Towards Sustainability-driven Innovation through Product-Service …835381/... · 2015-06-30 ·...
Transcript of Towards Sustainability-driven Innovation through Product-Service …835381/... · 2015-06-30 ·...
Anthony W
. Thom
pson2010:08
Increasing awareness of anthropogenic im-pacts on the planet has lead to efforts to re-duce negative environmental impacts in product development for several decades. Benefits to companies who focus on sustainability initiatives have been put forth more recently, leading to many efforts to incorporate sustainability consi-derations in their product innovation processes.
The majority of current sustainability consi-derations in industry constrain design space by emphasizing reduced material and energy flows across the product’s life cycle. However, there is also an opportunity to use awareness of sus-tainability to bring attention to new facets of design space and to drive innovation. Specifically there is an opportunity for product-service sys-tems (PSS) to be a vehicle through which sustai-nability-driven innovation occurs.
A framework for strategic sustainable deve-lopment (FSSD) provides the basis for under-standing sustainability in this work, and provides clarity with regard to how to think about sus-tainable products and service innovations. The “backcasting” approach included in this frame-work also provides insight into how incremental and radical approaches could be aligned within the product innovation working environment.
This thesis explores how sustainability con-siderations can be better integrated into exis-ting product innovation working environments
in order to drive innovation processes within firms, with a specific emphasis on opportunities that occur as sustainability knowledge leads to innovation through a product-service system approach. It endeavors to contribute to both theory development within the emerging sus-tainable PSS design research area, and also to advance the state of practice within industry by connecting dots between the state of theory and the state of practice.
Society’s opportunity to become more sus-tainable and industry’s desire for innovation in order to lead to or increase profitability are often in conflict. However, this thesis argues that knowledge of global social and ecological sustainability can be used to drive innovation processes, and that there are win-win oppor-tunities that can often be achieved through a PSS approach. There is some, but not sufficient, support for the inclusion of sustainability con-siderations in the product innovation process, and even fewer tools to support the use of sustainability to drive innovation. In response, an approach to providing support that brings together the FSSD and various approaches to systems modeling and simulation is presented. Opportunities to use sustainability-friendly att-ributes of existing products through a PSS-ap-proach are also presented.
ABSTRACT
ISSN 1650-2140
ISBN: 978-91-7295-188-4 2010:08
Blekinge Institute of TechnologyLicentiate Dissertation Series No. 2010:08
School of Engineering
TowARdS SuSTAinABiliTy-dRiven innovATion ThRough PRoduCT-SeRviCe SySTemS
Anthony W. Thompson
To
wA
Rd
S S
uS
TA
inA
Bil
iTy-d
Riv
en
in
no
vA
Tio
n T
hR
ou
gh
PR
od
uC
T-Se
Rv
iCe
Sy
ST
em
S
Towards Sustainability-driven Innovation
through Product-Service Systems
Anthony W. Thompson
Towards Sustainability-driven Innovation
through Product-Service Systems
Anthony W. Thompson
Blekinge Institute of Technology Licentiate Dissertation SeriesNo 2010:08
Department of Mechanical EngineeringSchool of Engineering
Blekinge Institute of TechnologySWEDEN
© 2010 Anthony W. ThompsonDepartment of Mechanical EngineeringSchool of EngineeringPublisher: Blekinge Institute of TechnologyPrinted by Printfabriken, Karlskrona, Sweden 2010ISBN: 978-91-7295-188-4 Blekinge Institute of Technology Licentiate Dissertation SeriesISSN 1650-2140urn:nbn:se:bth-00473
iii
Acknowledgements This work has been carried out at the Department of Mechanical Engineering, School of Engineering, Blekinge Institute of Technology (BTH), in Karlskrona, Sweden, under the supervision of Professors Göran Broman and Karl‐Henrik Robèrt. Thank you, Göran and Kalle, for your vision, hard work, and determination that are simultaneously daunting and deeply inspirational. I would also like to express my appreciation to Prof. Tobias Larsson for his support and guidance in this work.
Projects related to this work have been in collaboration between BTH and the following companies: Auralight, Dynapac, Roxtec, Stena Metall, Tetra Pak, Volvo Aero, and Volvo 3P – a big thanks to the people in each of these places who has contributed with their time and expertise to this research. Project funding has been provided by the Swedish Agency for Economic and Regional Growth (Tillväxtverket), the Swedish Energy Agency, the Swedish Environmental Protection Agency, the Swedish Governmental Agency for Innovation Systems (VINNOVA), the Swedish Knowledge Foundation (KKS), the Swedish Research Council for Environment, Agricultural Sciences and Spatial Planning (FORMAS), and the Faculty Board of BTH.
Much gratitude and many thanks are also due to colleagues in the Department of Mechancial Engineering. Dr. Sophie Hallstedt and Dr. Henrik Ny: your trailblazing in the area of sustainable product innovation at BTH has provided a solid foundation for me as an incoming PhD student. Pia Lindahl, Merlina Missimer, Cecilia Bratt and Cesar Levy Franca: as my PhD student peers I can only hope that the lessons learned and ideas explored together have been mutually beneficial; certainly they have contributed to my ability to write this.
To the rest of the “Sustainability Team” present and past – Tamara Connell, Brendan Moore, Treva Wetherell, Zaida Barcena, Marco Valente, Pong Leung, Richard Blume, Kristoffer Lundholm, and many more: though our work together is focused on education more than research, the inspiration you share carries through – thanks! To the MSLS students over the years, thanks for your energy, ideas, and desire to leave the world a little better than when you found it.
To family and friends near and far: your thoughts, notes, and visits have kept me going; the experiences we have shared have shown me how wisdom comes from the having known and the having lost, while joy comes from the discovery and the exploration.
iv
(This page intentionally left blank).
v
Abstract Increasing awareness of anthropogenic impacts on the planet has lead to efforts to reduce negative environmental impacts in product development for several decades. Benefits to companies who focus on sustainability initiatives have been put forth more recently, leading to many efforts to incorporate sustainability considerations in their product innovation processes.
The majority of current sustainability considerations in industry constrain design space by emphasizing reduced material and energy flows across the product’s life cycle. However, there is also an opportunity to use awareness of sustainability to bring attention to new facets of design space and to drive innovation. Specifically there is an opportunity for product‐service systems (PSS) to be a vehicle through which sustainability‐driven innovation occurs.
A framework for strategic sustainable development (FSSD) provides the basis for understanding sustainability in this work, and provides clarity with regard to how to think about sustainable products and service innovations. The “backcasting” approach included in this framework also provides insight into how incremental and radical approaches could be aligned within the product innovation working environment.
This thesis explores how sustainability considerations can be better integrated into existing product innovation working environments in order to drive innovation processes within firms, with a specific emphasis on opportunities that occur as sustainability knowledge leads to innovation through a product‐service system approach. It endeavors to contribute to both theory development within the emerging sustainable PSS design research area, and also to advance the state of practice within industry by connecting dots between the state of theory and the state of practice.
Society’s opportunity to become more sustainable and industry’s desire for innovation in order to lead to or increase profitability are often in conflict. However, this thesis argues that knowledge of global social and ecological sustainability can be used to drive innovation processes, and that there are win‐win opportunities that can often be achieved through a PSS approach. There is some, but not sufficient, support for the inclusion of sustainability considerations in the product innovation process, and even fewer tools to support the use of sustainability to drive innovation. In response, an approach to providing support that brings together the FSSD and various approaches to systems modeling and simulation is presented. Opportunities to use sustainability‐friendly attributes of existing products through a PSS‐approach are also presented.
vi
Keywords Sustainable product innovation, sustainable product development, strategic sustainable development, ecodesign, product‐service systems (PSS), decision support tools, life cycle management
vii
Thesis Disposition This thesis includes an introduction and the following four papers, which have been slightly reformatted from their original publication. Their content, though, is unchanged.
