ASU Center for Organization Research and Design

Influencing Factors of Successful Transitions towards Product-Service Systems: A Simulation Approach

by Flavio Tonelli; Nicola P. Bianchi; Roberto Revetria; Steve Evans

Jan 1, 2009

Product-Service Systems (PSS) are new business strategies moving and extending the product value towards its functional usage and related required services. From a theoretical point of view the PSS concept is known since a decade and many Authors reported reasonable possible success factors: higher profits over the entire life-cycle, diminished environmental burden, and localization of required services. Nevertheless the PSS promises remain quantitatively unproven relaying on a simple theory that involves a few constructs with some empirical grounding, but that is limited by weak conceptualization, few propositions, and/or rough underlying theoretical logic. A plausible interpretation to analyze the possible evolution of a PSS strategy could be considering it as a new business proposition competing on a traditional Product-Oriented (PO) market, assumed at its own equilibrium state at a given time. The analysis of the dynamics associated to a possible transition from a traditional PO to a PSS strategy allows investigating the main parameters and variables influencing an eventual successful adoption. This research is worthwhile because organizations undergoing fundamental PSS strategy are concerned about change and inertia key processes which, despite equilibrium theory and because of negative feedback loops, could undermine, economically, the return of their PSS proposition. In this paper Authors propose a qualitative System Dynamics (SD) approach by considering the PSS as a perturbation of an existing PO market featured by a set of known parameters. The proposed model incorporates several PSS factors able to influence the success of a PSS proposition under a set of given and justified assumptions, attempting to place this business strategy in a dynamic framework.