Earth, Inc.

5

Function over Form

RULE 5

Fulfill customers’ functional needs in ways that sustain the value cycle.

 

Own Nothing, Have Everything.—Napster advertising slogan¹

The idea of “servicization” or functional business models that deemphasize the product in favor of the functional benefit the product provides has been circulating for some time. The suggested benefits for companies usually include higher margins, more stable streams of revenue, and long-term relationships with customers (see table 5-1). Some companies have successfully implemented the concept, but there have also been some well-publicized failures. The reason service models sometimes fail is not because there is any inherent problem with the approach, but rather because many companies ...