Paper A Ny, H., A. W. Thompson, P. Lindahl, G. Broman, O. Isaksson, R. Carlson, T. Larsson and K.‐H. Robert (2008). Introducing Strategic Decision Support Systems for Sustainable Product‐Service Innovation Across Value Chains. Sustainable Innovation 08: Future products, technologies and industries. The Centre for Sustainable Design. Malmö, Sweden.
Paper B Thompson, A. W., P. Lindahl, S. Hallstedt, H. Ny and G. Broman (2011). Decision Support Tools for Sustainable Product Innovation in a few Swedish Companies. 3rd International Conference on Research into Design (ICoRD). Centre for Product Design and Manufacturing. Bangalore, India.
Paper C Ny, H., A. W. Thompson, K.‐H. Robèrt, G. Broman, H. Haraldsson, D. Koca and H. Sverdrup. Success within Sustainability Constraints through Strategic Systems Modeling and Simulation: The Case of Waterjet Cutting. Submitted for publication.
Paper D Thompson, A. W., H. Ny, P. Lindahl, G. Broman and M. Severinsson (2010). Benefits of a Product Service System Approach for Long‐life Products: The Case of Light Tubes. 2nd CIRP International Conference on Industrial Product‐Service System (IPS2). The International Academy for Product Engineering (CIRP). Linköping, Sweden.
viii
Acronyms B2B Business to Business B2C Business to Consumer CAD Computer Aided Design CLD Causal Loop Diagram DfE Design for Environment DRM Design Research Methodology DSS Decision Support Systems EIA Environmental Impact Assessment EMS Environmental Management System FCA Full Cost Accounting FPD Functional Product Development FSSD Framework for Strategic Sustainable Development IPCC Intergovernmental Panel on Climate Change LCA Life Cycle Assessment LCC Life Cycle Costing LED Light Emitting Diode MSPD Method for Sustainable Product Development PSS Product‐Service System REACH Registration, Evaluation, Authorisation and restriction of CHemicals SDSS Strategic Decision Support System SLCM Strategic Life Cycle Management SMS Systems Modeling and Simulation SPI Sustainable Product Innovation SSD Strategic Sustainable Development TCA Total Cost Accounting TSPD Templates for Sustainable Product Development
ix
Table of Contents 1. Introduction ........................................................................................... 1 1.1. Background / Context ........................................................................... 1 1.2. Aim ....................................................................................................... 2 1.2.1. Goal ............................................................................................... 2 1.2.2. Research Question ........................................................................ 2 1.2.3. Scope ............................................................................................. 2
1.3. Research Methodology ........................................................................ 2 1.3.1. Science and Knowledge ................................................................. 3 1.3.2. Research Approach ........................................................................ 3 1.3.3. Research Methods ......................................................................... 5 1.3.4. Design Research as a “Wicked Problem” ...................................... 6
1.4. Reader’s Guide ..................................................................................... 6 2. Knowledge Domains ............................................................................... 8 2.1. Sustainability ........................................................................................ 8 2.1.1. A Framework for Strategic Sustainable Development (FSSD) ....... 8
2.2. Product Innovation ............................................................................. 11 2.2.1. Types of Innovations ................................................................... 12 2.2.2. Modeling Innovation Processes .................................................. 14
2.3. Product‐Service Systems .................................................................... 17 2.4. Sustainable Product Innovation ......................................................... 20
3. Summary of Appended Papers .............................................................. 21 3.1. Paper A ............................................................................................... 21 3.2. Paper B ............................................................................................... 23 3.3. Paper C ............................................................................................... 24 3.4. Paper D ............................................................................................... 26
4. Towards Sustainability‐driven Innovation through Product‐Service Systems ........................................................................................................ 28 4.1. Observations on Sustainability in Swedish Product Innovation ......... 28 4.1.1. Motivations for Including Sustainability ...................................... 28 4.1.2. Ways of Including Sustainability .................................................. 28 4.1.3. Justification for Including Sustainability ...................................... 29 4.1.4. Summary of Observations ........................................................... 29
4.2. Sustainability as Driver of Innovation ................................................ 30 4.2.1. The Case for Sustainability as Driver ........................................... 30 4.2.2. Making Sustainability the Driver ................................................. 31
5. Contributions ........................................................................................ 35 5.1.1. To the Research Field .................................................................. 35 5.1.2. To the Research Group at BTH .................................................... 35 5.1.3. To Industry ................................................................................... 35
6. Conclusion ............................................................................................ 36
x
7. Future Work ......................................................................................... 36 8. References ............................................................................................ 37 Paper A ........................................................................................................ 43 Paper B ........................................................................................................ 57 Paper C......................................................................................................... 73 Paper D ...................................................................................................... 115
1. Introduction
1
1. Introduction This section first presents a background of the sustainability and product innovation issues that justify this research. Then the actual research gap that this research targets is identified, followed by the aim and methodology of this research. A more in‐depth review of the literature in these areas is presented in Chapter 2.
1.1. Background / Context People who work with product innovation – both product designers and business managers – have existed in the dominant mental paradigm that puts short‐term profit forward as the primary goal. These people, and the paradigms they exist within, are also quickly awakening to the need to more directly include both environmental and social issues in their daily decisions (Porter and Van Der Linde 1995; Pujari et al. 2003). This is happening for many reasons: customer demand, an expanding regulatory environment, global resource constraints, and perceived opportunities for cost savings to name just a few.
One reason product developers and engineers have left sustainability outside of their focus is that there is general confusion in the world around the topic of sustainability (Johnston et al. 2007). There is general agreement in the scientific community that things need to change (Millenium Ecosystem Assessment 2005), and this is often discussed under the term “sustainability.” However, there is a lack of clarity or consensus as to exactly what sustainability means (Glavic and Lukman 2007). With regard to sustainability, this thesis work builds upon the foundation that has been put forth over the past 20 years of a framework for strategic sustainable development (FSSD), described in section 2.1. This FSSD provides an operational definition of sustainability and initial set of strategic guidelines that can be used to provide guidance to decision‐makers, e.g. people working with product innovation.
With regard to products, there are two obvious things that can be changed. First, the physical artefacts themselves can be changed, and second, the way that products are managed (including how they are used) over their life cycles can be changed. For the former, more efficiency can be pursued, e.g. material reduction and energy optimization. These are generally good, though alone are not sufficient from a sustainability perspective. They also risk leading to the “rebound effect,” which is the idea that improvements on a per‐unit basis can lead to greater overall impacts due to increased volume that is enabled by e.g. reduced cost that stems from the improved efficiency, see e.g. (Binswanger 2001; Robèrt et al. 2000). While product innovation has traditionally focused on the former with occasional glances toward the latter (Isaksson et al. 2009), the movement in industry is toward the design of products and services together –
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
2
often referred to as product‐service systems (PSS) – and presents an opportunity for these two opportunities to be considered and improved in tandem (Isaksson et al. 2009; Maxwell et al. 2006; Mont 2002).
1.2. Aim This section presents the overall goal of this research, introduces an overarching research question, and sets the scope of this work.
1.2.1. Goal The overarching goal of this research is to contribute to sustainable development of society. In order to do that, it sets out to contribute to the body of knowledge by creating a better understanding of the possibilities and limitations for sustainability considerations to drive innovation through product‐service systems. With that additional understanding, it aims to contribute to the state of practice by exploring how to better support the development and implementation of product‐service systems that are (economically and other‐wise) attractive to business while at the same time are supportive of global society moving toward socio‐ecological sustainability and increasing value to users of the PSS. This work explores the intersection between sustainability and innovation, specifically with the opportunity for a product‐service system (PSS) approach to be a critical vehicle for sustainability‐driven innovation while also supporting global society’s movement toward sustainability.
