Product-Service Systems require simultaneous customer value, economic growth, and resource decoupling for true circularity.
Category: Sustainability · Effect: Strong effect · Year: 2019
For Product-Service Systems (PSS) to effectively enable circular economy business models, they must concurrently deliver enhanced customer value, support economic growth, and achieve resource decoupling.
Design Takeaway
Design PSS business models with a clear understanding of how they simultaneously enhance customer value, ensure economic viability, and contribute to resource decoupling, and be prepared to tailor these models to specific market niches.
Why It Matters
This insight highlights that simply offering a service alongside a product is insufficient for achieving circularity. Designers and strategists must holistically consider the interplay between customer benefits, financial viability, and environmental impact when configuring PSS business models.
Key Finding
Product-Service Systems (PSS) are only truly circular when they simultaneously offer better value to customers, allow for economic growth, and reduce resource use. These models often work best in specific market niches.
Key Findings
- PSS business models for circular economy must simultaneously fulfill conditions for superior customer value, economic growth, and resource decoupling to contribute to circular economy.
- PSS business models for circular economy are often niche solutions, catering to specific needs, customer segments, product types, or geographical locations.
Research Evidence
Aim: How can a business model configurator support the design and assessment of customer value, economic, and resource decoupling potential for Product-Service System (PSS) business models in practice?
Method: Action Research
Procedure: Two Nordic manufacturing companies in the furniture sector participated in action research. They proposed and assessed different business model concepts based on Product-Service Systems (PSS) using a previously developed business model configurator for circular economy.
Context: Manufacturing sector (furniture), circular economy business model development
Design Principle
Holistic PSS design for circularity requires the simultaneous optimization of customer value, economic performance, and resource decoupling.
How to Apply
Before launching a PSS, use a framework that assesses customer value propositions, revenue streams, cost structures, and resource efficiency metrics together. Identify target customer segments and product characteristics that best align with the PSS's circularity potential.
Limitations
The study was conducted in two specific companies within the furniture sector, which may limit the generalizability of findings to other industries or company sizes. The 'niche' nature of successful PSS models suggests that broad market adoption might face challenges.
Student Guide (IB Design Technology)
Simple Explanation: To make a product-service system truly good for the environment (circular), it needs to be good for customers, good for business, and good for the planet all at the same time. It often works best for specific types of products or customers.
Why This Matters: Understanding these conditions helps you design PSS that are not only innovative but also genuinely contribute to sustainability goals, making your design project more impactful.
Critical Thinking: If PSS for circularity are often niche solutions, what are the implications for scaling these models to achieve widespread environmental impact?
IA-Ready Paragraph: The research by Pieroni, McAloone, and Pigosso (2019) suggests that for Product-Service Systems (PSS) to be effective enablers of the circular economy, their configuration must simultaneously address superior customer value, economic growth, and resource decoupling. Furthermore, these PSS business models often function best as niche solutions, tailored to specific product types, customer segments, or geographical contexts. This implies that a successful PSS design must integrate these three dimensions holistically and consider targeted market application.
Project Tips
- When developing a PSS concept, explicitly map out how it benefits the customer, how it makes money, and how it reduces waste or resource use.
- Consider if your PSS is designed for a broad market or if it targets a specific group or need.
How to Use in IA
- Use the findings to justify the design choices for your PSS, explaining how your concept meets the criteria for customer value, economic viability, and resource decoupling.
- Discuss how your PSS might be a niche solution and why that is a strength.
Examiner Tips
- Demonstrate an understanding that circularity in PSS is a multi-faceted goal, not just about offering a service.
- Show how your PSS design addresses potential trade-offs between customer value, economic factors, and environmental impact.
Independent Variable: Configuration of Product-Service System (PSS) business models
Dependent Variable: Circularity potential (measured by customer value, economic growth, and resource decoupling)
Controlled Variables: Company type, product sector (furniture), geographical location
Strengths
- Practical application through action research in real companies.
- Development of a framework for assessing PSS circularity potential.
Critical Questions
- How can the 'niche' aspect of successful PSS be leveraged for broader impact?
- What are the key trade-offs designers must navigate when balancing customer value, economic viability, and resource decoupling in PSS?
Extended Essay Application
- Investigate the feasibility of a PSS for a specific product, analyzing its potential for customer value, economic viability, and resource savings.
- Develop a framework to assess the circularity potential of different PSS concepts for a chosen product category.
Source
Configuring New Business Models for Circular Economy through Product–Service Systems · Sustainability · 2019 · 10.3390/su11133727