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What is the Product-Service System and what is its relationship to sustainability?

Have you considered rethinking your business model with a more sustainable mindset? In the ESG era, this is the mission of many managers. The Product-Service System represents a new way of relating to products.

How about the fact that the energy efficiency of many processes domestic and industrial does not reach 50%? A large part of the resources we use ends up as garbage, without reuse. The key factor to this problem is in the way we deal with our consumption patterns. The Product-Service System is the solution to this problem.

In today’s post, we will show you all the details of this model that promises to revolutionize the way we design products and services for society. Follow along with us!

After all, what is a Product-Service System?

A Product-Service System (or Servitization) starts from the premise that companies must offer the function of the product, not the product itself. This concept is maturing with respect to the real needs of the consumer, who does not necessarily want to own things, but to benefit from using them.

The model is one of the pillars for improving energy efficiency, since the focus is on producing things in a rational way – just enough so that everyone can enjoy its benefits. 

As we are talking about the sustainability of the entire production chain, the Product-Service System also deals with the maintenance of these product-services, recycling and, when necessary, product replacement. Thus, we reduce the environmental impact of the entire cycle.

How does the Product-Service System work?

As we have already said, the Product-Service System is a paradigm shift to the whole logic of designing new products and services. Below, we offer a graphic diagram that can help you understand a little more about how this model works:

Let’s look at some practical examples:

  • IBM, for example, decided to rent servers instead of selling units directly to companies. 
  • Philips, on the other hand, has a pay-per-lux service, in which customers buy the promised level of lighting for a given building.
  • We also have cases like Drover, which works with a car rental system instead of selling this type of product.

What are the agents of change?

By now, you must have realized that switching to a Product-Service System requires a cultural transformation of the whole of society.

Detachment from possession is one of the pillars for us to live this new reality, greatly improving the way we work on issues such as energy efficiency and the waste of resources.

The “having” becomes the villain, and the “being” the most suitable mindset to get there. Some agents can help us move forward in this direction, but do we understand what they are?

Consumer power

Ultimately, consumers will decide whether the Product-Service System will work or not. After all, it is culture that shapes the importance we place on things, which directly affects our consumption preferences.

The good news is that we are changing. At this moment, ESG is becoming more of an issue not because of a demand from the government or companies, but because of the very change in the profile of society – and, consequently, of investors.

Government influence

The government can also play a role in turning the key to transforming society’s relationship to conscious consumption.

It is the State that controls taxes and can favor companies that work within a more intelligent model, such as the Product-Service System. In addition, governments can create laws that reduce bureaucracy in this type of relationship between companies and consumers, which is also a path to change.

The role of industry

Finally, the industry can think outside the box, rethinking the design of its products and services for the customer. 

The industry needs to reshape its business to be more attuned to new consumption patterns. It is necessary, more than ever, to innovate.

7 Product-Service System benefits

Servitization is a model extremely aligned with the current demands of society, especially when we think about the consumption model. 

Here we will list each of them:

  1. More sustainable economy;
  2. Increase in jobs in the service sector;
  3. End of product maintenance, and the costs associated with it, by customers;
  4. Opportunity to innovate in the market;
  5. Greater alignment between consumers and business needs;
  6. Creation of a long-term relationship between consumers and companies;
  7. Reduction of problems related to the reuse of waste;

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In other words, there is no lack of reasons for embarking on this new business model. Adjusting your company now to the new mindset is the best way to be aligned with a trend that will continue consolidating.

Has this discussion about new sustainable models arrived in your business? If so, it may be interesting to bring the Product-Service System into these discussions. 

Rethinking the way things are done in your company is an urgency, especially when we consider trends such as ESG, which is transforming the financial market as we know it.

Do you want to go even deeper on this topic? In our 2022 innovation report, we break down innovation for 2022 and beyond — with an entire chapter dedicated to product-service systems. Get your free copy here.