1.2.2. Research Question The collection of papers and articles included in this thesis each have their own specific research questions; these are summarized in Chapter 3. They all endeavor to contribute to answering the following overarching question:
How can sustainability considerations be better integrated into existing product innovation working environments, especially with regards to pursuing a product‐service system approach?
1.2.3. Scope This work explores the intersection of several research areas, and strives to both look forward to opportunities while also reflecting critically upon the assumptions that are made within each area. This work does not intend to demonstrate expertise in all of these areas; but rather to demonstrate sufficient understanding in each context in order to demonstrate expertise where these areas intersect.
1.3. Research Methodology The section presents the research methodology, i.e. brief thoughts on why research is important and how this research topic has been advanced.
1. Introduction
3
1.3.1. Science and Knowledge “Science” generally refers to a systematic approach to acquiring knowledge, i.e. the “scientific method” with its steps to observe, hypothesize, predict, experiment, and reflect.
“Knowledge” is a difficult term to define; it relates to collecting facts, often in the form of observations and experiences that contribute to our collective understanding of us and the world of which we are part. This collection of knowledge can be referred to as the “body of knowledge” – everything that we think we know to be true that has been obtained and modified and verified through science throughout human history.
“Research” is done by scientists to expand the collective body of knowledge; to continue the exploration of the world that is around us and includes us. We do research because we are curious; we wish to explore the unknown; we dare to attempt to understand the world around us.
1.3.2. Research Approach The initial design of this research began with a conceptual base in the approach to qualitative research design articulated by Maxwell (2005) and shown in Figure 1. As this thesis has gravitated towards the field of design research, it has been found helpful to adapt the Design Research Methodology (DRM) put forth by Blessing and Chakrabarti (2009) shown in Figure 2, that provides a more specific approach to research of this type. Following are brief descriptions of both.
Qualitative Research Design Maxwell suggests the following key aspects of research design:
1. Goals: Why is this study worth doing, what issues do I want to clarify, what practices / policies do I want to influence, why do I want to do this study, and why would anyone care about the results?
2. Conceptual framework: What do I think is going on? What theories, beliefs, and prior research will guide/inform this research? How will I understand the people or issues I am studying?
3. Research Questions: What specifically do I want to understand by doing this study? What do I not know about the thing I am studying that I want to learn? What questions will my research answer, and how are these questions related?
4. Methods: What will I actually do in conducting this study? 5. Validity: How might my results and conclusions be wrong?
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
4
Figure 1: Maxwell's model for qualitative research design. Recreated from (Maxwell 2005).
Design Research Methodology This work, remembering the two goals from 1.2.1, has largely been about understanding and some about providing support, as shown as “Main Outcomes” in Figure 2. This is described in more detail in Chapter 3, where the contributions from each paper are presented.
1. Introduction
5
Figure 2: Design Research Methodology (DRM). Recreated from (Blessing and Chakrabarti 2009).
Maxwell’s model provides a foundation for research in this thesis more generally, while Blessing and Chakrabarti provide a framework that is more directly applicable to the research in this project.
1.3.3. Research Methods The following methods and techniques have been used:
• A broad survey of literature has provided an opportunity to explore the related topics and specifically focus on the intersection between these key topics, in order to better understand the past and present thinking within the research field. The results of this are presented primarily in Chapter 2, and also serve as a foundation through each of the appended papers.
• Interviews and interaction with people working within the area of product innovation were conducted in order to better understand and describe the state of practice in industry. These provide general background support for ideas and arguments presented in Chapter 4 and paper A, and they are central to the research presented in papers B, C, and D.
• Participation in and facilitation of workshops with development teams with companies involved in the research project. These workshops
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
6
were intended to aid them in including sustainability in their thinking around product innovation, specifically using methods/tools previously developed by BTH. These workshops were conducted with Dynapac, Roxtec, and AuraLight.
These methods are in line with the first three stages of the design research methodology (DRM) described by Blessing and Chakrabarti as illustrated in Figure 2.
1.3.4. Design Research as a “Wicked Problem” Central to the approach taken in this thesis is the realization that research into design processes is not something that can be re‐created or tested with a control group. This is an important distinction from traditional research. In practical research terms, every design project is unique because of a unique set of needs in an ever‐changing global context being addressed by a single design group. Furthermore, there is no “correct” or even “best” solution, as this will change from user to user or context to context. This is the essence of the idea of “wicked problems” introduced by Rittel and Webber (1973) relating to planning with regard to social problems, where they write about how they see “social processes as the links tying open systems into large and interconnected networks of systems… it has become less apparent where problem centers lie, and less apparent where and how we should intervene even if we do happen to know what aims we seek” (Rittel and Webber 1973).
In his PhD dissertation, Andreas Larsson discusses the topic of “design as wicked problem” nicely, and summarizes with a clarifying example: “Developing a ‘passenger‐friendly’ airplane is a wicked problem, while calculating stresses in the fuselage is a tame problem, though time‐consuming, difficult, and not at all trivial” (Larsson 2005, p. 25). Understanding and supporting the development and implementation of product‐service systems is a “wicked problem,” much like developing the ‘passenger‐friendly’ airplane: it is dependent upon a context that is always changing, and thus there is no “correct” answer.
1.4. Reader’s Guide This document intends as its primary audience people working in the area of product innovation and those working to bring environmental and social issues into the product innovation process. It attempts to provide inspiration to bridge the gap between product innovation that is common in practice today and product innovation that is informed, and even driven by, a global socio‐ecological sustainability perspective.
An introductory part and four appended papers make up this thesis. The introductory part has six chapters with the contents outlined below.
1. Introduction
7
Chapter 1 introduces this work by zooming in from the broad background to the scope of this research and introducing the research methodology.
Chapter 2 introduces the knowledge domains related to this research by providing relevant information with related domains such as sustainability, product innovation, and product‐service systems.
Chapter 3 summarizes the appended papers regarding contents, relation to the thesis and how the work was divided between the authors.
Chapter 4 presents the found research opportunities and issues from collaborating research project companies.
Chapter 5 summarizes this work’s scientific and industrial contributions.
Chapter 6 provides a concise conclusion of this work.
Chapter 7 suggests future work that can build upon the work presented here.
Use and discussion of modeling and simulation occurs throughout this thesis in different contexts. For example: section 2.2.2 presents a discussion of different ways of thinking about the product innovation process; Paper C is a case study based of an approach to incorporating sustainability with system dynamics modeling; Paper D uses mental models to represent different users’ perspective on value offered by a PSS. While there is not a concentrated focus on modeling and simulation in this work, it is a recurring theme that may be developed in the continuation of this research.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
8
2. Knowledge Domains This thesis draws upon three broad topics: (1) sustainability, (2) product innovation, and (3) product‐service systems. This chapter presents briefly each of these three, as well as an additional area that is emerging as a combination of those three: “Sustainable Product Innovation.” This final section briefly presents other work related to this field to acknowledge that there are many others doing work that has a similar focus.
2.1. Sustainability Human society’s awareness of our collective impact on the planet has been growing over the last several decades. Published in 1962, Silent Spring is credited with raising awareness of environmental impacts from the dangers of certain chemicals (Carson 1962; Downs 2004). The Limits to Growth study published in 1972 by the Club of Rome is often referenced as a significant awareness‐raising study regarding the possibility of resource constraints for a rapidly expanding human population (Meadows et al. 1972). In 1987, Our Common Future was published, providing this frequently cited statement about sustainable development:
Humanity has the ability to make development sustainable – to ensure that it meets the needs of the present without
compromising the ability of future generations to meet their own needs.” (Brundtland 1987)
In recent decades, numerous reports, studies, theses, articles and books have been published documenting impacts and opportunities, for example species loss (Millenium Ecosystem Assessment 2005), resource constraints (Gordon et al. 2006), anthropogenic climate change (IPCC 2007), and the business opportunities for those aware of sustainability issues (Willard 2002).
