The Service Economy


I was reflecting upon how many of the services we enjoy today stem from the early days of the Web.

The graph above depicts the shift in focus and production from goods to the administering of services in the American economy. Products got progressively better with the introduction of technology, the ability to automate beyond production to qualitative measurements.

They also improved with the introduction of feedback loops from customers. Two main forms of feedback: 

  • an increasing array of choices that gave us the ability to buy the better performing items
  • the ability to "talk back" to the organization making the product(s) to help them improve

Due to the widespread adoption of total quality management principles and high yield utilization practices for manufacturing to keep production costs low, product differentiation is now based upon two main characteristics:

  1. quality of service
  2. design, including of experience

Going back to my thoughts about the Internet and the Web where services improve the more people use them — take for example, Amazon where customer reviews and interactions with the system produce better search results and purchases.

The people who use your services add value in the form of data. That value is not realized until the organization uses the data to actually improve its services. And that increasingly means the way it delivers them, how it designs online or physical world flows as experiences.

Take another look at the chart above, and what you may notice is that most of the organizations that are classified as being in the service business have operations as a core competency. How data is linked and mined to put products on shelves AND butts in seats.


[image source]


Valeria is an experienced listener. She is also frequent speaker at
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