There is another key factor, and that is the trust that’s implicit in the question “I know you can do this for me, but can you get it done?”. This is important because customers suffer the consequences of a job nearly done or poorly done. There are two aspects of trust. One is simply dependability, which is mix of availability (“there when needed”), reliability (“few failures”), security (“safe to use”), and continuity (“won’t disappear”). The other is a matter of integrity and conflict of interests. Will the self-interests of the service provider, including profit motives, conflict with the interests of the customers? Lack of trust results in transaction costs that don’t add value.

Transparency and trust are therefore very important in the design of services and service contracts. There is a reason why in some market spaces government agencies are the only viable players. Even among commercial service providers, trust is a competitive advantage. It’s why some use Google Maps, for example, over Apple Maps, and why it is better to fly with one airline over another, even if they aren’t offering the cheapest fares, and why privacy and security are a critical factor leading to investments in more reliable infrastructures, and why investing in better user experience makes business sense.

Posted by:Majid Iqbal

TL;DR I bring clarity to the concept of a service.