The Brundtland definition of sustainable development puts forth an attractive vision, but leaves a significant gap for the business need to be operational. This has lead to many attempts to clarify the concept of sustainability; one which has been proven to be universally applicable is presented in 2.1.1.
2.1.1. A Framework for Strategic Sustainable Development (FSSD) A generic five‐level framework and the framework for strategic sustainable development (FSSD) are presented in Figure 3. This five‐level framework can be used to plan in any complex system. When it is used to provide guidance toward a sustainable human society (i.e. “human society within the ecosphere” is at the system level – level 1), it is referred to here as the framework for strategic sustainable development.
2. Knowledge Domains
9
Level Generic 5‐Level Framework for
Planning in Complex Systems
Framework for Strategic Sustainable
Development (FSSD)
1. System The system that is relevant to the goal
Society (within the biosphere)
2. Success The definition of success
Compliance with sustainability principles
3. Strategic Guidelines
Guidelines used to select actions to move the system towards success
Backcasting Return on Investment Flexible Platform
Move toward success …
4. Actions Concrete actions that follow the strategic
guidelines
…
5. Tools Tools that support the process
…
Figure 3: Generic Five‐level Framework and FSSD.
Three key aspects of the FSSD make it well‐suited for use in both strategic and operational contexts.
Five‐level structure In the broader sustainable development discussion there is often confusion between “ends” and “means” with regard to the desired outcome of sustainability initiatives. A five‐level framework provides five clearly distinct levels, suggesting that it is imperative to first agree upon the system (level 1) that is to be planned within, and only then to go on to define success (level 2) for that system; after defining success, then strategic guidelines (level 3) can be determined for the selection and prioritization of actions (level 4); all four of these levels can be supported with tools (level 5) (Robèrt 2000; Robèrt et al. 2002).
This five‐level framework can be used to plan in any complex system. When it is used to provide guidance toward a sustainable human society (i.e. “human society within the biosphere” is at the system level – level 1), it is referred to here as the framework for strategic sustainable development.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
10
Unique Definition of Success: Sustainability Principles Defining the term “sustainability” is challenging. Yet without knowing what “sustainability” is, how can anyone work toward it? By first agreeing upon the system to be sustained, one can then go on to ask an opposite question: “How can we destroy this system?” If that question is answered in a way such that the results are statements that are:
• General: applicable in any situation, • Concrete: usable without ambiguity, • Sufficient: cover all potential issues of un‐sustainability, and • Necessary: requirements for sustainability, i.e. not just “nice things to
have.”
Then, by negating those resulting statements (adding ‘not’ in front of them), one arrives at a definition for the sustainability of human society within the biosphere. In this case:
In a sustainable society,
Nature is not subject to systematically increasing…
1. …concentrations of substances extracted from the Earth’s crust, 2. …concentrations of substances produced by society, 3. …degradation by physical means
and…
4. …people are not subject to conditions that systematically undermine their capacity to meet their needs. (Broman et al. 2000; Holmberg 1995; Holmberg and Robèrt 2000; Ny et al. 2006)
Backcasting One challenging aspect with many current approaches to sustainable development is that the approaches use a way of thinking about time that is rooted in the present. Because of this, current (or recent years, e.g. 2000) system states are used as the point of reference, and project or forecast into the future what should be done. For example, in the discussion of carbon emissions, there is debate regarding by what percent countries should be responsible for reducing their emissions, and central to this debate is agreeing upon the baseline year against which these reductions should be considered. Thus, the very really need to reduce global carbon emissions turns into a political battle field strewn with distractions about baseline years.
Changing the perspective of time from one that exists primarily in the present with one eye toward the past to a perspective that is focused equally and primarily on the present and the desired future, with a cognizance of the past,
2. Knowledge Domains
11
could help society to disconnect from past trends in order to get to a level of carbon in the atmosphere that is “safe.” Such an approach is known as backcasting, where one puts oneself in a desired future and looks back to the present, asking the question: “How did we get where we wanted to go?” (Dreborg 1996; Holmberg and Robèrt 2000; Robinson 1990).
When backcasting is combined with the unique definition of success (based on first‐order principles as described in the previous section, as opposed to various scenarios that people may or may not agree with), the result is “backcasting from sustainability principles” that allows for strategic decision‐making that ensures flexibility, movement toward a sustainable future, and appropriate allocation of resources (Holmberg and Robèrt 2000).
An example: “renewable energy” is often promoted as an ultimate solution (“success”) to society’s demand for energy. However, renewable sources of energy could be obtained in a way that undermines other aspects necessary for the long‐term sustainability of society. Success, then, should not be only to “use renewable energy,” but rather to acquire and use energy in a way that does not contribute to the violation of basic sustainability principles.
The term “sustainability” in this thesis, then, refers to global socio‐ecological sustainability. This means that it does not, unless specifically stated, refer to the sustainability of some other (sub‐) system, e.g. a company.
2.2. Product Innovation Innovation, generally, refers to new products, processes or ideas that are put into use in the world. “Innovation” differs from “invention” which is the creation of those new products or processes, in that innovation implies inventions that are put into practice. Schumpeter lists five types of innovation: new products, new methods of production, new sources of supply, exploitation of new markets, and new ways to organize business (Fagerberg et al. 2006, p.6). Much of the literature is focused on better understanding the first two in that list, which are commonly referred to as “product innovation” and “process innovation,” and are discussed in more detail in 2.2.1. Note that “product” sometimes is used in reference to tangible artefacts and is distinct from e.g. services or software. In other cases, “product” is used more generally to refer to any combination of tangible artefacts, services, software, etc. that customers pay for. In this thesis, the term “product” is in line with the ISO definition and refers to “what is sold” and thus not only the physical artefact:
A product is an output that results from a process. Products can be tangible or intangible, a thing or an idea, hardware or software, information or knowledge, a process or procedure, a service or
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
12
function, or a concept or creation. (International Organization for Standardization ISO 9001:2000)
Innovation literature frequently comes from the social sciences with roots originating with e.g. Schumpeter. Innovation references also originate from within the field of engineering, e.g. Roozenburg and Eekels (1995) or Ulrich and Eppinger (2003). One related observation is presented by Kline and Rosenberg:
Economists have, by and large, analyzed technological innovation as a “black box” – a system containing unknown components and processes. They have attempted to identify and measure the main inputs that enter that black box, and they have, with much greater difficulty, attempted to identify and measure the output emanating from that box. However, they have devoted very little attention to what actually goes on inside the box; they have largely neglected the highly complex process through which certain inputs are transformed into certain outputs.
Technologists, on the other hand, have been largely preoccupied with the technical processes that occur inside that box. They have too often neglected, or even ignored, both the market forces with which the product must operate and the institutional effects required to create the requisite adjustments to innovation. (Kline and Rosenberg 1986)
It is often challenging to arrive at a shared vocabulary between these different perspectives. Here literature is drawn from both social science and engineering perspectives.
2.2.1. Types of Innovations Innovation is a broad topic, and as such, many attempts have been made to divide it up or to categorize aspects of innovation. This section introduces a few of the key categories of innovation that may be referred to throughout this dissertation.
