead of profiling individuals, we should
3 Normann R (2001) Reframing business: When the map changes the landscape. John
Wiley & Sons Inc.
be profiling contexts. This is so that we can understand
which contexts enable value creation and how.
…I define service as a competency to create value and a service
system as a contextual configuration of entities that render
competencies to create systemic outcomes using their
competencies (ie their service) in context.
…Every value-creating context is a whole system and within the
whole are its entities or elements. To understand the system, we
need to understand the connections that result in the ‘whole’
system. The notion of ‘wholeness’, i.e. for all elements to
‘behave’ appropriately within the value creation context, must
mean that the whole is composed in a certain way and this
composition is the initial mapping to define the scope of the
system in focus. It is this wholeness that provides the basis for
contextual archetypes across people.
…The structural context refers to ‘rules’ or ‘norms’. within the
social context of value creation. Rules become norms that bind
us and create traditions that are enduring.
…The structural and systemic context are
inseparable from each other. Yet, the norms and practices are not
‘out there’ as though they are external to us. Rather, they are part
of us, and in the way we interact with others and with objects
(verbs), we create the rules as well as reinforce them; This is
what Giddens refers to as duality.
…My integrated framework of value19 proposes the relations
between the social and the material through a ‘relational
ontology’, which privileges neither humans nor objects, nor
treats humans and things as separate and different realities, as
suggested by Orlikowski.20
…analysed it in a systematic way. First, creating new markets from
digital connected offerings means we must be able to think about
how to influence or intervene in value creating systems in new
and effective ways, because digitally connected offerings are
able to. Secondly, the future of markets depend on how firms
can charge for different ways that are not merely exchanging
goods and services. Understanding value creation in context
brings forward different revenue or economic models and
commercial viability for future offerings. Finally, understanding
value creation in context helps us think about the design of
future offerings for their use and experience, rather than just
… Worth, then, is the shadow reality of value. True value is the goodness
created from our experience and interactions with objects and other
….Creating context-based exchanges would be more commonplace in the
future when content, media and business models begin to collaborate.
The challenge of new markets can be summarised in three factors:
(1) knowing when (context) there is a need for something (the
resource requirement to create value);
(2) knowing the form in which that need could be fulfilled (the
(3) knowing what activities, entities or issues within the value
creating context to create worth so that exchange can occur (the
,…With digitisation, identity is now an industry – with
firms profiting from protecting your privacy, reducing
theft of your identity and authenticating who you are
when it matters.
…What this means is that the separation between acquiring
and use of resources to create value is collapsing into a
similar time and space.
….Little wonder that everything and anything that could
potentially be digitised is being digitised, giving birth to
new services and new offerings.
….Understanding innovation for a digitally connected
future has to start by understanding needs, wants and
then what might be demanded which goes to the heart of
how individuals currently live their lives.
[[[needs, wants, aspirations – connecting to Quality of Life]
…. Every object therefore has a story to tell, an affordance
to act on and is a connected part of the family system;
and every object offers a service i.e. a competency to the
system for different outcomes. Every object could
therefore be seen as a resource and we create value with
it for the social construction of ‚family’.
…. In satisfying our needs, we search for new forms that
could ensure the needs are satisfied, especially when
solutions do not exist. Human beings are therefore not
merely context designers, we are effectual designers.
Effectual logic is a different sort of logic from causal
logic. Causal logic means we start with a pre-determined
goal and with a given set of resources or means, we seek
to find the optimal (fastest, cheapest, most efficient etc.)
way to achieve the goal. Effectual logic, however, starts
with having no goal but instead, with a set of means and
appropriating different resources, goals could emerge
contingently over time through imagination and
….In the digital world, a digital service that is adopted
could spread quickly through communities who are
highly digitally connected’
….Mindset change 1: Customer as Competency of the
firm’s Value Proposition
….We now have to rethink the term ‘value proposition’.
Instead of a value proposition that is offered to the
customer and then ‘delivered’ by the firm through an
exchange, value proposition has now to be a ‘resource
proposition’ of the firm to fit into the customer’s context
to create value. In other words, firms can only make a
proposition as a potential resource participant in value
….Make-it-Better or Make-me-Better. Taking the
concept of affordance in chapter 4, note that an
empowering value proposition falls into 2 extreme
categories i.e. making the value proposition better or
making us better. This is especially relevant for future
….Paradox of solutioning. Also, the paradox of providing
solutions is that we relegate your customer to a passive
role,wherefore making it harder for the firm to please
the customer. The logic is that an engaged customer is a
happy customer because you respect their autonomy and
yet able to manage the cooperation and empowerment.
Wanting your customer to be passive is like wanting
your child to be passive and you provide everything for
a child. it usually doesn’t make for happy children.
,,,,The ability of digital offerings to be provided cheaply or
almost free result in more of society being served at a
….Firstly, our future ‘wealth’ may not be just our money. It
may include our skills, actions and competencies but
only if they are able to be digitally visible and
commodifiable, and only if they are used subject to your
consent and with due compensation.