Insights into service coming from biology
by
Timothy F. Allen1, Duncan Shaw2 and Peter C. Allen1
1
University of Wisconsin, Gaylord Nelson Institute of environmental studies, Madison WI USA
2
Nottingham University Business School, Nottingham, UK
Abstract
The social sciences and business have a preferred presentation of complexity as charts and categories,
encouraging contrast not comparison. In biology the multiple levels invoked in complexity are treated in
a more unified way through comparisons. Dualities are expected wherein different levels of analysis can
flip examples between types. Thus manufacturing and service can both apply to almost any facet of
business. Even heavy industrial manufacture of ingots is a service to industries that make things out of
iron. Our general findings are:
1) The difference between manufacture and service pivots on the distinction between high
gain rate-dependence for manufacture as opposed to low gain rate-independence for
service efficiency. High gain takes in fuel or parts and uses them directly. Low gain takes in
low quality material and improves it. Service is low gain, while manufacturing is relatively
high gain.
2) Manufacturing has a point of output and so is generally easier to outsource, because the
output can be moved later. Service often keeps going.
3) Service generally is smaller than its manufacturing counterpart. The size difference alone
takes service out of the realm of manufacturing.
4) Manufacturing creates something while service changes something.
5) Manufacturing uses a process to make a structure that is a good to be sold. Service
generally works on some extant structure or situation: e.g. a car or a patient.
6) Whether a product is manufactured item or a service often turns on who is identified as the
customer and how they use the product.
7) A century ago industry emerged with a high gain posture. Now the internet and the
information age press manufactures into low gain service
8) The move to low gain can be very lucrative if the clients are the mass at the bottom of the
pyramid. There is more profit in service because of low production cost and big markets.
9) Service is like mutualism in biology. It is about cooperation. But the origin of mutualistic
relationships is often destructive and predatory. It takes time to work out the
accommodation. Service evolves as does a prudent predator in biology (don’t eat it all).
10) “Ecosystem services” is a misnomer. It is turned backwards. Human service providers
accommodate to the customer in positive terms; the lack of sentience in ecosystems means
through depletion they resist offering service. Principles of Supply-side Sustainability show
that human exploitation of ecosystems is only stable so long as the ecosystem is itself
serviced by its “clients.”
Introduction : services versus production
Our assignment in this article is to bring insights from biology into a discourse about service in business.
This we will do, but we will also make a more general point. We suspect that people in service theory
want examples of service from biology to enrich the discussion. We can do a bit of that, but it is much
more important that we offer a biological way of looking at service. Shaw comes with business acumen,
but the authors Allen come from outside social science. We are trained in biology, and so will not take
for granted the conventional wisdom of service businesses. Biology can offer a new way of thinking
about it. The authors bring an opportunity for synergism.
Ken Boulding commands our respect; it was nip and tuck as to whether it was him or Herbert Simon who
got the Nobel Prize for systems thinking in economics and business management. He has a grand
scheme for levels of systems that we find wanting (Boulding 1956). He works his way up:
1. Frameworks. 2. Clockworks. 3. Thermostats. 4. Cells. 5. Plants. 6. Animals. 7. Human Beings. 8.
Social Organizations. 9. Trascendental Systems. He makes a table of it all. As outsiders we notice a
dominant mode of presentation in social science, tabulation. That tends to fragment the discussion into
categories, between which the whole can fall. As a botanist Allen finds the separate category “Plants”
passing strange, and very particular. It is not clear to him why plants are separate. In biology we notice
that plant hormones greatly resemble human speech, just slower and more stable that’s all. Biologists
would look for the unity of all codes in all living things, including social systems. Social scientists make
too much of human sentience for the taste of biologists. Yes, it is a distinctive way of dealing with
information, but thought has a lot in common with all coded information from DNA to culture. And
anyway, humans are not that smart at creating new things, but they are good at recognizing when they
are on a winner. Mind you, Darwinian evolution does that too, and selects for winners.
Contrast Boulding’s scheme with the grand opus of James Grier Miller (1978, Living systems). (Figure 1).
Miller too has levels like Boulding, but of a different sort. Miller came from medicine, so we recognize
the biologist in him. He too is all inclusive: cells; tissues; organs systems; organism (human); groups (of
people); organizations (e.g. large ships); nation states; international systems. But unlike Boulding he
presents a unity, not a tabular fragmentation. Yes, he does have tables, but simply to name the parts for
the specific system at hand, in terms that apply exactly to other levels. For Miller there are 19
subsystems that he recognizes as present at all his levels. His presentation is distinctly not tabular (the
several tables in his work notwithstanding). In biology, but not in business discussions, we see a
constant rescaling of ideas, looking for persistence across levels. We do not find in business much
discussion of how service and manufacturing are opposite sides of the same coin. Furthermore,
biologists would expect the sides of the coin themselves to flip with a shift in the level of analysis;
manufacturing can become service, and vice versa, it depends on how you look them. The central
message here is to answer the question “What is ……?” The answer is, “It depends.” This paper points
out on what it depends. Not only is there service for the car that is manufactured, but manufacturing
itself can be seen as service for a means of transportation.
Bill Ford himself says that the company is no longer simply in the business of building and selling
cars and trucks. Instead, they might be in what we call "the personal mobility business." To us
this means the auto industry is preparing to design cars as products of service rather than sell
them to individual owners.
