Shedding a light on PaaS
Producers are feeling more and more pressure to invest in circular economy. Consumers especially are becoming more articulate and expect an alternative to the linear take-make-dispose model.
Lately, pioneers are already making the transition to a circular business model – a model based on recycling, remanufacturing or service. The latter, the product-as-a-service model, is a popular way to “valorize” circularity into the hi-tech industry.
The switch from a sales to a service model does require a well thought-out approach: producers look for ways to make the product design more robust and durable, how to organize the service delivery, and they examine the maintenance possibilities as well. When the switch is made to a circular model, they also think about reproduction, redistribution and reuse.
Let there be light!
Is it worth my while then, to make the switch to such a service model? Absolutely. The growth potential and benefits are abundant for many markets. The supply of materials becomes less uncertain, new markets are opened with interesting revenue models, the client has less to worry about, plus, circular models are (generally) better for the environment.
Switching from a linear to a circular model requires vision, courage and guidance. In this project, ETAP – a producer of high-end light fixtures – and Möbius want to assemble a standard package that can help producers with evaluating and organizing their switch from a sales model to a circular model. In this transition, special attention is drawn to the product design and how to get to a thorough business case.
Going LaaS and what to expect
In the light industry you’ll find more than enough reasons why you need to switch to a service model. You already know, of course, the ecological and durable benefits of LED. The past couple of years, however, we’ve seen a shift in the competitive battle to a focus on price. A perfect situation that offers those high-end producers a stronger strategic position within an LaaS-model (Light-as-a-Service).
How exactly does a high-end producer like ETAP switch to such a model? ETAP and Möbius did the test – together with innovation consultant Verhaert.
In a first, investigative phase, we went looking for a type of fitting in the ETAP-portfolio that was good enough to use for the LaaS-model. Many thoughts crossed our minds: to what extent has the product been used as a service? Was the design adapted to possible reuse in a circular process? How important is the product for the financial stability of the company? Which position does the product take in the market and how does this position fit into the LaaS-model?
The next step was further refining the LaaS business model – and making the translation to the product design (in association with Verhaert). That’s why we examined which specific hardware, software and service requirements were needed in order to meet a new value-proposition. How can we make sure that we can measure the delivered services? How do we make the product easy to maintain? Is the fitting easy to disassemble? Which raw materials can we reintroduce into the production process? These thoughts were summarized in a comprehensible roadmap for product (re)design for the upcoming years.
In the last phase, the chosen LaaS business model was translated to a tangible business case – through detailed cost modelling. We also compared different LaaS-options with each other: what if we made the product design more maintenance-friendly? What if we offer more contract periods? What if the client terminates the contract? What if we did the maintenance ourselves or outsource this task? Extensive cost modelling paves the way to an optimal design of the business model – but it also provides insight into a well thought-out pricing strategy.
The switch from a sales model to a service or circular model offers the producers new perspectives: it allows them to offer clients what they really want, it’s a whole lot more sustainable, and it taps into new cost-effective sources.
Would you like to know more about the opportunities and possibilities within a service or circular business model? Contact one of our consultants for more information.
We know almost anything about lighting, and we resolutely go for sustainability. But switching to a durable business model on your own is easier said than done. The collaboration between the people from Möbius and Verhaert was open and amicable, and that’s a great start in the creation of added value. It’s nice to see how our knowledge in the field of lighting has led to the creation of models that would have never seen the light this quickly if we had to do it on our own.