Incremental and Radical One approach to classifying innovations with roots in Schumpeter’s work relate to how radical an innovation is relative to the status quo. Continuous improvements are considered to be “incremental” innovations; these are in contrast to “radical” innovations that result in significant changes.
Product and Process Innovation “Product innovation” and “process innovation” are used to characterize the occurrence of new or improved goods and services, and improvements in the ways to produce these goods and services, respectively” (Fagerberg et al. 2006,
2. Knowledge Domains
13
p. 7). Schumpeter defined ‘product innovation’ as “the introduction of a new a good… or a new quality of good” and ‘process innovation’ as “the introduction of a new method of production… or a new way of handling a commodity commercially” (Schumpeter (1934), as cited in Fagerberg et al. 2006, p. 572).
The distinction between product and process innovations should not be carried too far. Most innovative firms introduce both at the same time, but in most firms and industries it is possible to identify the dominant orientation of innovative efforts, associated with strategies of either price competitiveness (and mainly process innovations) or technological competitiveness (and mainly product innovations). In addition to product and process innovations, organizational innovation also can affect the quantity and quality of employment, and is usually closely linked to the introduction of new technologies (Caroli 2001). (Fagerberg et al. 2006, p. 573).
As summarized by (Damanpour and Gopalakrishnan 2001),
‐ “product” is a good or service offered to the customer or client; ‐ “process” is the mode of production and delivery of the good or service
(referring to Barras 1986); ‐ “product innovation” is new products or services introduced to meet an
external user or market need; ‐ “process innovation” is new elements introduced into an organization’s
production or service operations (e.g. input materials, task specifications, work and info flow mechanisms, equipment) to produce a product or render a service (Ettlie and Reza 1992; Knight 1967; Utterback and Abernathy 1975)
Distinctions between product and process innovation are not always clear, as Fritsch and Meschede (2001) describe in their exploration of the impacts of a firm’s size with regard to R&D expenditures on product versus process innovation. They point out that many studies into differences between types of innovation refer to firm size, but not always with regard to the size of the firm relative to the size of the industry, which could be significant. They also allude to the idea of “thresholds” (my term) with regard to acquiring knowledge for innovation – “the requirement to build up some sort of absorptive capacity.” Fritsch and Meschede then suggest that complications arise when considering that product and process innovations may be related (Kraft 1990; Lunn 1986), and that there are in fact, good arguments to suspect a quite significant interrelationship (Ewers et al. 1990). Product innovation can necessitate
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
14
process innovations, and process innovation may enable product improvements.
2.2.2. Modeling Innovation Processes This section – with reference back to the Kline and Rosenberg quotation at the start of section 2.2 – begins by taking a look inside the “black box” regarding the process by which innovation happens. In order to be able to develop tools and methods to integrate into existing product innovation working environments – a long‐term goal of this research – it is important to have a base understanding of how the product innovation process is perceived. However, many models of the product development and/or product innovation process exist. When considering possible interventions for including sustainability aspects in product innovation, it is helpful to consider these different models and their varying levels of complexity. Below, first a Roozenburg and Eekels model used both in Paper C and in other related works is presented to provide clarity with what is meant. Then, some other models of this process are presented to show that there are different ways of looking at how innovation happens. Roozenburg and Eekels (1995) provide a distinction between product development and product innovation, suggesting that product innovation is a process that includes product development as illustrated in Figure 41. Other authors use different descriptions of the process. For example, Ulrich and Eppinger define product development (PD) as “the set of activities beginning with the perception of a market opportunity and ending in the production, sale and delivery of a product” (Ulrich and Eppinger 2003). This definition for “product development” more closely matches with what Roozenburg and Eekels refer to as “product innovation.”
1 In this figure, the boxes represent processes ‐‐ things that happen, i.e. they are represented as verbs, while the circles represent results of the process, i.e. they are represented as nouns.
2. Knowledge Domains
15
Figure 4: Product Innovation Process. Recreated from (Roozenburg and Eekels 1995).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
16
Linear Simple linear models view new product development (NPD) as a sequential and ordered process with five to ten ordered steps, e.g. Syan (1994).
Concurrent Concurrent models maintain the same view with a linear flow, but add multiple lines based on different functions. See e.g. Olsson (1976), Syan and Menon (1994), Cooper (1990) (the Stage‐Gate process), or Ulrich and Eppinger (2003). Acknowledging that these concurrent models are perhaps too rigid, Byggeth and Broman (2000) introduce the idea of “flashes of thought” to suggest that there is generally a procedural flow that can be represented in a integrated product development approach, but that experienced product developers will be thinking backwards or forwards or between different responsibility areas even while their main focus is in one development phase.
Recursive Recursive models view the process as having concurrent and multiple feedback loops that generate iterative behavior and lead to outcomes that are not linear, and therefore are much more difficult to predict, e.g. Kline and Rosenberg (1986).
Chaotic Chaotic models come from the area of chaos theory in physics, and essentially extend the recursive perspective. These suggest that innovation process starts chaotically and finishes in stability, e.g. the “fuzzy front end” is chaotic, but leads into a more predictable state. Thus the initial stages exhibit chaotic dynamics that appear random and unpredictable, while the latter stages of product innovation are better suited to linear frameworks, e.g. Koput (1997) or Cheng and van de Ven (1996).
Complex Adaptive Systems Complex adaptive systems models describe the process as a network of partially‐connected agents with a varying level of involvement in a variety of processes while also creating new, reconfiguring, and cutting out network relationships. This perspective, promoted by McCarthy et al. (2006), maintains the complex systems view of the previous two perspectives, but instead of being based on a top‐down perspective mapped at a high system level, it describes the process “from within,” i.e. with a bottom‐up perspective. This approach assumes that all three of the following are adaptable and changing:
1) The environment in which the agents are existing 2) The configuration of the agents’ networks
2. Knowledge Domains
17
3) The rules governing the behavior of the individual agents (the way agents make decisions)
In this way, those agents can be adapted, e.g. to match push/pull market forces and innovation expectations that range from incremental to radical.
This final approach begins to address the separation pointed out by Kline and Rosenberg, integrating both that which is “outside the box” as well as that which is “inside the box.”
2.3. Product-Service Systems The concept of product‐service systems (PSS) emphasizes a shift in the focus from selling only a physical product or service to selling the result of a combination of products and services. Definitions of PSS typically include reference to increased competitiveness of PSS providers. Some definitions do not explicitly include reference to reduced environmental impacts e.g. (Manzini and Vezzoli 2003; Wong 2004); however, PSS definitions frequently do include reference to reduced negative environmental impacts, e.g. (Baines et al. 2007; Goedkoop et al. 1999; Mont 2004; Wong 2004).
Tukker presents eight types of PSS, which he divides into three categories: one category being product‐based, the other category being service‐based, and a middle category (Tukker 2004). See Figure 5.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
18
Figure 5: Eight types of PSS, including main and subcategories of PSS. Recreated from (Tukker 2004).
Tukker, Tischner and Verkuijl (2006) have explored the opportunities for environmental improvement with regard to these eight types of PSS, finding that they are generally, but not necessarily, associated with improved environmental performance. Of the eight types, some have the opportunity for more significant improvement in environmental performance than others, with the function‐oriented type having the most significant opportunities. This is illustrated in Figure 6.
The eighth type, functional result‐oriented PSS, leads into the idea of “functional product development” described by Isaksson et al. (2009) as having the objective of “developing the solution (i.e. any combination of hardware, software, services, etc.) to customer needs that create value for the customer.”