(McDonough & Braungart 2001)
We agree; Ford is doing exactly that. Making ingots serves the needs of those who require them, even
though heavy industry would seem to be quientessentially industrial manufacturing.
Figure 1
Contrasting Ken Boulding’s fragmented treatment of levels with J. G. Miller’s unfied treatment of levels
of systems. Miller has 19 subsystems that he recognizes at each level. Boulding treats each level as
distinctive, with its description separating it from all other levels.
In biology the same thing is discussed at different levels, but in a unifying framework that emphasizes
level of analysis as an abstraction not a fact. Change level of analysis and different things happen even
in the same setting. There is less unity in business ideas across levels such as we find in biology.
Considedr the set of genetic devices: Mendelian genes, polygenes, DNA, chromatids, chromosomes,
homologous pair, genomes, haploid and diploid nuclei as opposed to monocaryotic and dicaryotic cells.
The distinctions are a matter of level of analysis in the context of the unified notion of genetics. Asked
to learn the names of some new subatomic particles, Enrico Fermi said, “I won’t remember the names of
the particles. I can’t remember the names of the particles. If I could remember the names of the
particles I would have been a botanist.” We all know what he means. But in defense of biology, we do
need the terms. Not only do we have the thing, but each new term captures the thing at a different
level of analysis. The single stranded chromatid becomes a chromosome in its own right once the
previously double stranded chromosome that generated it has had its strands pulled apart. Moving in
the other direction, a homologous pair of chromosomes crosses over to give a hybrid with four strands.
But then it acts as if it were one chromosome in the first division of meiosis. They did not tell you this in
biology class, but Jacob Bronowski (1974) in his Ascent of Man, explained Mendel’s insight by pointing
out that you can understand genetics in the number two: double stranded DNA, double stranded
chromosomes, the twosome of homologous pairs, and the coming together of two parents. Two makes
one and one makes two: replicate and divide. Outsiders might think biology is stamp collecting, and it
was, but we have got beyond natural history, as biology becomes a mature integrated discourse.
It is not that social science is less integrative, it is probably that we live day to day in social settings that
are familiar and taken for granted. The different styles come from texture of the patterns in the
respective discourses. In social science there are defined entities, like nuclear family, which are
distinctly separate from other groups of people. There is no special word for a double family, nor a
word for half a family. Extended family is the next level up. The next level down might be “broken
home,” but that comes with lots of baggage. In social science nuance is expressed in specific definitions,
the subtlety of which is self-evident (we can all tell what Boulding’s categories mean). Meanwhile in
biology nuance is in how change in level of analysis can still be talking about the very same thing, but
with different implications. Only then can we see how genetics and cell division are linked in a rich
dance with its specific steps. The English language encourages a realist view that can muddle things
badly, particularly in complex systems analysis. As Bill Clinton said, “It depends on what the definition of
“is” is. There is no single “is” in genetics.
The ascendancy of service
Service in business is of keen interest because there is presently a clear trend from manufactured
production to service. That appearance is a real consideration, as was the reverse process of
industrialization a century ago . Before the 20th century most peoples’ work in the US was grooming the
land in a rural human ecology. With the coming of oil as a ubiquitous fuel there was a move to
industrialization, to making products. With that radical change from farming to industry came massive
growth in production. Draves and Coates (2007)ummarize that change in “Nine Shift,” where they note
that we are in the middle of a change just as great today, one that is pressing business into service. It
will pay to expand Draves and Coates’ argument with an example worked through in Peter Allen’s MS
thesis (2009), where he tied the shift to transportation and the human ecology of land occupancy. It
shows how service and manufacturing have changed over time and in different places, as people occupy
the landscape in an alternative fashion. Evansville, Wisconsin, is a small town situated in a deeply rural
setting. It is roughly half way between Madison, the State Capital, and Janesville, a formerly industrial
city making automobiles some 40 miles south. Rail in Wisconsin first came due west in 1850 from
Milwaukee, the big industrial city on Lake Michigan, north of Chicago. Janesville was one of the first
cities to be connected. But then a new railroad line came into Wisconsin from the south, directly from
Chicago, going straight to Evansville and bypassing a disgruntled Janesville. From 1860 to 1864 little
Evansville was the rail head going north. It was a boon.
Draves and Coates (2007) note that small market towns like Evansville were rich because they were the
first place that agricultural production was concentrated. The money was made on processing raw
materials of agricultural output, the main production in the nation, by simply concentrating it and selling
it on. There was a small town in the literal “wild west” of Kansas, Frankfort, where you cannot now buy
a pair of shoes. But in the first decade of the 20th century there were four department stores in
Frankfort, wherein one could buy 150 varieties of cape, and shoes for all people of all ages in New York
styles made of Italian leather. There were six millionaire bankers in town, and an opera house, as there
were in all such market towns in Kansas. It is hard to remember that there was almost no money to be
made in the US in the nineteenth century in industry; it was almost all agricultural productivity, as in
millennia before. There are still mansions in Evansville to prove it.
We can see Evansville in terms of high and low gain returns (Allen et al 2009). Low gain systems refine
and concentrate low grade resources to make a mass of high quality material for use as fuel. High gain
systems depend on taking in high quality material, and directly burning inputs as fuel. By fuel we
sometimes mean literally fuel, as in capturing and refining oil. But we could equally mean getting
copper from ore and using the refined metal to make things. We could also mean the concentrated
agricultural market material, ready to be sold (burned as it were). We sometimes mean ants farming
fungi to make food. Low gain systems are highly constrained and organized, and we predict their
behavior from degrees of organization and efficiency. By contrast, high gain systems are predictable
only from flux of inputs, without organization offering much insight.
