Products are out; services are better for the environment

I know it’s not as simple as that, but this article in FastCompany flipped a switch in my head.

“The cutting edge, the thing that is getting more traction, is the effort to sell services rather than products,” Brown says. It’s a shift in perspective that can transform a business. It’s IBM selling you computing services-server space, processing capacity-rather than actual computers. A company selling computers wants to sell as many servers as possible, without much regard for the power they consume or cooling they require; a company that sells computer services wants the most efficient, cool-running servers it can make. Companies that are able to turn their business inside out this way find that addressing sustainability issues can change from a burden or cost to an opportunity for efficiency and profit.

Of course, if the vendor is responsible for providing the service, not the product, and for the disposal of the product, they’ll have a vested interest in making the product last longer, be more durable, and be cheaper and more efficient to dispose of.

At the same time, a subscription service over a one-time product sale gives recurring revenue and customer loyalty. It becomes harder to switch provider, which is good for the companies. Along with the halo effect of doing the right thing for the planet.

1 comment

Rahul Dewan

Hi Lars, Got interested in this post which reminds me of what my Business and Life Coach in USA mentioned recently. I was talking to him about this extra excitement about building our own products and slowly moving out of services (we're an open source consulting company and do some really good stuff; our website is a bit dated now, unfortunately). On hearing this, he advised that while products maybe a good idea, yet enquiried whether I was sure that this was not because of a sense of egoism. His argument was, that in services, you truly have to work to "keep the customer happy", where often you have to let-go your ego in your efforts towards creating a win-win between the customer and your organisation. In this perspective a move towards Products can be from a place of a desire to move away from constantly serving customers to offer them something that you have built. Am I making sense? :-) Also, I wrote a blog about how my coaching sessions have helped me during the last year or so. Here's the link: http://srijantech.wordpress.com/2007/09/25/business-and-life-coaching-for-entrepreneurs/ Thanks, Rahul Dewan -- www.srijan.in
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