Mont, in her PhD thesis on the topic of product‐service systems, includes an extensive history of the concept, summarizing with this: “the shift to PSSs stimulates companies to find new profit centres, concentrate on core activities and outsource support functions, create alliances for provision of product value and improve economics by optimizing service productivity and by treating products as capital assets” (Mont 2004). Matzen makes a major contribution to the field with his PhD thesis focusing on service‐oriented product development, contributing significantly with how to bring service aspects into product‐
2. Knowledge Domains
19
focused development processes (Matzen 2009). Tan complements this work, contributing strategies related to service development (Tan 2010). PSS Type Environmental impacts compared with a reference
situation (product)
Worse Equal Incremental Reduction (<20%)
Considerable Reduction (<50%)
Radical Reduction (<90%)
1. Product‐related Service
2. Product‐related consultancy
3. Product lease
4. Product renting and sharing1,3
5. Product pooling2,3
6. Pay‐per unit use
7. Activity management
8. Functional result
1Renting, sharing: considerably to radically better if impacts are related to product production and the product—when traditionally owned—is used with very low intensity 2Pooling: additional reductions compared with sharing/renting if there are important impacts related to the use phase 3Renting, sharing, pooling: even higher if the system leads to no‐use behaviour All: if the new business model enhances the competitive position of environmentally friendly technologies, higher improvements can be at stake (not usual and case‐specific)
Figure 6: Tentative (environmental) sustainability characteristics of different PSS types. Recreated from (Tukker and Tischner 2006, p. 96).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
20
2.4. Sustainable Product Innovation There is significant research in a variety of areas closely relating to sustainability in product innovation. Recently, work was done at Imperial College focusing on Sustainable Product and Service Development (SPSD) that reviewed many approaches to sustainability in product development and resulted in an approach that emphasized functional and systems thinking, see e.g. (Maxwell 2003; Maxwell et al. 2006). See a summary of Ecodesign, which emphasizes bringing ecological issues into the product innovation process, in a 2006 special issue of the Journal of Cleaner Production focused on the topic (Karlsson and Luttropp 2006), as well as closely‐related concepts like Design for Environment (DfE). The present work differs from those by utilizing the framework for strategic sustainable development introduced in 2.1, thus providing a different perspective with regard to the sustainability component with potentially different results.
There are various approaches to design (more broadly than product development) that also bring in sustainability‐based thinking, e.g. Cradle‐to‐Cradle or Biomimicry. Here, emphasis is placed on radical innovation through outside inspiration. Cradle‐to‐Cradle, with the mantra “waste equals food,” emphasizes the need for technical systems to operate in cycles, and highlights the concept that “eco‐efficiency only works to make the old, destructive systems a bit less so” (Mcdonough and Braungart 2002, p.62). Biomimicry suggests that nature has been innovating for billions of years, and that there is a huge amount of inspiration to be explored by human designers (Benyus 1997). These two examples are mentioned because they strongly relate to the aspect of this thesis that focuses on sustainability‐driven innovation.
Research at BTH relates to bringing together a strategic sustainable development perspective with traditional product innovation approaches. Previous work suggests that there is a need for systematic integration of sustainability aspects in the product innovation process with strong support from senior management and presents a method for doing so (Hallstedt 2009). Previous work also provides detailed examples for how the FSSD can be used to design tools intended specifically for incorporating a full sustainability perspective in the early stages of product innovation (Ny 2010). The present thesis extends the existing research by increasing the focus on product‐service systems and opening the door into innovation research.
3. Summary of Appended Papers
21
3. Summary of Appended Papers
3.1. Paper A Introducing Strategic Decision Support Systems for Sustainable Product‐Service Innovation Across Value Chains
Published as: Ny, H., A. W. Thompson, P. Lindahl, G. Broman, O. Isaksson, R. Carlson, T. Larsson and K.‐H. Robert (2008). Introducing Strategic Decision Support Systems for Sustainable Product‐Service Innovation Across Value Chains. Sustainable Innovation 08: Future products, technologies and industries. The Centre for Sustainable Design. Malmö, Sweden.
Summary This paper suggests that expanding the perspective of product developers and business developers can lead to insight regarding opportunities for sustainability‐inspired innovation, and we present an idea for a strategic decision support system (SDSS) that could support that by systematically:
1. Incorporating a full sustainability perspective to respond to increasingly‐important market demands and opportunities,
2. Providing opportunities to optimize value chains by enabling a life‐cycle overview of the entire value chain,
3. Supporting transitioning of traditional product solutions into product‐service systems focused on meeting (market and basic human) needs, and
4. Connecting operational and strategic levels in companies. This paper provides an overview of how a framework for strategic sustainable development can provide a foundation for including sustainability considerations throughout the product innovation process in order to better connect strategic and operational levels in companies, resulting in the identification and exploration of opportunities to optimize value chains through product‐service systems.
Relation in thesis This paper sets the broader scope of the thesis work by introducing the concept of a strategic decision support system that incorporates (1) a full global socio‐ecological sustainability perspective, (2) a broader approach to meeting needs through product‐service systems, and (3) interfaces toward both product developers and business managers.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
22
Results The result of this paper is a model for how a strategic decision support system (SDSS) could link business and product‐service developers with suitable tools and experts throughout innovation processes by building systematically upon a theoretical foundation.
Present Author’s Contribution The present author was involved from the initial concept stage of this paper, and as such contributed significantly with developing and formulating theory through to final editing.
3. Summary of Appended Papers
23
3.2. Paper B Decision Support Tools for Sustainable Product Innovation in a few Swedish Companies
Accepted as: Thompson, A. W., P. Lindahl, S. Hallstedt, H. Ny and G. Broman (2011). Decision Support Tools for Sustainable Product Innovation in a few Swedish Companies. 3rd International Conference on Research into Design (ICORD). Centre for Product Design and Manufacturing. Bangalore, India.
Summary This paper explores how and where sustainability is considered in the product innovation process at six Swedish companies. The paper provides a map of the overall company operations for the companies in relation to a generic product innovation model (the Roozenburg and Eekels diagram presented in Figure 4), followed by a map of the places where sustainability considerations are made in that model. It also briefly describes some tools that are used to support those sustainability considerations, and then summarizes responses from interviewees regarding where they see gaps with regard to including sustainability in their companies’ innovation processes.
Relation in thesis This paper explores the current state of methods and tools for sustainable product innovation in some Swedish companies. It confirms and provides further insight into a key assumption: that there is an opportunity to expand existing methods and tools to support sustainability considerations in product innovation. It also provides insight into how company processes work, and where it might make sense to introduce new methods or tools, either from scratch or as complements to existing tools.
Results The paper concludes that there are some, but not sufficient, methods and tools to support inclusion of sustainability aspects in the product innovation processes of these companies. It also makes the point that many of the existing methods and tools for bringing sustainability considerations into the product innovation process are based on a forecasting approach, which is rooted in a mindset of reducing negative impacts.
Present Author’s Contribution The present author was involved from the early stages of planning these interviews, participated in interviews with three of the six companies, and then lead the summarizing of results and the writing process.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
24
3.3. Paper C Success within Sustainability Constraints through Strategic Systems Modeling and Simulation: The Case of Waterjet Cutting
Submitted for publication as: Ny, H., A. W. Thompson, K.‐H. Robèrt, G. Broman, H. Haraldsson, D. Koca and H. Sverdrup (2010). Success within Sustainability Constraints through Strategic Systems Modeling and Simulation: The Case of Waterjet Cutting.