Evansville was, and still is, a low gain system. It functioned by concentrating diffuse material, crops
made by sunshine. In 1903 the Grange Department Store opened as the biggest west of Milwaukee, to
service the farmers and townsfolk. The Grange used the railroad to bring in goods from Chicago.
Evansville was touting itself as a place of expansion for investment; it did not happen. Instead, as high
quality liquid fossil fuel came on line in the new century, Janesville and Madison flourished while
Evansville stagnated. The reason is that fossil fuel encourages high gain expansion, against which
Evansville lost advantage. In the early 20th century expansion in transportation was in roads, not
railroads. Planning is low gain; notice that rail tends to be planned ahead of time, to go long distances.
That line to Evansville from Chicago went all the way to Minneapolis by 1871 as was the plan. Systems
like Evansville depend on diffuse material, sunshine and crops. The game in such systems is organized
value added.
Development of roads is by contrast a high gain issue. Roads are not so much planned as they are
straightened by increased flow of traffic. You can predict road improvement not so much by looking at
plans, but by noticing increased pressure of traffic. Flux, not planning is the predictor under high gain,
and high gain Janesville got into a positive feedback a hundred years ago. Its transportation needs
straightened the roads to it, which increased Janesville’s consumption, trade and markets.
Now a hundred years have passed, and fossil fuel is coming under pressure from difficult international
politics and sheer limits on supply. The power of fossil fuels to focus activity is declining. Instead of
pumping more high gain oil out of the ground into our engines, we are turning to diffuse energy
resources, such as biodiesel. In a continuing low gain posture, Evansville pronounced itself the Soy Bean
Capital of Wisconsin in 1987. In 2007 the mayor declared “Soy Bean Days,” a town festival. The railroad
is now closed, but there are plans (on again and off again) to reopen the line to the south to Chicago to
service Evansville’s promised biodiesel plant. Formerly, the railroad serviced the service activities of the
Grange Department Store for the diffuse agricultural community. The plan is for rail now to service the
diffuse energy production of growing soybeans. The original gradient has diffuse sunshine at its top.
As is exemplified in contrast between Evansville and Janesville, manufacturing is driven by steep energy
gradients, while service is maintained by shallow material and energy gradients. So the emergence of
service as the burgeoning part of the economy is part of a large trend back to low gain patterns. Instead
of high gain production aimed at high quality customers with the deep pockets of large corporations, the
trend to service is working with information systems to find and satisfy the small particular needs of
ordinary people one at a time. The more ordinary are the people, the more of them there are (Prahalad,
2005). Service is straight up low gain, and Evansville is simply a microcosm of the general trend across
business at large.
The shift to low gain demands that business now increases in efficiency. That requires putting more
effort into the service side of things, such as lowering inventory to meet just immediate demand. At the
beginning of the 20th century, industrial production was born. Studebaker used to make luxury
carriages, one of them for President Grant. Their move in the opening years of the 20th century from
making low gain luxury carriages to high gain production of automobiles was typical of that time when
fuel and growth became high gain. There is now a systematic move. It is from focused production of
material goods to low gain accumulation and organization of diffuse information. That is why there are
so many examples in the last quarter century of successful shifts in the direction of service. Firms that
have collapsed, like Kodak, failed to make the shift. They kept manufacturing film instead of providing
memories as a service.
There is a firm in Waunakee, Wisconsin, that has been through the whole cycle, there to high gain and
now back to low gain. Carl Statz and Sons have always sold agricultural equipment. The boys in the
business are two generations on, as they refer to grandpa who first sold horse drawn equipment, an
agricultural equivalent to Studebaker’s horse drawn luxury carriages. The founder of Statz, Carl, made
the same shift as Studebaker, and started to sell motorized machines. Waunakee was a low gain hub,
collecting farm produce for market in the 19th century, rather like Evansville. As oil became king and the
high gain boom in powered machinery took over, Carl Statz moved from downtown Waunakee to out of
town. While the senior author Allen was buying his secondhand zero turn mower from Statz, he
predicted from his understanding of low gain and service, that the firm was doing well. “Yes”said one to
the grandsons who was selling the mower, “we sell a lot of tractors to Texas.” Statz is a local firm selling
to local people, so what is going on with Texas? “Yes, we do it on the internet.” Of course, they do. It is
a shift to a more diffuse market, to which they offer the service of coupling those who need tractors at a
national level to those who are selling tractors in Wisconsin. The service increases the efficiency with
which farm machinery is sold. From low gain horse-drawn, to high gain tractors, and now back to low
gain on the internet.
We recognize a symmetry in the move from farming-to-industry as opposed to the present move from
industry-to-service. It can be explained by the symmetry between manufacturing and service. Service
and industry are two sides of the same coin. Make cars, but make more money servicing the financing
of the purchase, as did GM. We believe that more or less any business activity can be seen as a service.
Being a waiter is on its face a person in service, but we would also say that even heavy industry like
making iron ingots would also be a service to those who need readymade iron ingots. Looking at
anything as manufacturing invokes a process whereby something material is made. Looking at anything
as a service can take that same situation and see it as filling a want or need. Whether a given activity is
production or service depends on who is identified as the customer and the description of what is done
for that customer. Thus service fits the ecological argument surrounding Evansville and Carl Statz and
Sons.
