Let’s (not) get (too) physical, physical • 1
While the shift from products to services – often referred to as servitization – is far from new, it remains a powerful framework for manufacturing companies and digital-first startups looking to embrace customer-centric, service-dominant business models. In this series of blog posts, I have refreshed vintage content with repackaged strategies and new examples to help leaders, innovators, and designers transform customer offerings and experiences for the future.
Eight ways to think services instead of physical and digital products:
Access > Ownership. Enabling access to assets and resources without the burdens of ownership.
Solutions > Products. Delivering holistic, outcome-focused solutions that address the broader needs of customers.
Customization > Standardization. Encouraging active participation in the specification, creation, production, delivery, and marketing of customer solutions.
Adaptability > Stability. Dynamically adjusting offerings and delivery systems to respond to customer needs over time and in real time.
Experience > Transaction. Orchestrating engaging and memorable experiences across every touchpoint in the customer journey.
Inclusion > Exclusion. Removing barriers that prevent individuals and groups from engaging with solutions and brands..
Connection > Disconnection. Building vibrant, connected communities around solutions and brands.
Circularity > Linearity. Promoting circular business models and mindsets to contribute to broader sustainability goals.
Note: These strategies are not mutually exclusive or collectively exhaustive (MECE), which is intentional. Think of them as lenses through which to explore opportunities to transform customer offerings and experiences – an approach that proves highly effective in ideation sessions.
1. Access > Ownership
The Access Over Ownership strategy empowers B2B and B2C customers to experience, utilize, and benefit from assets and resources without the burdens and costs associated with ownership. The focus shifts from value exchange and take-make-dispose models to value-in-use, circular behaviors, and collaborative consumption. (Based on Bau, 2006, 2010, 2011, 2014, 2015; Wirtz & Lovelock, 2016; Botsman & Rogers, 2010; Buczynski, 2013; Jégou & Manzini, 2008.)
Note: In this context, assets refer to physical items (vehicles, machinery, real estate, etc.) and digital assets (software, data, digital content, etc.). Resources encompass these assets along with intangible elements such as expertise, time, and network access. In outcome-driven innovation, resources are tools or means that enable customers to perform tasks, ‘get the job done,’ and achieve their desired outcomes.
Service models:
B2C2C peer-to-peer sharing models empower individuals to share their own assets and resources – such as homes, cars, tools, or skills – with others in exchange for a fee, or for free in a bartering system where goods or services are exchanged directly. In this setup, enabling platforms typically serve as intermediaries, connecting users, managing transactions, and fostering a sense of community.
Examples: Turo – car owners rent out their personal vehicles to others through Turo’s car-sharing marketplace; TaskRabbit – locals offer their skills and time to perform various tasks, such as home repairs or furniture assembly, for a fee; community-based collaborative services – community members engage in micro-initiatives such as bicycle self-repair workshops, family-run micro-nurseries, and home laundry services.
B2B P2P sharing models enable businesses to share their own assets and resources – including vehicles, facilities, equipment, tools, and even manpower – with other businesses for a fee. Platforms play a crucial role by facilitating connections, managing transactions, and fostering collaboration, networking, and knowledge sharing.
Examples: Floow2 – businesses share equipment, office space, and even staff with other companies; LiquidSpace – businesses rent out unused office space to other companies, freelancers, or startups on a short-term basis; Cohealo – healthcare facilities share medical equipment with other institutions, optimizing the use of expensive resources.
B2C rental, leasing, and subscription models provide individuals with access to high-value assets and resources, sometimes bundled with services like customer delivery, onboarding, and support to boost productivity and address potential issues.
Examples: Rent the Runway – customers rent designer clothing and accessories for a specific period, returning them after use; Netflix – subscribers gain access to a vast library of movies and TV shows, streaming content without the need for ownership; Zipcar – users rent cars by the hour or day, gaining access to vehicles without the costs of ownership.
B2B rental, leasing, and subscription models allow businesses to access high-value assets and resources, often bundled with services like delivery, setup, installation, training, maintenance, optimization, and expert support to boost productivity and maximize value-in-use.
