MIT Sloan Management Review

Corporate Strategy, Service and Quality

 

Sustainability Through Servicizing

By Sandra Rothenberg

January 1, 2007

The full text of this article is available free to all site visitors as part of our ongoing Business Insight series compliments of SAS. Jointly produced by MIT Sloan Management Review and The Wall Street Journal, Business Insight offers fresh thinking on crucial management issues supplemented by the deep knowledge of related MIT SMR articles. Download article PDF

In an increasingly environmentally conscious and cost-conscious world, suppliers can make their business both more sustainable and more profitable by focusing on services that extend the efficiency and value of their products.

As the scientific evidence for environmental degradation becomes harder to discount, enlightened companies have begun embracing the vision of “sustainable development,” defined by the World Commission on Environment and Development as “the ability of current generations to meet their needs without compromising the ability of future generations to meet theirs.”1 But while sustainable development is a desirable goal for society, critics suggest that significant, if not radical, changes in the basic assumptions behind current business models are needed to achieve it.

Contemporary management scholars suggest that sustainability can be addressed by focusing on increased operational efficiency or more environmentally benign products and processes.2 Some argue, however, that while these changes are necessary, they are not sufficient because they do not address consumption levels. Gains in operational efficiency and environment-friendlier technology may even eventually be counteracted by increases in consumption.3 Thus, in order to be a truly sustainable society, developed nations must consume less.4

This is no small challenge to industrial societies, where consumption has traditionally been an end in itself. Yet companies are often in the best position to help customers reduce consumption — even of their own products. By “servicizing,” suppliers may change the focus of their business models from selling products to providing services, thereby turning demand for reduced material use into... To read the complete article, login or sign-up using the form below.

 
 

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