Manufacturing is understood by rates of flux in a process, it is rate dependent. Manufacturing is a high
gain activity. Service is understood by the efficiencies it invokes, a low gain consideration. It usually
involves changes in constraints, perhaps constraints on the bewildering set of options of where a visitor
might eat in town. A smart phone might constrain the options to only those establishments that are
near enough to be seen in a street scene taken by the phone’s camera. Unlike manufacturing, service is
rate independent; we do not emphasize the rate at which a service occurs, as we might do in the rate of
manufacture of cars. Rather we focus on the change of state from needing service to having been
serviced (Figure 2). We do not consider the rate at which the phone sorts the restaurants in the scene,
since the functionally of telling where to eat is instantaneous. We might care about the rate of
automobile manufacture if the model we want is on back order; the wait time is a function of the speed
of production.
The early assembly line captures the duality of manufacture and service. The movement down an
assembly line invented by Ford is telltale that it was involved in the birth of automobile manufacture.
On the other hand, the improvements in efficiency engendered by the assembly line identifies Ford’s
role in servicing the need for automobiles to the public, a public that he paid enough so his workers
could afford the cars they made.
Figure 2
A schematic for service. Only one structure is involved. Its state is changed. There is a separate agent
that offers the service
Biological analogues of the service industries.
We achieved these insights by looking at ordering principles in biology and ecology. Analogy between
biology and human organized systems is a promising way to understand the nature of business systems.
For instance Janine Beynus’ Biomimicry Institute has a great following. Anything that applies to both
business and biology is likely to be fundamental in some way. Some biological activities are clearly
service more than production.
An instance of an obvious service in biology is the cleaner fish that hangs around the mouths of fierce
predators offering cleaning services to the predator. Cleaner fish are much smaller than the fish they
service, indicating a separation of service from production as a matter of size. Service certainly leaves
the impression of being smaller than its industrial production counterparts. Automobile repair is
performed by a garage, not a factory line. If service is big, what is being serviced is even bigger. We
gave the example of viewing the production of iron ingots as a service to light industry. It may involve
big Bessemer furnaces, but the iron foundry is still smaller than the aggregate of automobile makers and
other iron consuming industry that the foundry services.
The difference in size puts the small servicing fish in something of a different world. Most birds and
bees ignore each other because of size differences, but humming birds are sometimes harassed by bees,
because both insect and bird are of the same order of size, performing the same pollination activities.
That puts humming birds and bees in the same world on many dimensions. Competition will be
between things that are of the same size. The harassment of hummingbirds reflects competitive
activities in pollination. The indication is that size differences put the one offering service in a different
world from those who make an item to be serviced (Ford versus the corner garage). In biology we do
find evidence of accommodation, scale differences notwithstanding. Service emerges through
accommodation, sometimes between things of different size. The smaller of two competing species
commonly becomes even smaller so as to get out of the successful competitor’s world (Allen and
Hoekstra, 1992). Parasites are commonly much smaller than their hosts so that the economics of
consuming without killing can work. There is also a stealth component to parasitism, and too small to
be noticed is part of that. Because they are so small, cleaner fish live in the world of their host only by
the focused means of the service they offer. Size difference appears a natural part of offering service.
The host of the cleaner fish will act in a way that invites cleaning services. The host allows itself to be
serviced. The cleaner has a constant stream of resource. It serves itself by offering the service of
cleaning up the mess and sometimes by removing parasites. If you are too big to stop parasites
attaching to you, employ someone closer to the size of the parasites. If your life is too busy for you to
handle, hire the services of a secretary or housecleaner. There are cleaner birds that live on cows,
making a meal of insect parasites. There are equivalents of scam business services in biology, where the
cleaner fish are mimicked by other fish which, instead of cleaning, dart in and chew off bits of the host.
So the world of biology does include clear service industries and some ancillary activities that mimic
services.
How small can a manufacturing enterprise become before it looks like part of the service sector. The
example of Singapore is telling here. Singapore has been a nation in its own right ever since it was
expelled from Malaysia. Singapore indicates that a country can be of almost any size, for instance as
small as 16 miles on a side. Singapore is not large enough to provide its own food or even water.
Therefore it cannot readily be a manufacturing nation in any terms. So Singapore is a unified integrated
service center to the rest of the world. We used to live in a world where effective manufacture was
achieved by increasing size; that was the hallmark of the industrial revolution. By contrast we are now
making things ever smaller so that they can do more and faster in a limited space. As a result we can
expect small manufactured things to take on certain qualities in the information age normally associated
with service not manufacturing. Production of handheld machines moved Apple into the service sector,
even though it manufactures smart phones. Mitchell (2011) identified the Kindle Fire as a service not a
product. It is sold at a small loss, so that Amazon can provide the service of selling electronic books for
the device. There are similar patterns of emergence of service, called servitization (Neely, 2008) in the
history of the automobile industry.
Biological analogues
There are many examples of service in biology, and mutualistic relationships are the place to look.
Plants provide carbon energy to fungi, which is the gradient that encourages fungal parasitism. Higher
carbon dioxide in the air does not directly lead to more plant growth; rather plants release carbon into
the soil to encourage fungal growth. The threads of fungi associated with roots, called mycorrhyzae,
offer a benefit to the plant’s nutrient status. The fungi give mineral nutrients to the plant, which is
almost always nutrient limited. The zone where the fungi are most effective is called the rhizosphere.
