Circular economy services: From owning to leasing, borrowing, sharing and swapping things

Liiteri

Liiteri is an example of circular economy service models.

The circular economy is considered one of the key enablers of economic growth both in Finland and worldwide. Legislative means can be employed to accelerate the transfer to this system, but new, innovative business models are needed for Finnish industry to achieve forerunner status and gain the related advantages.

A good example of new business models is the transfer from the sale of products to the sale of services. This issue has been discussed for a long time and is now more topical than ever. Servitisation could provide a way of closing the material cycle, when service providers steer products towards recycling at the end of their life cycle. Secondly, servitisation would help to lengthen the life cycle of a single product: the materials used tend to be more durable and the products easier to repair when a product is provided as a service. Thirdly, servitisation often enhances resource efficiency, because products have a longer life cycle and overall benefits can be achieved when products are managed by the service provider.

Servitisation also creates growth opportunities for companies, enabling them to transfer towards more holistic service entities. Combined with the efficient use of technology, it provides service providers with the opportunity, for example, to conduct remote monitoring and preventive maintenance resource-efficiently.

Circular economy service models create added value for consumers

To create attractive services, we need to understand how the value of a product or service is created for consumers. The shift from buying and owning things to buying services will generate new kinds of benefits and sacrifices. We have launched the AARRE project in order to study these more closely. In our workshop consumers listed flexibility, higher quality, reduced risk and the desire for change as the benefits of servitisation. In terms of sacrifices, on the other hand, they referred to loss of ownership, particularly in the case of products to which they are emotionally attached. Ownership still evokes feelings of autonomy and power in consumers, for which reason the transfer to services will require an extensive change of mindset.

When transferring from ownership to leasing, consumers need to be somewhat more systematic than they are used to. If they want to order food home, they need to plan their shopping list the day before. Similarly, when renting tools instead of buying them, you cannot just reach for the tool cabinet; obtaining the tools will take more time. On the other hand, consumers are increasingly interested in reducing the number of items in their homes, which supports servitisation.

Practical trials as providers of information

Servitisation is about providing experiences. During the service journey customers are involved in the process of creating value in collaboration with companies. In other words, it is of vital importance to engage consumers in the design of service experiences. Various quick trials and pilots would serve this purpose well.

Coordinated by VTT, the AARRE project is involved in Liiteri, a tool renting pilot by CoReorient Oy, which provides virtual hardware store services to consumers 24/7 in the Teurastamo area in Helsinki. The Liiteri pilot is expected to provide information on many key questions, such as the attractiveness and pricing of, and easy access to, the service model.

Maria Antikainen, Senior Scientist

Anna Aminoff, Senior Scientist

Outi Kettunen, Senior Scientist

Henna Sundqvist-Andberg, Senior Scientist

Headed by VTT, the AARRE project is creating new, user-driven circular economy business activities. This project is a networked research project (2015–2017) being undertaken in partnership with the business sector, with Tekes as the main funder. In addition to VTT, the other research organisations involved include the Finnish Environment Institute (SYKE) and the Consumer Society Research Centre of the University of Helsinki. The partners in the AARRE project are Lassila & Tikanoja, Destaclean, Kierrätysverkko, CoreOrient, Eurokangas, Not Innovated Here, as well as the Chemical Industry Federation of Finland, and the Federation of Finnish Technology Industries.

Twitter: @AarreResearch

 

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