Feb 9, 2021
Tommaso tells two stories of companies that became more profitable and successful with the help of sustainable service design. While looking for solutions, it’s priority to think about the environment and the care of our planet.
British Telecom (BT), an internet service provider, discovered that by delivering their Homehub routers, the delivery service was increasing carbon footprint and creating huge costs. By looking into this issue, they realized that the delivery was often delayed or, worse, sent back and forth between company and customer’ houses, while polluting the environment with carbon emissions. This was leading to high extra costs for a side service that they provide to customers for free.
In order to solve this issue, their design team ideated a Swap Box, a slim router that fits any letter box, so that the postman could deliver it at any time. As well, by walking distance, any customer could reach a letter box, so to send back the slim router in case of replacement or reparation (Link).
This solution consequentially enabled to cut transport costs and many other small services related to it, by completely erasing delivery trips and fees. On top of that, it allowed to eliminate the costs of electricity consumption and waste management.
The benefits by now, are to reach three times more customers and more rapidly. And only by 2019, BT Group had saved over £298 million through its energy efficiency program. Lastly, over 23% of BT Group’s revenue in 2018/19 (£5.5bn) was made from products and services that enable customers to cut their carbon emissions (Link). Especially, it decreased the carbon emission of 37 tons per year. Along with this, BT committed to being a net zero carbon emissions business by 2045.
How they started? BT run a “life cycle analysis” as a sustainable approach, on top of Personas, Stakeholder journeys, user interviews, blueprints, service prototypes.
Caterpillar Inc. is the world's largest construction equipment manufacturer. Through a deep analysis, they estimated that 65% of their costs were coming from materials (Link), and that they were not able to reuse or recycle any extracted raw material. So, to cut costs, they created a “remanufacturing” program called Cat Reman®. The program allows customers to return a used/damaged component and to receive the same product as a remanufactured one. This represents an economic benefit to the consumer, since a remanufactured item is priced lower than a new one, and decreases the use of raw materials, through additive manufacturing techniques and reuse. The solution spins around the concept of “salvage”, which describes applying various technologies to restore damaged components, so to bring them back to the same functional performance of new products (Link).
The “Salvage” expertise significantly reduces operating costs and lowers the use of new parts and raw material. The results are maximum productivity and lower costs. Caterpillar highlights that the remanufacturing resulted in 134 million lbs of material remanufactured or recycled per year, the preservation of 85% of original energy "value add" and approaching the "zero landfill" status (link) .
For both business cases, and many others, we highlight a shift of focus. During the last decades, the focus for most industries was mostly on two elements: people and businesses, to make people satisfied and businesses profitable. Recently, for every industry it’s clear that those focuses are now consequences of a much higher priority: a healthier planet. This is clear since our society faces serious environmental challenges, from rising global resource demands, to climate change, water scarcity, threats to biodiversity and air pollution, and more. Global consumption patterns are unsustainable.
Whether your industry is about a physical or digital product, services are all around any business, because services are the connections of all elements, where altogether these elements become a system, made of: people, technologies, resources. The service design approach is one key for sustainability because it enables project teams and companies to ideate new service offerings, and so to create new business models designed around the principle of sustainability.
Taking a service design approach can disrupt traditional channels to market, lead to innovation, increase customer satisfaction, improve firm effectiveness and offer a means for differentiation to ultimately boost competitiveness. This approach generates a business model framework as the combination of: a value proposition; the supply chain; the customer interface; and the financial model.
In order to kick off a sustainable-oriented project, a service designer should definitely start with research and analysis to discover the gaps of logistics and productions, that’s where usually most of the natural resources are wasted, or operations are over-performed. And then, to demonstrate how these affect the profits, as well as the offerings to the final customers. That’s a basic principle of Service System Design for Sustainability, where all elements are integrated in an ecosystem.