Kill the fungi and the forest system as a whole starts losing minerals disastrously. Leaf litter stops
decomposing and is lost to the system, as was evidenced on the side of a forest closest to a lead smelter
(fungi hate heavy metals) (Allen and Hoekstra 1992).
As with all neat stories, it is not quite that simple. The fungi offer the service in a funny way. As spring
gives way to summer, the roots are invaded by fungi when the warmer days give the fungus the edge.
But as the weather cools in the autumn, the fungi start to die, releasing their nutrients into the soil. The
roots still function well at lower temperatures, and pick up the released nutrients. Then in another turn
comes winter; the fine roots die in the frozen ground. But all is far from lost, as the new spring roots
grow down the old “quick frozen” root holes, in which are concentrated last year’s minerals associated
with last year’s dead roots. The fungi appear to service a closing of the nutrient cycle.
But of course it is again not quite true, and not on the bright side of service either. The fungi are far
from chums who help everyone pull together. They don’t play at all nice. When they get the edge over
the roots in summer, there is a wholesale invasion. It is not pretty. The roots are badly debilitated by
what amounts to an infestation that overwhelms them. Not exactly a service they would want. And yet
at the higher level of analysis, as the annual temperature cycle moderates the warring factions, there is
benefit to the whole forest. In this case, service is therefore an emergent from otherwise selfish
behavior.
Of course financial services also do not play nice. Yes, they offer you credit, at low interest rates at first,
when you could pay them back if they jacked up the rates. But once you have a profile that indicates
you are overcommitted to debt, then the rates rise, and you cannot escape. Denied usurious rates
under government regulation (which was only mandated in terms of honesty in labeling) credit card
banks started clever devices to get you pay usurious rates on overdrafts on your debit cards. The $3.00
cup of coffee you paid for with your card suddenly costs you an extra $30.00 in overdraft fees. Of
course you are not informed that your account is in the danger zone. The banks, before regulation to
moderate them, offered you this overdraft service automatically, without warning you, when most
people would prefer to have the debit charge denied. There is now an upfront requirement that the
banks warn customers, who can then opt out of the overdraft service. Only recently has there been a
move to force banks to add up the check and debits in the order that favors the customer. The story
from the banks is that they presume that customers would prefer to have their largest, most important
checks debited first. No, the checks and debits were not added up in the order they came into the bank,
they were processed in a way that most quickly gets your account into overdraft. Thereafter, each small
check or debit gets the $30.00 overdraft fee put on it. So banking services greatly resemble the sort of
service fungi give to forest trees. Like the individual selection of fungi out for themselves, banks offer
services on terms favorable to themselves. In the end they are regulated to be more contributive to the
service part of service. Twenty four hour banking does not necessarily mean the customer can bank all
the day and night. But the bank does calculate overdrafts and generate overdraft fees on a twenty four
hour basis.
So is there equivalent ambiguity in the service sector of society and in service functions in biology? The
prey in a prey/predator relationship in a sense offers a service to the predator. At another level the prey
are material things, the acquisition of which are like a purchasing a car. In predation, money down for
the “car” is the expenditure of energy to catch the prey, not to mention the danger of approaching a
zebra from behind in the chase. Instinctively zebras know when to strike so as to kick off the face of a
lion.
Service, as do all complex phenomena, requires several levels of analysis. Less obvious is the service
that the predator gives the prey, although it is clear when we look at the process at the level of whole
prey populations. Predators are coevolved with their prey. A predator that is too efficient, like a
ladybug, will wipe out its prey, and indeed some predators at some levels do that. On the face of it that
makes no sense. One can reasonably ask how come there are any ladybugs or aphids left in the world.
But the ladybug has evolved into a prudent predator, just not at the level of cleaning out a whole plant.
There has to be a level at which moderation has been evolved. For ladybugs it is ineptitude when it
comes to finding new plants with aphid prey on them. The moderation of predators means that they
tend to kill more when over-population of the prey is at hand. For mammals such as wolves, predators
also pick off the old and the diseased, which increases the health of the prey population. Predators
offer a service.
Service seems to come from an exchange, called value cocreation (Vargo et al. 2008; Spohrer and
Maglio, 2008) in the scholarly literature on service. Mutualistic relationships pivot on mutual servicing.
In business the service company is also serviced with money by its customers. The ubiquitous presence
of mutualism means that the advantage of service is a potent force in evolution. It is so in business.
Mycorrhizal mutualism and rapacious banking practices in the human service sector indicate that even
bad practices can in the end turn positive, when eventually accommodations are reached under
regulation. The adaptation can take many forms. The big predator fish assists the cleaners by letting
them near and remaining passive as the small fish offer the service of cleaning. Some flowers have
spurred petals. The spur has a hollow tube up its middle with nectar at the deepest part of the tube.
Delphiniums and Columbines have such spur tubes. Plants coevolve with their pollinators, as Darwin
observed, allowing him to predict a moth with a spectacularly long rolled up tongue, because he had
seen a flower in Madagascar with a particularly long spur. The moth was not discovered until 40 years
later.
Some species of Acacia have ants that live in the hollow spines at the base of its leaves. The ants protect
the plant by running up the nostrils of grazers, and then stinging. The ants weed around the base of the
shrubs, and eat the parts of any plant that touches their host. Acacias have been seen that appear to
have drilled their way up through a tree canopy that would otherwise shade the shrub; the ants did the
drilling. On the plant’s side of the relationship, small protein rich brown bodies grow on the tips of their
leaflets. Called Mullerian bodies, they provide an ideal food for the ants. Service therefore appears
often to involve an accommodation that takes time to evolve.
