Business as unusual

Posted on Leave a commentPosted in Access model, Business Model Archetypes, Classic life-long model, Gap-exploiter model, Hybrid model, Performance model

The reason why circular design is so difficult, is because it not only forces companies to design products differently, it also forces them to do their business in a new way. Whats the point of designing a drill that would last 100 years, when a normal person use a drill only 12 minutes in its entire lifetime? The way to make things more sustainable is not only by making them last longer. In the last couple of years we have seen an increasing popularity of all sorts of services where people share or rent their tools, their car or their wedding dress instead of owning. I think this shift in consumption is very exciting and offers great opportunities for living smarter, simpler and more sustainable.

An important part of the products that last framework is to think about new possible business models. The design strategies that one should follow to design more sustainable products are dependents on the system that the product should function in and thereby of the business model behind the product. It makes much more sense to design the drill that I mentioned before in a robust manner and use high quality components, if it is going to be in use 10% of the time instead of 0,01% of the time. Product sharing is still relatively new, and doesn’t have mass traction yet, but it is interesting to note that none of the products, let it be cars or tools, are designed specifically for shared use. They are instead designed for the classic long life model, where there is only one owner.

At the session last thursday I explored the opportunities within the different business model archetypes which are;

  • classic long life model
  • hybrid model
  • gap-exploiter model
  • access model
  • performance model

I had very competent advice from Ronald Salters who has many years of experience in the speaker business from working as sales manager for Bose. I must admit that it took a little bit of effort to convince him that it is possible to earn money on speakers in other ways than the classic up front sale. And I understand his skepticism. Why would you rent a speaker? You can get one very cheap. It’s a small item. And even if you would be willing to rent it why would a company be interested in doing so?

After some brainstorming and discussion we came up with different use scenarios where other business models might be viable.

The hybrid model
A modular design could allow for extensions and additions to the product, along the way, so revenue would be prolonged. This could be in the form of exchangeable covers, modules with lights, solar panels, etc..  If the sole goal is to make a “hybrid-income” the speaker could also use special non-rechargeable batteries, so the consumer was forced to constantly buy new ones to use the product (Needless to say that such a speaker is everything but circular and that the product probably wouldn’t last long on the market).

Gap exploiter model
The gap exploiter model is not based on a specific composition of a revenue stream, but the principle that untapped resources are being exploited. An idea could be to transform old radios to bluetooth speakers by adding a bluetooth receiver and then selling them at a premium price to the market segment of  “retro-lovers”.

Performance model
In the performance model users pay for the result that the product delivers instead of the product it self or access to it. So instead of renting or buying a speaker users would pay per watt or decibel that the speaker plays. The golden idea behind the performance model is that if the user only pays for what is delivered, then it is up to the company to device how this effect will be delivered. And then it is also beneficial for the company to deliver the effect as efficiently as possible. So far examples of the performance model is only found in business-to-business solutions, and it is hard to imagine how such a solution could be attractive to a consumer. That said it is not impossible, it is just a bit unlikely.

The access model
This covers renting, swapping, leasing and borrowing. All the instances where a user get access to a product without having ownership. Many of these models can be characterized as product-service systems. As mentioned above, a wireless speaker is not the most likely item that you would rent. But there are situations where it would make sense for specific market segments:

  • Backpacking
  • At the beach on vacation
  • At music festivals

I see great potential in designing a solution for participants at music festivals. I have therefore decided to focus on this segment. My next post will therefore be a new and detailed design brief for the new direction.