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E. Gummesson 2009

1960s-present Marketing management of consumer goodsplus1970s-present Services marketing and management plus1980s-present Quality management, excellence, value, satisfactionplus1990s-present Relationship marketing, CRM, one-to-oneadding up in the

2000s- S-D logic, service science, many-to-many networks

LET ME OPEN WITH A NOTE ON MY PERSONAL JOURNEY FROM THE PAST TO THE PRESENT:

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AN EXCITING TIME:

1. THE MOST PROFOUND TRANSITION

IN THINKING AND CONCEPTUAL DEVELOPMENT

THAT I HAVE EXPERIENCED IN MY CAREER.

2. IT IS INDEPENDENTLY INITIATED AND DRIVEN BY ACADEMIA AND, THROUGH IBM, BY INDUSTRY.

It’s simply UNIQUE!

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Professor Evert GummessonStockholm University School of BusinessSwedeneg@fek.su.sewww2.fek.su.se/home/eg/

Complexity, network theory &

many-to-many marketing

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The noun “complexity” stems from the Latin complexus meaning “network” accompanied by the verb complecti meaning ”to twine together”.

The word “system” is derived from the Greek systema, meaning “a whole composed of many parts”.

“Context” comes from Latin contexere, “to join together”.

These words and several others, like ”ecology” and ”holism”, obviously belong to the same family.

I use the word system in its generic and general sense, for example “service system”, but let networks through network theory (and case study research) be the basis for analysis and discussion.

ON MY TERMINOLOGY:

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Throughout my research the overriding key variables are relational in three ways:

relationships,networks &interaction

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Traditional American marketing managementand marketing mix

Customer centric Centered on one party

Customer

Relationship marketingCRM One-to-one marketing

SupplierCustomer

Relationship centricCentered on two parties

Many-to-many marketing

Network centricCentered on many parties

1960s-present 1990s-present 2000s-

DEVELOPMENT OF THE RELATIONAL APPROACH TO MARKETING

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Definition:

“Many-to-many marketingdescribes, analyzes and utilizes

the network properties of marketing.”

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Marketing as Complex Networks: Many-to-Many MarketingFrom one-to-one to many-to-many in the marketing of the value-creating network economy

PRELIMINARY CHAPTERS:1 From One-to-One to Many-to-Many 2 B2B: Networks in Business-to-Business3 B2C/C2B: Networks in Business-to-Consumer and Consumer-to- Business 4 C2C: Customer-to-Customer Networks 5 B2B2C2C2B2B... Everything Is Linked to Market, Mega and Nano Networks 6 Infrastructure and Mega Networks 7 High Tech/High Touch: Human Beings Are Not Obsolete! 8 Many-to-Many Management: From CEO to NEO, from CMO to NMO, from ROI to RON 9 Traveling the Land of Theory and Research10 Many-to-Many: Science, Internet – or Innernet?

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Network theory:

both methodologyand a theory of life

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The topology of Capri – going from a photo to a network and fractals model

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air BalticAir Chinaair greenlandAir OneAtlantic AirwaysCimber AirCity AirlineEstonian AirQantasSkywaysWideroe

Adria

3 REGIONAL PARTNERS

11 SPECIALSAS PARTNERS

Blue 1

Croatia Airlines

Star Alliance

TAP Portugal

ThaiUnited

SWISS

US Airways

Spanair

South African Airways

Austrian

Asiana Airlines

Lufthansa

LOT Polish Airlines

bmi british midland

SAS Scandianvian Airlines

Singapore Airlines

Shanghai Airlines

Air New Zealand

Air China

ANA All Nippon Airways

Air Canada

19 FULL PARTNERS

THE STAR ALLIANCE,FEBRUARY 2008

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HUB

NODE

LINK

CENTRALIZED NETWORKDECENTRALIZED NETWORK

DISTRIBUTED NETWORK

WHAT IS NETWORK THEORY?

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Neural networks:

Bundles of nerve fibers running to various organs and tissues of the body.

Computer representation of the human brain that tries to simulate its processes.

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Patient ANNA, 82 Network & systems manager

5 doctors prescribing9+2 pills

23 diagnoseddisorders

11 therapies comprising41 components

55 specialists

masseurs

social assistants

social insurance people

nurses

ambulance andtaxi drivers

an endless amount of capital goodsand disposables

Based on Akner, G. (2004). Multisjuklighet hos äldre. Malmö, Sweden: Liber.

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Patient ANNA, 82 Network & systems manager

5 doctors prescribing9+2 pills

23 diagnoseddisorders

11 therapies comprising41 components

55 specialists

masseurs

social assistants

social insurance people

nurses

ambulance andtaxi drivers

an endless amount of capital goodsand disposables

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This is not a customer-oriented service system!

It is too complex to work.

How do we find the necessary simplicity to make it work?

We are facing a huge challenge!

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THIS IS ABOUT MARKETING, SO WHERE DOES MANY-TO-MANY MARKETING AND NETWORKS COME IN?

WE HAVE TO ANSWER SEVERAL FUNDAMENTAL QUESTIONS:

Who are the customers and who are the suppliers? What do suppliers do best? What do customers do best? What do third parties do best? What should be one-party (individual) action? What should be two-party (dyadic) interaction? What should be multiparty (network) interaction? What should be C2C interaction? What should be face-to-face interaction, ear-to-ear interaction, email

interaction, Internet interaction, text messaging, and interaction with automatic machines?

What do human beings do best? What does technology do best? Is there a no-man’s land where service is neglected?