Dualities and dealing with dilemmas
There seem to be dualities in the distinction between service and manufacturing. One duality here is
process versus function. It is tied up in the tension between rate dependent flux as opposed to rateindependent structure. Echoes of high and low gain again. To illustrate this point, let us turn to the
difference between plant community ecology and ecosystem ecology. In community ecology species
are seen to evolve, compete, go extinct, become mutualistic or competitive, and enter predator/prey or
parasite/host relationships. The difference between a plant community and an ecosystem arises when
climate, soil and animals are folded into the structure, which then becomes an ecosystem. Notice that
the reference to the societal benefit is always to ecosystems services, never is it to biotic community
services to humanity. And there’s the rub. Communities are defined by structures, organisms belonging
to species. Services are not so much material structures, and are more associated with processes.
Ecosystems are cast as a web of processes. Services appear to be attached to processes, while
manufacturing is associated with making and selling a material structure. Realized manufactured goods
are structures (Figure 3), and would be equivalent to organisms in in our discussion of a community.
Figure 3.
A schematic for manufacturing. A collection of parts are unified to create a new structure.
It might therefore be a surprise that the notion of ecosystem services does not map well onto the
services in business. The process focus of both ecosystems and business service is a match, but it breaks
down on closer investigation. Services in a business setting accommodate to needs and desires of the
customer. Ecosystems as service providers generally do not. As the ecosystem is cropped there is a
gradient applied to nature. Ecosystems do respond by producing more because of that gradient of
depletion, but only up to a point. Uncropped, an ecosystem will invest in maintenance, converting less
of its inputs to capital as time goes on. Big old fish eat but do not grow much, and so do not convert
sunshine and photosynthate into fish biomass. Old fish have been evolved to apply their effort to
sustaining their ecosystem. Cropped, the ecosystem will increase investment in increasing capital to
replace the lost capital that has been cropped. But that accommodation may come at a cost in terms of
stability and sustainability. For instance, cropping the old fish in the Gulf of Maine changes the species
into those that can grow fast, trash fish like dogfish, not quality species like cod. The fish biomass in the
system does not diminish with cropping, but the quality of the fish biomass does go down. Cropping to
excess not only changes what can be cropped, it changes the human ability to manage. The Gulf of
Maine now has species populations with mathematically chaotic dynamics, which by definition of chaos
cannot be managed (Appolonio, 2002).
So ecosystems do respond to cropping, but not in the way that service providers do in business. In
general the authors here are slow to invoke sentience as a factor that makes human systems different
from other biological systems, because humans are not that good at thinking in complex settings, and
their decisions are more in recognizing they are on a winner. Evolution is also good at amplifying
behavior that wins. But this time we may have to say humans are distinctive. There is active planning
on the part of the human service provider to accommodate positively to the demands of those served.
In ecosystem service there is only mechanical reaction, with no means to invest in effort to
accommodate positively. Thus “ecosystem services” is a misleading misnomer. Mines are not natural
candidates for offering service, they are more readily seen as generating product. Receiving what are
called “ecosystem services” is often a biotic version of mining. With regard to non-renewable
ecosystem resources that service humanity, the only response is a necessary depletion. Nonrenewables are quite like a market that saturates. All they do is go away, like customers in a saturated
market. For the most part the only response in ecosystem service is from the consumers of ecosystem
service, not the ecosystem itself. That one way reaction takes ecosystem services out of the general
discussion of services.
The literature on ecosystem services is not strong. For instance Costanza et al. (1997), published in
Nature the monetary value of global ecosystem services. It was a value seized eagerly by those who
would degrade the global ecosystem, because the sum was hugely low balled. Anything on which they
could not get data was simply ignored (James Kay, personal communication). A collapsed global
ecosystem does not cost a certain amount, it is the whole game.
So what is service?
First there is a structure that can benefit from some sort of servicing. The structure in need of service
might result from an exchange that has bonded a producer with a buyer. After servicing, the structure
changes state; there is an arrow in Figure 2 that takes the structure that needed servicing in its old state
to the new state after servicing. Separate from that change of state is the servicing agent that comes in
as the cause of the change of state. Thus service addresses structure by imposing a process. Service is
process. Hence ecosystem services, given the way process dominates ecosystem conceptions. Service is
not a material thing, but service may be applied to material structures. Some of those structures might
be the material products of the realization process of manufacture. Automobiles would fit that sort of
structure as they are mechanically serviced or the debt they create is furnished.
All services are made up of inputs such as ‘operand resources’ (physical resources) and ‘operant
resources’ (information, permissions, knowledge and skills are operant resources) (Vargo and Lusch,
2004; 2008). Operant resources act on operand resources. Sometimes there is not some particular
thing to which the service is applied, but rather the service acts directly on the person consuming the
service. A haircut is a case in point. Biological services often take that form. Some services arise not out
of construction but rather as a response to a gradient of need. The need may be material but some
services may be driven by a gradient of dissatisfaction. The structure to be serviced might be a person,
who is moved by a service to a more satisfactory place. Psychiatry is a service industry driven by
dissatisfaction.
