Book review: FinancialServiceLogic by Pekka Puustinen

Book review: FinancialServiceLogic by Pekka PuustinenCompanies are increasingly striving to become more focused on customer needs and better serve their customers. After all, what is a company without customers? Yet, what exactly is the relationship between the company and the customer, and what should companies do in practice in order to truly provide service for their customers?

In his new book, FinancialServiceLogic: In the Revolution of Exchange in Banking and Insurance, Pekka Puustinen serves us as a guide on a path to a deeper understanding of the nature of exchange, the multiple dimensions of value created for all parties through interaction, and what it means to see your customers as human beings.

While the book focuses on the finance sector, the core tenets of the book are in no way limited to finance alone. The lessons from the book apply to any business, and the discussion is not so specific to finance that managers from other fields could not see how to apply it.

The theoretical framework: service logic

Puustinen is an academic, and his background is clearly visible in the text. While his stated aim is to present his thinking in a clear and interesting manner, FinancialServiceLogic is not as light a read as most business books. It is nowhere near as heavy as an academic article either, and periods of deep theoretical thought are intertwined with practical stories and brief explorations into potential new avenues that are left as food for thought for the reader.

The core theoretical basis of the book is an amalgamation of the service-dominant logic of Stephen Vargo and Robert Lusch, the Nordic school service logic as represented by Christian Grönroos, and the customer-dominant logic of the Hanken School of Economics. While such an amalgamation may be an impossibility in the academia, it forms a firm basis for a practitioner to plan tangible actions to adopt a new type of thinking.

The basic building blocks of this service logic are as follows:

  • Value is subjective, multidimensional, and created in the everyday life of the customer.
  • Companies cannot create value for the customer, but only provide value propositions.
  • The value propositions are delivered through value-creating mechanisms, service platforms where the resources and processes of both the company and the customer are integrated, the use of which can result in many kinds of value both for the company and for the customer.

Exploration into the nature of value

The logic becomes more tangible when Puustinen moves on to elaborate on the nature of value following the four dimensions of value proposed by Timo Rintamäki, Hannu Kuusela, and Lasse Mitronen in their 2007 paper Identifying competitive customer value propositions in retailing. The four dimensions of value (economic, functional, emotional, and symbolic) can be used to better explain customer behavior, such as why people often purchase goods even though they may be “a little too expensive”, “impractical”, or “unnecessary” on the basis that they are “so cool.” (As I have explored before in this blog, they can also help understand value-based pricing more deeply)

The nature of value and how to enable the customer to create value is the central theme that Puustinen explores in the book, and its most valuable contribution. Through numerous stories and examples, Puustinen provides a new lens into the larger view companies should take when attempting to create attractive value propositions. For example, if you only measure the interaction with the customer, but disregard the various hoops the customer has to jump through in order to receive that service, you may end up losing the customer even though your internal measurement shows that he was ”relatively satisfied” with the interaction itself.

The other side of value creation that is explored more briefly in the book is how the company creates value for itself. The four dimensions of value apply here as well, and money is not the only thing a company can gain from the exchange. Companies can also gain insight into customer needs, and co-design and co-market their service with their customers. Proper understanding of this can help companies craft better value propositions.

Service logic brought to a practical level

Through his focus on value, Puustinen is able to highlight a new aspect of service logic on a practical level. This is in stark contrast with, for example, Vargo’s and Lusch’s own book-length treatise on service-dominant logic, Service-Dominant Logic: Premises, Perspectives, Possibilities, which focuses on explaining the theoretical basis of and building a lexicon for discussing service-dominant logic, with the only somewhat practical application being a high-level strategic discussion on how to pursue blue ocean strategies.

While Puustinen also discusses differentiation, the level of discussion is more practical and focuses not only on blue oceans but also on iterative improvement of existing value propositions through an improved understanding of the customers’ lifestyles.


At 173 pages, it is more accurate to call the book a wake-up call than a complete cookbook. Built on a solid core of service logic and the four dimensions of value, it strikes a good bargain between academic and practical, even though the free flow of ideas occasionally results in underdeveloped dead ends and loose straws that could have been improved with more editorial focus. Nonetheless, this book is perhaps the most practical book on service logic currently available.


Disclosure: Pekka and I grew up in the same small village in Finland, so we are acquainted even though we have never worked together. I have no financial interest in this book, and bought my copy with my own money.

Author: Ville Kilkku

I run my own consultancy business, so if you find the ideas on this blog intriguing, contact me at or call me at +358 50 588 5043 and we can discuss how I can help you solve your business problems. I am currently based in Finland, but work globally.