Why companies can not do radical innovations? Business managers get trapped by their current way of thinking. This is known as the dominant logic trap, where the wisdom of a company does not let new business concept get through the organization. As show in the Figure below, We can visualize this issue by using a funnel. The filter inside the funner represent the current way of thinking. Moreover, this filter is the collective wisdom of managers that stop the adoption of innovative ideas outside the current way of doing business. Furthermore, the arrow outside the funnel represents the service dominant business concept that can not get into the company’s mindset.
Reference: Lüftenegger, E.R., Grefen, P.W.P.J. & Weisleder, C.A. (2012). The service dominant strategy canvas : defining and visualizing a service dominant strategy through the traditional strategic lens.BETA publicatie : working papers No. 383, Eindhoven: Technische Universiteit Eindhoven, 50 pp. (PDF)
Lüftenegger, E.R., Grefen, P.W.P.J. & Weisleder, C.A. (2012). The service dominant strategy canvas : defining and visualizing a service dominant strategy through the traditional strategic lens.BETA publicatie : working papers No. 383, Eindhoven: Technische Universiteit Eindhoven, 50 pp.
Abstract: Service orientation, customer focus and collaboration between firms are changing the way of doing business. Marketing scholars are the first academics to conceptualize these changes under a new mindset, known as the service dominant logic. We observe a direct relationship between the service dominant logic and cross-organizational information systems.
However, the service dominant logic is difficult to communicate and operationalize. Management constructs are needed to apply the service dominant logic to the busi- ness environment. Strategy is the first management construct that we need for the business development of the service dominant logic. Currently, there are few works on the service dominant logic at strategic level.
In this report, we present a structured definition of a service dominant strategy by taking these emerging works and confronting them with the traditional strategies taught at business schools. We make a projection of the identified strategic statements of the service dominant logic to organize them and make some conclusions. We contribute to the development of the service science at strategic level, by presenting a management tool that facilitates the design of service dominant strategies.
Companies that are in a predominant position in the marketplace, usually look at new entrants as non-dangerous. For instance, Steve Ballemer laughed about a new phone in the market called the iPhone because was too expensive. However, nowadays the iPhone is the best-selling smartphone displacing incumbents like Nokia. Sometimes, the dominant logic of a company do not let see other opportunities that are emerging. Moreover, they may seen as ridiculous by incumbent companies as we can see in the following video:
Designing businesses by following a Service-Dominant Logic