Alternatively service may involve material, such as oxygen produced by plants in an ecosystem. Notice
that the service turns on the usefulness of the oxygen, not the oxygen itself. This point is driven home
by noting how early anaerobic bacteria not adapted to oxygen billions of years ago, felt the product of
photosynthesis as a pollutant not a service. It took time for other organisms such as animals to evolve
to use oxygen. For them the generation of oxygen had become a service. Oxygen can rise to
dangerously high levels, such that plants would burn even when wet. So consumption of oxygen in turn
becomes a service for the plants that produce it. The cyclical nature of the oxygen service is what makes
it somewhat different from the ecosystem servicing humans.
In the light of the cycle of oxygen servicing, ecosystem services does make more sense if the humans
service the ecosystem in return. Allen, Tainter and Hoekstra (2003) develop principles of supply-side
sustainability that creates such a cycle. The first principle is: Manage for the functioning of the
ecosystem, not the resource being taken. The second principle is manage from the context. The third
principle says, if you manage for the proper context of the functioning of the ecosystem, then the
ecosystem will not experience that it has been orphaned, and will operate at full function. It will
generate resources; those you can take, because you have earned them with your service to the
ecosystem. So ecosystem services turn not on the service offered by the ecosystem, but is rather a
matter of humans servicing the ecosystem. Clearly those offering services in a business setting will
benefit from applying those principles. Give the one serviced a good deal, and you can take the profit as
a service provider. Otherwise your customers will not return for more service. Treat them well, and you
can achieve brand loyalty. This is consistent with the ‘service system’ concept in the service literature
(Maglio et al, 2009) . Service essence fits well with the notion of a brand in marketing – not the product
but the evolving associations and values of the firm and its market over time.
If oxygen can be either a poison or a service, service industries are a matter of definition. That does not
make them meaningless, and it does not interfere with what we intuitively feel about the distinction
between material product and abstract service. Lay intuition is sound, for it applies perfectly well, even
when there appears to be ambiguity. The ambiguity comes not from the notion of service being itself
fuzzy, but comes instead solely from conflicting levels of analysis, and that is always a problem.
Conclusion
Service is more slippery than we might expect, but it does still have certain distinct characteristics. It is
possible to be too close to some problem, and people in business are likely to be too close to the
service/manufacturing duality to be clear on the ambiguities. If you know something too well you are
likely to be too insistent on just one way of addressing the situation. Success in the past can entrain a
problem solver into a narrow and rigid posture. But coming from biology, we have been able to get a
certain distance from the issue. Stepping away from business into biology and ecology can help. The list
below summarizes our findings.
Social scientists and business theorists tend to study and present their findings with tables,
producing separate items whose definition carries meaning, a separate meaning for each entry
in the table. In biology there is far more searching for equivalence across levels of analysis.
Therefore biological service introduces ideas of relativity of service to manufacture that can
redefine a given action as service or manufacture. It is easy to slip from one exposition to
another. In a complex system that is likely to present dualities, you need focus on the whole.
Holding up the duals as being separate items in a table sunders unity. Looking for commonality
preserves the whole.
Although we all know service when we see it, service is seen to be service only at a certain level
of analysis. Anything can be seen as manufacturing products, but at the same time it could also
be seen as offering something more abstract, a service. Contrast making a disc as a material
product, as opposed to the abstract code that offers the service to the computer and its user.
Thus service and manufacturing depends not on material differences, but upon the level of
analysis. Change the customer from the end user to the customer being a manufacturer, and
suddenly heavy industry in an iron foundry becomes a service to the needs of the consumers of
the product. An operating system has different implications for the maker as opposed to the
used of the computer.
Manufacturing is generally easier to outsource, because the output can be moved later. Many
services are tied to the place where the service is needed, and so often cannot be outsourced.
Service generally is smaller than its manufacturing counterpart. A competitor is of the same
order of size and so shares the world with its antagonists. The size difference alone takes
service out of the realm of manufacturing.
Manufacturing uses a process to make a structure that is a good to be sold. Service generally
works on some extant structure or situation: a car to be serviced or a patient to be cured.
Manufacturing creates something while service changes something.
The difference between manufacture and service pivots on the distinction between ratedependence for manufacture as opposed to rate-independence for service. This duality feeds
into an established scheme, the distinction between high and low gain, already in use in biology
and in the functioning of social structures (Tainter and Allen in review).
High gain takes in fuel or parts and uses them directly as inputs for use. Low gain takes in low
quality material and improves it, often by introducing efficiency. Service is low gain, while
manufacturing is relatively high gain. The distinction between high and low gain is well
recognized as a level of analysis issue, which fits with how we see manufacturing and service.
Manufacturing is best understood by looking at rate-dependent flux and process. Service is
predicted with rate-independent constraints. Increased control of the situation in achieved by
the service provider putting constraints on the world that the uses faces. But that ends up
removing constraints on the customer by improving service. Visitors constrained by lack of
knowledge of local restaurants are informed by a service app that controls masses of data.
Customers that were constrainedby ignorance are mollified.
A century ago, as industry emerged, companies expanded into manufacturing in a switch to a
high gain posture. Now, a hundred years later, and the move to the internet and the
information age, extant manufacturing firms are being pressed into low gain service
The move to low gain can be very lucrative if the clients are the mass at the bottom of the
pyramid. The trend towards low gain service can sometimes be described as reaching out to a
much larger mass of customers who offer less profit per individual. Less profit per customer is
more than counter-balanced by there being so many more customers. That is the change going
on across industrial societies now. Most of the capital in the world is owned by the mass of
people who actually have very little as individuals. That looks like a low gain prospect to us. This
is recognized in the size of the bottom of the social pyramid ( Prahalad ,2005). Make profit by
servicing ordinary people, the more ordinary, the more the profit in the end.