Summary This paper proposes a method for bringing together a framework for strategic sustainable development (FSSD) and an approach to systems modeling and simulation (SMS) through a case study of business planning within the waterjet cutting machine industry. From the SMS perspective, the FSSD contributes a sustainability perspective to ensure that when SMS tools are used, the resulting analysis does not miss key sustainability aspects. From the FSSD perspective, SMS tools contribute with the detailed analysis that supports evaluation of various options. The overall structure of the case study presented in this paper is in the form of a “backcasting from principles” approach, referred to in the paper as an ABCD process. This involves four steps:
A) Agreeing upon the Waterjet System within society and the biosphere, and success for those systems
B) Benchmarking against success C) Creating visions and potential actions D) Determining actions
After doing these four steps at an overview level, they are revisited using conceptual SMS tools, in this case causal loop diagrams, to map out causalities between system variables. A third revisit employs numerical analysis tools (where necessary) to quantify those variables and iterate them over time within different scenarios. For this case study, with a focus on exploring how sustainability‐drivers within the market could impact the waterjet cutting industry, the scenarios explore different responses to a hypothetical increase in the tax on carbon emissions, supporting further understanding of the problems, possible solutions, and possible investment paths.
Relation in thesis This paper introduces various approaches to modeling and simulation, and goes into a detailed description of one of these approaches and how it can be combined with the FSSD to form a new tool for decision support in planning.
3. Summary of Appended Papers
25
Results This paper presents a suggested approach for bringing together the FSSD and system dynamics modeling. The results of the case study provide some recommendations to the waterjet cutting industry regarding what it can do to be more competitive on a sustainability‐driven market.
Present Author’s Contribution The present author was involved primarily through contributing LCA‐based data from the Waterjet cutting machine, along with minor contributions to the system dynamics modeling.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
26
3.4. Paper D Benefits of a Product‐Service System Approach for Long‐life Products: The Case of Light Tubes
Published as: Thompson, A. W., H. Ny, P. Lindahl, G. Broman and M. Severinsson (2010). Benefits of a Product Service System Approach for Long‐life Products: The Case of Light Tubes. 2nd CIRP International Conference on Industrial Product‐Service System (IPS2). The International Academy for Product Engineering (CIRP). Linköping, Sweden.
Summary Products designed for long‐life often have significant potential for better sustainability performance than standard products due to less material and energy usage for a given service provided, which usually also results in a lower total cost. These benefits are not always obvious or appealing to customers, who often focus on price. Long‐life products are therefore at an inherent disadvantage: due to lower volume of sales that results from the products’ longer‐life, the margins (price) often need to be higher. This paper shows that when the revenue base is shifted to be the service of light (instead of the sales of light tubes), there is an opportunity for a “win‐win‐win” for the light user, the long‐life light provider and society. Through a product‐service system approach, resulting in a well‐communicated total offer, the full array of benefits becomes clearer to the customer, including that they avoid the high initial cost.
Relation in thesis This paper explores a specific opportunity for a PSS, including the need and opportunity for business model innovation, and is motivated by two questions Tukker (2004) posed regarding 1) if a PSS‐approach is the best way to create added value, and 2) the factors that determine if a PSS approach is more sustainable than a traditional approach. This paper provided the opportunity to think more in depth about a PSS approach and for modeling and simulation to support such an approach with regard to considering both environmental and economic aspects. The paper uses a Strategic Life Cycle Management (SLCM) tool that is based on the FSSD to show how the sustainability aspects of a PSS approach can be compared to a traditional offer. The paper also discusses the value proposition, emphasizing both value to the producer and value to the consumer, to show the benefits of considering these two distinct perspectives on value while developing a PSS. Two clear contributions of this paper are:
3. Summary of Appended Papers
27
1) A concrete example of a PSS that can come about based on an innovation to the business model with little, if any, change to the physical product due to its inherent sustainability‐friendly attributes.
2) An approach to assessing sustainability performance based on the FSSD, most significantly saying that only after all other potential sustainability impacts are considered and found to be the same, can one then conclude that the PSS scenario with the least energy and material flows is the “more sustainable” option.
Results This paper extends the same logical arguments in favor of a PSS approach that have been offered by early movers in this field by shifting the starting point of those arguments. Here the emphasis is that products designed for long‐life gain competitive advantage through a PSS offer by capturing value that is otherwise distributed elsewhere in the value chain. Rather than having a regular product evolve into a PSS and then working toward longer‐life, it is possible to start with a long‐life product that gains competitive advantage by selling function: this is a different path to the same result.
Present Author’s Contribution The present author’s interest in the idea drove the paper; as such, the present author drove the writing process.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
28
4. Towards Sustainability-driven Innovation through Product-Service Systems
The first section in this chapter presents the author’s present understanding of how sustainability considerations are currently included in product innovation processes. The second section develops the case for using, and then presents ideas for how to work towards, sustainability‐driven innovation through product‐service systems.
4.1. Observations on Sustainability in Swedish Product Innovation
This section first reflects on some motivations for companies wanting to include sustainability in their product innovation processes, followed by some ways that they are including sustainability in those processes and some of the justifications they provide for doing so.
4.1.1. Motivations for Including Sustainability Companies include sustainability criteria in their product innovation processes primarily for one of these reasons: 1) legislation, 2) cost reduction (e.g. resource efficiency), or 3) employee interest in “doing good.”
Certainly the Swedish companies involved in this work include sustainability aspects at least to the extent that they must in order to comply with legislation. Sustainability criteria that overlap with cost savings (e.g. efficiency of resource use or energy) are also very likely to be considered. Other sustainability criteria that do not have direct effects on cost are much less likely to be considered; though aspects that can have indirect impacts on company success e.g. through the company’s image are being considered with greater frequency.
The origination of sustainability from legal requirements or employee interest often leads to sustainability considerations being perceived as an extra expense, i.e. one more product requirement that competes for resources.
In both business‐to‐consumer (B2C) and business‐to‐business (B2B) situations, customers are increasingly demanding sustainability be considered in products. In B2C it is often in the form of eco‐labels or other identifying factors that provide piece of mind to the consumer, while in B2B situations it frequently relates to procurement demands by the purchasing company to reduce risks e.g. of not being in compliance with environmental legislation.
4.1.2. Ways of Including Sustainability In response to the way sustainability aspects are beginning to be required of companies, sustainability aspects are being added into product requirements, e.g. compliance with materials lists that say certain substances are not to be
4. Towards Sustainability‐driven Innovation through Product‐Service Systems
29
used in a product itself or the manufacturing processes for the product; carbon emissions over the life of the product must be estimated and held at or below a certain level; or the working conditions of suppliers must meet certain requirements. Some of these have been around for decades (e.g. material lists), while others are very recent (e.g. social aspects at suppliers).
Design processes must then take these additional requirements into consideration, which further limits (e.g. beyond technical limitations) the design space in which product developers are able to create solutions or draws resources away from other types of improvements that could be made. This adds to the cost of the innovation project, putting additional constraints on the already stretched allocation of resources.
4.1.3. Justification for Including Sustainability These approaches typically lead to attempts to show how sustainability efforts reduce costs or increase revenues, and to argue that when fully considered, sustainability aspects do not increase overall costs for the company. Theoretically, this is done at a product level through e.g. life‐cycle costing (LCC), total‐cost accounting (TCA), or full‐cost accounting (FCA); see e.g. (Norris 2001; Shapiro 2001). Willard has written on the effects of sustainability at the firm level, and suggests that there are significant economic impacts on a company’s bottom line from incorporating sustainability aspects that relate to e.g. staff retention, attraction of the best talent, etc. (Willard 2002). Companies that have been involved in this research project are aware of these approaches, but do not appear to have them integrated into standard procedures.
