Is Servitisation the Way To Sustainability?
Sustainability is a strange thing. We get very excited about recycling and sustainable production but are these really the way to positively effect climate change? What about looking at some old fashioned ideas and giving them the new exciting title by asking, is servitisation the way to sustainability?
Servitisation involves selling a mixture of products and services. My definition is “build it once, keep it up to date and working.” Too many things have a kind of built in obsolescence, not just my sofa and my fridge but my car, my phone, and just about everything I own. I can’t repair things that go wrong or they are just too expensive to repair. The worst thing is the only way the companies making these things can make money is by designing and making a better version and then getting me to throw away (recycle!) my old one and buy the latest version. This didn’t used to be the case, when something went wrong it could be easily and cheaply repaired.
Here’s the thing, why can’t we go back to that and even improve upon it in a profitably sustainable way? In some ways the software industry has got this cracked. I can upgrade. I don’t need to buy a complete new system every time. What’s more the software company ties me into a contract that means they get regular, predictable payments and I always have the latest version. Win, win.
Some companies such as Rolls Royce have gone a long way down the servitisation route for manufacturing. In fact many say that it was that decision that saved the company. Whilst Rolls is a manufacturer of engines they actually rent the engine and charge for a service package charging customers according to flight hours.
Manufacturers of cars, white goods, consumer electronics could consider the same business model. Sell or rent the actual good once and then sell a service package which includes not only software updates but maintenance and physical upgrades. This would require important and significant changes at the design stage but could bring enormous financial and environmental advantages in the medium to long term.
If you are looking at effectively increasing the sustainability and net zero credentials of your business why not see if you could go down the servitisation route and sell once and maintain and upgrade many times? Not only is this good for the planet but many of the most valuable businesses are valued highly because they can show a forward sustainable income stream.
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