Croydon Council recently jumped onto the ‘sharing economy’ bandwagon
when it swapped its fleet of cars for Zipcars – hire by the hour vehicles for staff to use, and available to members of the public outside office hours.
Why did it shift from buying to renting? Simple: when the council ran a pilot study it saw travel costs plunge from £1.3 million to £756,000 and the associated carbon emissions almost halve. In these tight times, the business case was obvious.
Croydon Council is part of a growing movement of organisations and people making the ‘product to service shift’, where you pay for performance rather than product itself. Hands up if you’ve ever used Spotify? Then you’re part of the movement too. And there are lots of other examples.
Mainstream brands are making the shift as well. In 2012 hire car giants Avis bought up Zipcar
, delivering their oomph to scale up the service model.
Meanwhile Dutch firm, RAU Architects, have been going the whole hog by challenging their suppliers to provide everything in the office as a service – from lighting to flooring to bathrooms. Out of this sprang Turntoo
– a platform that advocates performance-based consumption, creating a loop so materials from leased products are returned to the producer at the end of the contract. Companies including Philips (lighting), InterfaceFLOR (carpet tiles) and Steelcase (office furniture) are helping to develop Turntoo’s service-based concept.
So, what’s the upside for the people doing the hiring? Well, if the supplier owns the asset (be that the car, the printer or the digital infrastructure) then they have every incentive to offer cutting edge technology through their products and to make sure they run efficiently, last a long time and don’t break down (and if they do, they fix them - sharpish). This means you, the hirer, can get on with the job in hand and don’t have to worry about all the operating costs and issues of service. It makes everything so nice and simple.
It’s also good news for the environment, since well-made and long-lasting products lead to the use of fewer natural resources, reduced energy for production and transport and, of course, a lot less waste.
Kyocera hasn’t looked back since it adapted its business from selling printers to also offering pay-per-print managed document solutions, tailored to each business. “The product to service shift represents a genuine opportunity for businesses to consider adjustments to their business model that could enable them to increase market share, expand into related markets and create economically and environmentally sustainable revenue streams,” says the company’s head of CSR, Tracey Rawling Church.
It’s these sorts of new business models that need to become the norm if we’re to make the big shift towards greater sustainability – putting the emphasis on performance and quality over quantity and disposability.
So, how do businesses get on the sharing economy bandwagon?
We hear a lot about these new business models, and see signs of organisations buying more services; but what people don’t hear is how they are doing it. What new skills and incentives are needed to make it work, for example? What new lines of communication are needed? What does this mean for contracts and accounting?
Without these processes working properly behind the scenes these shifts are impossible. At Forum for the Future, we see great value in the product to service shift and we want to help others make it happen. That is why we have been working very closely with Kyocera to understand the processes involved in creating this shift, and have produced some lessons to inspire and assist organisations make the change themselves.
☛ Sarah Tulej is a sustainability advisor at Forum for the Future. The organisations will be holding a webinar on the product to service shift at 3pm on 25 November.