Articles

« go back

The value of a leasing model to help drive the circular economy

This guest post is submitted by Rob Maslin, Director of We All DesignWe All Design, design services and strategies for a resource efficient society. The company takes a human centred design approach to coordinate users, staff, things (material resources), information and stakeholders to create more value collectively than it could in isolation.
 
 
 
The Dutch are keen to make progress in the circular economy and We All Design were delighted to make a contribution to the cause at Dutch Design Week (DDW) in October ’15. The event is held annually in Eindhoven, part of the province of Brabant. The provincial government is keen to encourage small and medium enterprises (SME’s) engagement in the circular economy. I was invited by friends at Dutch design research agency STBY to collaborate on an exhibit. Together we researched peoples attitudes on the 'product to service' shift, helping us move towards a circular economy.
 
What is the Circular Economy?
 
If you are not already familiar with the Circular Economy, its aim is to rethink the way we do business based on a conviction that waste is a resource, it's just in the wrong place. At it’s simplest it is a tiered system of reuse, repair, remanufacture, and recycling in a closed loop (below).
 
 
 
 
 
Why leasing might help
 
Leasing is a big transition for our society and some fundamental problems need to be solved for a circular economy to be achieved. Examples of these challenges include:
 
Companies have no incentive to design products for scenarios after they have been used.
The public are confused if not inconvenienced by what to do with products at the end of use.
A lack of the right information, for each one of the millions of products that are passed onto recyclers and waste handlers, make it hard to capture high value in reuse and recycling.
 
If businesses shifted from selling products to leasing products as services, the three problems above could be solved. Users would know where to send things at the end of use. It would be in a companies interest to design for durability, repairability and recyclability as they try to maximise the life of each product. Recyclers could be passed purer streams of materials and all the information needed to recycle at a high quality. Sounds great right? It is in theory. But making that proposition attractive to customers is more complicated.
 
The concept of Lease Anything
 
 
 
 
To understand what conditions might work for and against the 'product to service' shift, We All Design created the Lease Anything shop at DDW’15. We proposed four different products to be leased, including: headphones from Pelican House, Jeans from Mud Jeans, Umbrellas for festival goers and a speculative idea to lease a chicken. Each product had its own proposed terms of business.
 
The shop projected people into a world where the circular economy might work. The products sparked conversation between the sales staff and the prospective customers. But the shop was not real. The conversations were in truth mini interviews, which probed peoples attitudes in an attempt to understand real world views on what leasing might mean for the design of business models and services. Using the shop items as stimulus people were posed three questions. What would encourage or discourage the interviewee to lease instead of buy a product? The persons own convenience, their environmental / ethical concerns and finally whether it represents good value for money. The response to each one was captured as a barrier (orange circle) or driver (a green circle) with a quote to record peoples' responses in their own words.
 
What did we find out?
 
In the short time we had, three key themes emerged - Responsibility of the user, Users trust in the brand and How leasing changes the nature of a solution. 
 
Responsibility of the user - Ownership of products is an established model of consumption, it provides an easy to understand line of responsibility. But where products are leased the line becomes blurred. The terms of different contracts vary and products can become a burden of responsibility. Some people said they would ‘not like to lease incase they broke it, in the same way’ they would not want to borrow an item from a friend. Other people commented that they would not lease a product because they anticipated ‘more effort and paper work that they need to understand the terms of their agreement as well as the responsibility to make sure that payments go through each month.’
 
Trust in the brand - The user's relationship with the lease provider and the trust that they will deliver the service well, was also key. People feel the quality of a product can be assed in a store. But assessment of a services’ quality is dependant on how events unfold over time and interviewees did not always trust providers to deliver once the contracts are signed. Anecdotes about gym memberships and satellite TV subscriptions were used to illustrate experiences where brands simply make it hard to leave instead of improving the service experience.
 
Nature of a solution - A leased product is no longer just a product. The service takes on a part of the value proposition, which it can hinder or benefit use of the product. The service should not be dead weight in the proposition, services need to be cared for as much as the products themselves. For example in the case of leasing jeans, the offer should be more than one pair of jeans that are in fashion this season. Instead jeans brands might offer advice, accessories or as one interviewee suggested even a ‘new wardrobe for each season’ to make access to fashion easier on a continual basis. Or maybe the opportunity is about selling the longevity of denim by letting people read the diaries of people who have worn the jeans before the current wearer. In other words these two examples show the potential for a deepening customer and brand relationship. Leasing models can and should be able to offer extra value beyond the sale of a standard product.
 
Conclusion
 
These insights confirm that to make leased products attractive to users, services need to be crafted with creativity and care. The same attention to detail that goes into designing products themselves, also needs to be put into crafting the non-material parts of the value propositions. 
 
As with all brands relationships trust is vital. Services offer brands a closer relationship with customers. But that requires extra trust, which must not be abused if a long term success is to be created. 
 
Business also need to understand how to achieve a balance between incentives that encourage people to look after items they lease, without scaring people of the consequences of things being damaged.
 
 
 
If you would like to contact Rob Maslin to further discuss issues raised in this article, he can be contacted at rob@wealldesign.co.uk.
 
 
Comments
No comments yet. Be the first.

Most read articles

Designing Smart Cities in 2013

This guest post is submitted by Mischa Dohler - Chair Professor at King’s College London,...

The GreenHack Challenge - connecting students with businesses, designers & academics

This post is submitted by Martin Charter - Director of The Centre for Sustainable Design...

Case Study Film: Design in Innovation

What is "design in innovation" and how can it be used to benefit UKplc and public,...