Examples: Salesforce – businesses subscribe to Salesforce’s CRM software, which includes ongoing updates, support, and customization options; WeWork – companies lease office spaces and enjoy bundled services like high-speed internet, cleaning, and community events; Cisco Systems – companies lease networking equipment from Cisco, which includes maintenance, setup, and ongoing support.
Resource pooling brings together groups of people or businesses to share or jointly access resources. Through collaboration, these groups can collectively strengthen their bargaining power to negotiate more favorable terms or secure preferential treatment.
Examples: WeWork Labs – startups share office space and resources, benefiting from networking opportunities and shared services; Gartner Peer Connect – businesses pool their knowledge and expertise, sharing best practices and industry insights within the network; community solar projects – groups of individuals or businesses invest in shared solar energy installations, pooling resources to generate renewable energy and reduce energy costs.
On-demand access allows people or businesses to instantly obtain assets and resources as needed, paying only for what they use at the moment, without any long-term commitment.
Examples: Uber – users request rides instantly, paying only for the service they need at the moment without any long-term commitment; AWS (Amazon Web Services) – businesses access cloud computing power on-demand, scaling up or down based on their immediate needs; Blue Apron – customers order meal kits on-demand, choosing from a variety of recipes, with no commitment to ongoing subscriptions, allowing them to cook at home only when they need it.
Freemium models offer basic features for free, but once upgraded, they often allow multiple users, like project teams or households, to share access.
Examples: Spotify Family Plan – lets multiple household members share a single premium music streaming account, allowing each person to have their own playlists and recommendations; Google Workspace – allows users to work together and create content in real-time, with paid upgrades for additional storage, advanced collaboration features, and increased user access; Zoom – offers free video conferencing, with paid upgrades for hosting larger meetings and accessing additional collaboration features.
Note: P2P sharing models are typically shorter-term and less formalized than rental, leasing, and subscription models.
Benefits:
Democratizes access to high-value assets and resources by enhancing accessibility and affordability
Eliminates the hassle, responsibilities, and costs associated with ownership (e.g., upfront capital, storage, maintenance, repairs, upgrades, and disposal)
Provides flexibility and freedom to adjust, scale, or discontinue usage/consumption as needs change over time
Aligns with the trend of prioritizing experiences over possessions
Maximizes resource utilization through continuous use and reuse
Monetizes underutilized assets or resources, turning them into revenue-generating opportunities
Reduces the demand for the production of new tangible goods
Reduces carbon footprint and minimizes environmental impact
Fosters a sense of community by connecting users who share similar needs or values
Encourages innovation in value creation, value co-creation, and value facilitation (see my blog post Get the balance right! • 2)
Drives differentiation and builds brand equity
See also:
Solutions > Products
Connection > Disconnection
Circularity > Linearity
The Solutions Over Products strategy will be covered in the next blog post.
References
Bau, R. (2006). Design av tjänster och upplevelser [Design for services and experiences]. Part of Executive education in Design Management [unpublished training material]. Berghs School of Communication.
Bau, R. (2010, December). Ten strategy paradoxes in service Innovation and design. Paper presented at ServDes 2010 (Service Design and Innovation Conference), Linköping, Sweden.
Bau, R. (2011, December). Strategy paradoxes in service innovation and design. In: Cai et al. (Eds.), Design Management: Toward a new era of innovation. Proceedings from the 2011 Tsinghua-DMI International Design Management Symposium, Hong Kong, China. IDMA.
Bau, R. (2014). Sharing & caring across generations. Breakout session at Service Design Global Conference, Stockholm, Sweden. [Unpublished]
Bau, R. (2015). Thinking services instead of products. In: Service Design Boot Camp, Day 1 [unpublished training material]. Veryday.
Botsman, R & Rogers, R. (2010). What’s mine is yours: The rise of collaborative consumption. HarperCollins.
Buczynski, B. (2013). Sharing is good. How to save money, time and resources through collaborative consumption. New Society Publishers.
Jégou, F. & Manzini, E. (2008). Collaborative services: Social innovation and design for sustainability. Edizioni POLI.design.
Wirtz, J. & Lovelock, C. (2016). Services Marketing: People, technology, strategy (8th ed.). World Scientific Publishing.
