Understanding Value Co-Creation and Service Innovations in Time & Space Complexity: The Abstract-Entity-Interaction-Outcome-Universal (AEIOU) Theory

Haluk Demirkan, University of Washington Tacoma
Jim Spohrer, IBM Almaden Research Center

While there is a rapid growth in the number of researchers and practitioners joining the service science community to better understand services this community has not yet reached consensus on precise answers to two fundamental questions: “What is service?” and “Where is the science (in service science)?” After performing an extensive multidisciplinary review, this paper explores possible answers to these two fundamental questions from the traditional economist perspective (intangible product, service sector, prices and productivity), a splinter marketing perspective (service-dominant-logic and value co-creation) and a splinter systems perspective, closer to ecology (diversity, sustainability and quality of life). Then, it proposes a systematic framework for conceptualizing the evolution of value co-creation interactions between complex adaptive entities – service systems – within an ecology of nested, networked entities as a new way to describe the innovation processes of service-producing entities instead of following traditional “bricks-and-mortar product development processes and platforms,” and seeks a formal and universal theory – The Abstract-Entity-Interaction-Outcome-Universals (AEIOU) – in which to understand entity, interaction, and outcome patterns of service systems. AEIOU theory defines service separation as customers’ absence from service production, which denotes the spatial separations between service production, distribution, consumption and recycling in time and space complexity. Service separation increases customers’ perceptions of not only access and benefit conveniences but also performance and psychological risks. Specifically, relative to experience services, for credence services, the effects of separation on service convenience are mitigated, and the effects on perceived risk are magnified.

Spohrer, J. C. and Demirkan, H., “Understanding Service Systems & Innovations in Time-Space Complexity: The Abstract-Entity-Interaction-Outcome-Universals Theory,” in-progress.