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In the new service logic the customer and supplier roles have merged, although they perform different tasks in differnet context (“value-in-context”). The following categories of suppliers are found in the market:

business enterprises governments on a national, regional and local level and

increasingly on a mega, supra-national level, such as the EU NGOs and voluntary organizations which arise where the first

two have failed, or act as supplementary to them

In B2B, the suppliers are also customers. In B2C/C2B we find

consumers citizens

who are also co-creators, that is suppliers.

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Properties of case study research and network theory.

They can accomodate:

Complexity Context Change Non-linearity Both parts & the whole Both structure, hierarchy & process Both tech & human aspects

COMPLEXITY

THEORY

No other research methods in social sciences can do that!

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CASE STUDY RESEARCHVerbal narrativesHigh validity, low reliabilityInteractive

NETWORK THEORYVerbalGraphicalMathematicalInteractive

STATISTICAL SURVEYSUsually low quality dataSuperficialCannot handle complexityPseudo-precisenessLow validity, high reliabilityNon-interactive

ONLY SPECIALAPPLICATIONS ATBUSINESS SCHOOLS

CLAIMED TO BESCIENTIFIC: ”SURVEY-DOMINANT LOGIC”

CLAIMED TO BE ONLYANECDOTAL AT SOMEBUSINESS SCHOOLS,HIGH ACCEPTANCEAT OTHERS

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But this is not enough. Scientific methodology is not a technique;it is techniques in the context of a philosophy and worldview.Researchers who just become technicians are not scholars. To be a scholar and true scientist you have to consider other dimensions as well:

common senseintuitionsound judgmentwisdominsightshunchesexperienceinstinctsvisions...

Without these additional aspects, scientific method is empty!

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“Networks are the fundamental stuff of which neworganizations areand will be made.”

Source: Manuel Castells, Professor of Sociology, in The Rise of the Network Society. Oxford, UK: Blackwells, 1996. Quotation from p. 168

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Source: Mark Buchanan, physicist and former Editor of Nature and New Scientist, in Small World, Phoenix, London, 2003.Quotations from p.165

“Physicists have entered into a new stage of their science and have come to realize that physics is not only about physics anymore, about liquids, gases, electromagnetic

fields, and physical stuff in all its forms.”

“At a deeper level, physics is really about organization –

it is an exploration of the laws of pure form.”

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“…understanding network effects becomes the key to survival in a rapidly evolving new economy.”

“In reality, a market is nothing but a directed network.”

(as opposed to a random, scale-free network)

Source: Albert-László Barabási, Professor of Physics, in Linked: The New Science of Networks, Perseus, Cambridge, MA, 2002.Quotations from pp. 200 and 208

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* Nodes and links* Hubs* Random networks* Planned networks* Clusters* Connectors* Preferential attachment* Rich gets richer* Fitness* Fit-get-rich* Winner-takes-all* Scale-free networks* Power laws* Phase transition* Robustness, error tolerance* Cascading failure* Tipping points* Thresholds* Spreading rates* Self-organizing* Six degrees of separation* What is the Internet, really?

A SAMPLE OF CONCEPTS AND

ISSUES FROM

NETWORK THEORY:

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* Nodes and links* Hubs* Random networks* Planned networks* Clusters* Connectors* Preferential attachment* Rich gets richer* Fitness* Fit-get-rich* Winner-takes-all* Scale-free networks* Power laws* Phase transition* Robustness, error tolerance* Cascading failure* Tipping points* Thresholds* Spreading rates* Self-organizing* Six degrees of separation* What is the Internet, really?

A SAMPLE OF CONCEPTS AND

ISSUES FROM

NETWORK THEORY:

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CEOChief Executive Offcier

or...

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NEONetwork Executive Officer

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CMOChief Marketing Officer

or...

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New indicator:Return on Networks (RON)

is a measure of the profitabilityof a company’s networks

Traditional indicator:Return on Investment (ROI)

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Articles:Gummesson, E. (1987), "The New Marketing – Developing Long Term Interactive Relationships". Long Range Planning, Vol. 20/4, No. 104, August.Lovelock, C. and Gummesson, E. (2004), ”Whither Services Marketing? In Search of a Paradigm and Fresh Perspectives,” Journal of Service Research, vol. 7, no.1, pp. 20-41. Winner of the 2005 American Marketing Association Best Services Article Award.Gummesson, E. (2006), “After Relationship Marketing, CRM and One-to-One: Many-to-Many Networks,” Finanza Marketing e Produzione, no.1, pp. 138-144.Gummesson, E. (2007), “Exit Services Marketing – Enter Service Marketing”. Journal of Customer Behaviour, Vol. 6, No. 2, pp. 113-141.Gummesson, E. (2007), “Case study research and network theory: Birds of a feather”, Qualitative Research in Organizations and Management, Vol. 2, No. 3, pp.226-248.Gummesson, E. (2008), “Extending the New Dominant Logic: From Customer Centricity to Balanced Centricity.” Commentary for Special Issue of The Journal of the Academy of Marketing Science (JAMS) on the New Dominant Logic, 36 (1), pp.15-17.Gummesson, E. (2008), “Quality, service-dominant logic and many-to-many marketing.” The TQM Journal, 20 (2), pp.143-153.Gummesson, E. and Polese, F. (2009), “B2B is not an island”, The Journal of Business & Industrial Marketing 24 (5-6). Gummesson, E. (2009), “The future of service is long overdue”, in Maglio, P. P., Kieliszewski, C. A., and Spohrer, J., Eds.. Handbook of Service Science. New York: Springer.Book:Gummesson, E. (2008), Total Relationship Marketing, Oxford, UK: Elsevier/ Butterworth-Heinemann (3rd ed.).

BIBLIOGRAPHY ON RELATIONAL APPROACHES (SELECTED)

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OVERLOAD?

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THE END

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THE END