Many questions remain to be answered about servicizing. The three case studies are encouraging, but given the universe of different companies it is not clear under what conditions a company adopting the servicizing model will be rewarded with increased revenue or indeed put itself out of business. Notable, however, is the experience of Xerox, which suggests that companies with a broader product base and a strong research and development department may be best placed to benefit from the servicizing approach. They have the potential to offer more innovative solutions and to take better advantage of new market opportunities that may develop with a particular customer.
Another question is whether this model can also be applied in a business-to-consumer setting. It certainly worked for Patagonia, based in Ventura, California, which sells clothing and equipment to practitioners of “silent sports” (which use no motors), such as fly fishing, paddling and trail running. This company, which made a strategic decision to reduce growth and instead focus on providing value through product quality13 to its unique consumer base, may well be atypical. The challenges of selling services that replace material use are likely to be far greater for the average company trying to cater to the average consumer.
Future research may therefore include exploring whether or not the application of this model is as promising for consumer markets as it is for business-to-business ones, and whether the process of change differs. Answering these and other questions may help diverse companies move toward business models that do not rest on the assumption that selling more is better but instead emphasize sustainable levels of consumption.
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Acknowledgments
The author would like to thank the participants in this research study for their time and knowledge, as well as the Alfred P. Sloan Foundation, the International Motor Vehicle Program at MIT, and the RIT Printing Industry Center for their financial support. The author would also like to acknowledge those who have provided feedback on this and earlier versions of this article.
REFERENCES
1. The World Commission on Environment and Development, “Our Common Future” (New York: Oxford University Press, 1987).
2. See, for example, R.S. Marshall and D. Brown, “The Strategy of Sustainability: A Systems Perspective on Environmental Initiatives,” California Management Review 46, no. 1 (fall 2003): 101–126; J. Hall and H. Vredenburg, “The Challenges of Innovating for Sustainable Development,” MIT Sloan Management Review 45, no. 1 (fall 2003): 61–68; F.L. Reinhardt, “Environmental Product Differentiation: Implications for Corporate Strategy,” California Management Review 40, no. 4 (summer 1998): 43–73; and S.L. Hart, “Beyond Greening: Strategies for a Sustainable World,” Harvard Business Review 75 (January/February 1997): 67–76.
3. C. Sanne, “Are We Chasing Our Tail in the Pursuit of Sustainability?” International Journal of Sustainable Development 4, no. 1 (2001): 120–133.
4. Ibid.; P. Dobers and L. Strannegard, “Design, Lifestyles and Sustainability: Aesthetic Consumption in a World of Abundance,” Business Strategy and the Environment 14 (2005): 324–336; A. Schaefer and A. Crane, “Addressing Sustainability and Consumption,” Journal of Macromarketing 25, no. 1 (2005): 76–92; and E.F. Schumacher, “Small Is Beautiful: Economics as If People Mattered” (Vancouver, British Columbia: Hartley & Marks, 1999).
5. M. Sawhney, S. Balasubramanian and V. Krishnan, “Creating Growth with Services,” MIT Sloan Management Review 45, no. 2 (winter 2004): 34–43.
6. R. Oliva and R. Kallenberg, “Managing the Transition from Products to Services,” International Journal of Service Industry Management 14, no. 2, (2003): 160–172.
7. Ibid.; K. Bates, H. Bates and R. Johnston, “Linking Service to Profit: The Business Case for Service Excellence,” International Journal of Service Industry Management 14, no. 2 (2003): 173–183; and G. Allmendinger and R. Lombreglia, “Four Strategies for the Age of Smart Services,” Harvard Business Review 83 (October 2005): 131–145. Interface, for example, claims that replacing products with services has increased market share at the expense of competitors. The Interface model can be found at www.interfacesustainability.com/model.html.
8. See L. Preston, “Sustainability at Hewlett-Packard: From Theory to Practice,” California Management Review 43, no. 3 (spring 2001): 26–37.
9. A. White, M. Stoughton and L. Feng, “Servicizing: The Quiet Transition to Extended Product Responsibility,” report by Tellus Institute (1999).
10. As noted by Oliva,“Managing the Transition” and Sawhney, “Creating Growth,” very little has been published on the actual transition process for companies moving from selling products to services. The same holds for transitions that involve reducing material consumption on the part of the consumer. The environmental benefits of servicizing are discussed by White, “Servicizing.” Other articles that mention the environmental benefits of servicizing include: I. Ropke, “Is Consumption Becoming Less Material: The Case of Services,” International Journal of Sustainable Development 4, no. 1 (2001): 33–47; Preston, “Sustainability and Hewlett-Packard”; M.W. Toffel, “Contracting for Servicizing,” working paper, Haas School of Business, Berkeley, California, May 15, 2002; E.D. Reiskin, A.L. White, J.K. Johnson and T.J. Votta, “Servicizing the Chemical Supply Chain,” Journal of Industrial Ecology 3, no. 2 and 3 (2000):19–31; K. Hockerts, “Eco-efficient Services Innovation, Increasing Business-Ecological Efficiency of Products and Services,” in “Greener Marketing” 2nd. ed. M. Charter and M.J. Polonsky (Sheffield, United Kingdom: Greenleaf Publishing, 1999), 95–108 and other articles focusing on “product service systems” and “chemical management. Some additional references can be found at the Web site of the Chemical Strategies Partnership, www.chemicalstrategies.org. Some articles that mention this type of strategic approach, although not all focusing on the environmental benefits, include K. Funk, “Sustainability and Performance,” MIT Sloan Management Review 44, no. 2 (winter 2003): 65–70; and Sawhney, “Creating Growth.”
11. More information can be found at J. Firestone, “Growth Opportunities: Services,” http://a1851.g.akamaitech.net/f/1851/2996/24h/cacheB.xerox.com/downloads/usa/en/i/ir_2005InvestorConference_JFirestone.pdf.
12. The Gage Web site is www.gageproducts.com.
13. D.H. Meadows, D.L. Meadows and J. Randers, “Beyond the Limits: Confronting Global Collapse, Envisioning a Sustainable Future” (Post Mills, Vermont: Chelsea Green Publishing, 1992).