Service is like mutualism in biology. It is about cooperation. That being said, the origins of
mutualistic relationships is often predation and destruction. It takes time to work out the
accommodation. Manufacturing is simply the making of things, as opposed to service which is
the development of an accommodation. Evolution takes time, and so does the creation of
service.
The time frame changes between a concrete product that ends a process (low level), and an
accommodation to get repeat consumers (higher level). Manufacturing has an end product,
while service offers something fixed, but usually only for the moment. Manufacturing reaches a
moment when the problem is solved in a sold item. Sevice is much more ongoing; the problem
is never completely solved. Manufacturing evolves to become focused on more useful
creations. That accommodation is the service provided by manufacturing. Manufacturing and
service are entwined in a web of connections that talk across levels. (Knowledge @ Wharton,
2007)
Ecosystem services is something of a misnomer. While human service providers accommodate
to the customer in positive terms, the lack of sentience in ecosystems means that ecosystems
generally resist offering service through depletion. Principles of Supply-side Sustainability show
that human exploitation of ecosystems is only stable so long as the ecosystem is itself serviced
by its “clients.” Manage for the health of the production system, not for resources taken.
Manage from the context. That increases resource taken, but in a sustainably manner.
References
Allen, P. 2009. Energy gain and transitions in ecological and social systems. MS. Thesis in Institute for
Environmental Studies, University of Wisconsin, Madison WI.
Allen, T. F. H., Allen, P. C., Malek, A., Flynn, J. and Flynn, M. 2009. Confronting economic profit with
hierarchy theory: The concept of gain J. in ecology. Systems Research and Behavioral Science 26
(5):583-599.
Allen, T. F. H. and Hoekstra, T. W. 1992. Toward a Unified Ecology. Columbia University Press, New
York.
Allen, T. F. H., Tainter, J. A. and Hoekstra, T. W.. 2003. Supply-side Sustainability. Columbia University
Press, New York.
Allen. P. C. (2009) Energy gain and transitions in ecological and social systems. Master of Science
Thesis, Gaylord Nelson Institute for Envionmental Studies. University of Wisconsin, Madison
Wisconsin.
Appolonio, S. 2002. Hierarchical Perspectives on Marine Complexities: Searching for
Systems in the Gulf of Maine. Columbia University Press; New York; 279 pp.
Boulding, K. (1956) General Systems Theory: The Skeleton of Science. Management Science 2: (3) 1972086 (reprinted in General Systems, Yearbook of the Society for General Systems Research, vol. 1,
1956).
Bronowski, J. (1974) The Ascent of Man. Little Brown & Co
Costanza, R., D’Arge, R., DeGroot, R., Farber, S., Grasso, M., Hannon, B., Limburg, K., Naeem, S., O’Neill
R., Paruelo, J., amd Raskin R. 1997. The value of the world's ecosystem services and natural capital.
Nature 387: 253-260
Draves, W. and Coates, J. 2007. Nine Shift. LERN Co, River Falls WI
Knowledge @ Wharton. (2007 Feb 21st)'Power by the Hour’: Can Paying Only for Performance Redefine
How Products Are Sold and Serviced? http://knowledge.wharton.upenn.edu/article.cfm?articleid=1665.
Retrieved 5/22/12
Maglio, P. P., Vargo, S. L., Caswell, N., and Spohrer, J. 2009. The service system is the basic abstraction of
service science. Information Systems and E-Business Management 7(4), 395–406.
McDonough, W and Braungart, M. 2001. The Extravagant Gesture: Nature, Design, and the
Transformation of Human Industry. In: Schor, J. (Ed.) Sustainable Planet: Solutions for the Twenty-First
Century. Beacon Press.
Miller, James Grier. 1978. Living systems. New York: Mc Graw-Hill
Mitchell, Jon.2011. Kindle Fire Is A Service, Not a Product. November 21, 2011 9:00
AM ReadWriteWeb.http://www.readwriteweb.com/archives/kindle_fire_is_a_service_not_a_product.php
Neely, A. 2008. Exploring the financial consequences of the servitization of manufacturing. Operations
Management Research 1(2), 103–118.
Prahalad, C.K. 2005.The fortune at the bottom of the pyramid. Prentice Hall, Upper Saddle River NJ.
Spoherer, J. and Maglio, P. P. 2008. The emergence of service science: toward systematic service
innovations to accelerate co-creation of value. Production and Operations Management 17(3), 238–246.
Tainter, J. A. and Allen, T. F. (under review) Energy Gain in Historical Ecology: Ants, Empires, and the
Evolution of Organization. Christian Isendahl (ed.) Applied Archaeology, Historical Ecology, and the
Usable Past. Oxford Handbook of Applied Archaeology. Oxford University Press, Oxford.
Vargo, S. L. and Lusch, R. F. 2004. Evolving to a new dominant logic for marketing. Journal of Marketing
68(1), 1–17.
Vargo, S. L. and Lusch, R. F. 2008. Service-dominant logic: continuing the evolution. Journal of the
Academy of Marketing Science 36(1), 1–10.
Vargo, S. L., Maglio, P. P. and Akaka, M. A. 2008. On value and value co-creation: a service systems and
service logic perspective. European Management Journal 26(1), 145–152.