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Viable Service Systems and Transformation


A system, be it an individual, a group, an organisation, or a government, can be both efficient (i.e. perform at a level that uses the lowest amount of inputs to create the greatest amount of outputs) and/or effective (i.e. capable of producing an outcome that is of value to the intended beneficiary). To be viable, a system must be both efficient and effective.


A viable system “is a system with an identity and purpose which is, in principle, capable of surviving its appointed time, whether definite or indefinite” (Leonard in Beer, 1994:347). Therefore a viable business must be effective inachieving an outcome that is of value to the intended beneficiary and within the context of its operating environment. Stafford Beer (1985) describes the necessary conditions for viability. In business, a firm that is viable is able to obtain funding or revenues for its offerings such that it is above the cost of delivering such offerings and therefore it must be efficientin terms of its primary activity, through management, support, coordination and overall governance

Service Transformation is the journey of a firm/business unit from selling exchangeable offerings to being an outcome-focused co-creator of value with the customer (Ng and Briscoe, 2011). For an established organisation, the move to being an excellent hybrid of a service and manufacturing firm can be a difficult one, involving unnecessary cost and risk. Up to 57% of businesses see lower profits from ‘adding’ services (Neely, 2008). Underlying these problems is that the capability of a manufacturing firm is fundamentally different from the capability of a service firm, from the way the firm delivers its core value proposition to the way the entire firm is configured and coordinated for a hybrid value proposition of manufacturing and service, therefore creating problems in the viability of the provider system. Our research considers the transformation of the firm/business unit to a service provider as a re-specification of system 1 of the provider, the boundary between the customer and the provider and the corresponding system 2,3,4,5 and homeostats supporting the change of the service provider’s value proposition from selling exchangeable offerings to contribution to value creating activities towards value-in-use (Ng et al. 2012).




Recommended Reading

Beer, Stafford. (1985), Diagnosing the System for Organizations. Chichester: John Wiley & Sons



Research Lead

Irene Ng






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