4.1.4. Summary of Observations The chain of thought presented in this section suggests that companies include sustainability considerations either because they are legislated, out of some sense of greater good, or in order to attract or retain customers and staff. All of these are fine reasons to include sustainability considerations, and likely contribute to a company’s success as suggested by e.g. (Willard 2002). However, this chain of thought does not get directly to the main motivation for industry: profitability. Rather, there is an indirect journey that leads back to profitability. Companies are doing things for sustainability. As with the five‐level‐framework in section 2.1, “sustainability” is at the “success” level. However, for companies, “success” is not “global socio‐ecological sustainability,” but rather “profitability.” Awareness of sustainability issues and the strategic use of them can certainly support a company’s efforts to be profitable, e.g.:
‐ Using knowledge of material scarcity and material flows to influence material selection,
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
30
‐ Awareness of public perception of energy, water, other resource use in areas where resources are limited, and
‐ Understanding cycles of natures and using that for inspiration in the design of product‐service innovations.
Innovation is a significant factor in profitability: the ability to identify and successfully take to market new products, to find new and better ways to produce physical artefacts and to deliver services, etc. directly support competitiveness and profitability for firms. Assuming this is true, there is an opportunity for sustainability to drive innovation processes in companies that leads to profitability. What is missing, then, is the motivation and competence to use sustainability, and especially a strategic sustainability perspective, to guide and even accelerate innovation processes.
4.2. Sustainability as Driver of Innovation 4.2.1. The Case for Sustainability as Driver Sustainability as described in section 2.1 asks what is necessary in order for human society to not systematically degrade its ability to exist, and suggests that society ought not to do things that potentially risk that long‐term existence. This way of thinking about sustainability can be used to drive innovation through incremental innovations in either products or processes (e.g. reduced material or energy use by a product or increased efficiency in production processes). This way of thinking about sustainability can also drive radical innovations that seek fundamentally new ways of meeting market needs with radically reduced negative environmental or social impacts, or increased satisfaction of those needs with the same environmental or social impacts.
Sustainability‐driven innovation is different than “innovation for sustainability,” which implies that the innovators are interested in pursuing sustainability as an end goal2. This is not typically the way companies do – even legally can – define success. Rather, knowing about sustainability issues can help companies to be more successful on an increasingly sustainability‐driven market.
Using a product‐service system approach provides an opportunity for companies to reconsider how their products/services/combinations create value and generate revenue. Pursuing a PSS does not necessarily explicitly demand a sustainability focus or even awareness, and it does not imply an
2 Certainly there are individuals (e.g. social entrepreneurs) and organizations (e.g. NGOs) that are interested in innovating toward the end goal of a sustainable society. This thesis, however, is directed toward firms and developing both their interest in using sustainability to drive their innovation processes and the support mechanisms they need to do that.
4. Towards Sustainability‐driven Innovation through Product‐Service Systems
31
improved sustainability profile. Rather, a PSS‐approach opens up to new ways of thinking which are inherently in less contradiction to a sustainable society than more traditional approaches focused only on generating revenue from the sales of physical artefacts. This is because a PSS‐approach opens the possibilities to generating revenue based on the provision of specific functions that meet needs rather than generating revenue based on the sales of those physical artefacts. Revenue based on function is further enhanced through sustainability‐related initiatives such as dematerialization, consideration of closed‐loop product life cycles, minimization of operating costs that are often indicative of negative environmental or social impacts, etc.
4.2.2. Making Sustainability the Driver Section 4.1 presents observations of the day‐in and day‐out of sustainability aspects in product innovation in some Swedish companies: there exists a core product, there is a desire to improve the product both in terms of meeting evolving customer needs and in terms of sustainability performance, and there is a need to maintain or improve profitability. With that in mind, and also keeping in mind Section 2.4, which briefly introduced other existing innovation‐based design approaches (with Cradle‐to‐Cradle and Biomimicry as specific examples), this section provides thoughts on how innovation processes can become more sustainability‐driven.
Backcasting when Developing Support The challenge when developing support for design processes is that with regard to sustainability, there is a sense of needing the radical changes that can be inspired by these more radical concepts. On the other hand, the challenge of integrating support into existing product innovation working environments is that there are established routines and tight timeframes for innovation projects; asking for a radical re‐thinking of how a product should or could function is simply not possible given limited resources. Product developers ask for a simple tool that guides them to the right material choice; e.g. aluminum requires more energy to produce than steel, so steel should be used. This, of course, is a gross over‐simplification of the life cycle impacts of the different materials, and is precisely why simple, well‐intentioned guidance is problematic: the questions seldom have simple answers. People understand this: aluminum is lighter than steel, so using aluminum instead of steel in some applications will recover the extra energy used in production, eventually having a better overall performance with regard to energy use. However, the best design may depend significantly upon user behavior, thus an apparently simple question becomes a wicked problem as described in section 1.3.4.
Support concepts must acknowledge the reality of the present product innovation working environment, including resource (e.g. time) constraints as
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
32
well as product performance obligations. This naturally tends towards an incremental approach to improving the sustainability performance of products. At the same time, there is an urgency to provide support that is capable of meeting the ever‐higher demands of the global context. In light of this, there is an opportunity to use a backcasting approach when developing support tools and methods. This would entail developing such support that considers both the immediate decisions that product developers are being asked to make in short time periods, and also using that support to lead the product developer’s thinking into new areas so that when “flashes of thought” occur, there are seeds of ideas for these other sustainability‐related things to be considered that open opportunities for innovation (e.g. sustainability of materials, user behavior, service opportunities, etc.). The short‐term steps involve providing support tools and methods that companies need to continue exploring a PSS mindset may not result immediately in function‐based innovation (since function‐oriented products are only one type of PSS). The long‐term is about working toward function‐based innovation so that revenue streams can evolve to be based on sales of function – with its associated potential benefits for global socio‐ecological systems.
The distinction between the use of backcasting here and e.g. Hallstedt’s Method for Sustainable Product Development (MSPD) (Hallstedt 2008) is that MSPD asks for people using that method to backcast from a product that could exist in a sustainable society, and to use that to help make decisions in the innovation process. Here the suggestion is that the backcasting approach be used by researchers to develop support methods and tools. Furthermore, based on the assumption that pursuing function‐based products is a very attractive opportunity that combines society’s need to pursue sustainability with the business need to be profitable, the suggestion is that the vision that is backcast from be a product innovation working environment that is focused on functional product innovation. This is an extension of the idea of “bridging tools” that is presented in Paper A.
Expand from Sustainability Constraints to Sustainability‐driven Innovation As described in 4.1.2, sustainability is often incorporated into product innovation working environments as an “add‐on,” e.g. through product or process requirements that serve as filters to reduce the number of ideas or concepts until only the “more sustainable” (typically meaning the options with the fewest known environmental impacts) remain.
To a greater or lesser extent, adding sustainability‐based design requirements and incorporating methods and tools to existing product innovation processes are ways of comfortably introducing sustainability into those environments.
4. Towards Sustainability‐driven Innovation through Product‐Service Systems
33
However, as the easy opportunities for improvement with regard to sustainability are implemented (i.e. the “low‐hanging fruit” are “harvested”), continued improvement with regard to sustainability aspects is more difficult. After the easy stuff is done, then there is a need/opportunity for sustainability to proactively drive innovation.
This work suggests that sustainability can drive innovation by opening up the idea space during idea generation, i.e. contributing to the “divergence” that occurs in earlier stages, before sustainability aspects are used as a filter to “converge” onto a final product. The waterjet cutting machine example in Paper C begins to describe a way in how to do this through the “C step” of creating visions and potential actions by modeling a current system and then looking at it in an anticipated future in which the market is increasingly sustainability‐driven.
Find value‐creating opportunities by optimizing at a higher system level Expanding the peripheral perspective of people working with innovation can lead to opportunities for capturing value that is otherwise outside of their scope. This is because there is frequently an emphasis on the optimization of sub‐systems, while higher level systems remain sub‐optimized: focus is on tweaking the details of lower‐level systems, while opportunities for significant higher‐level system improvement are missed. This is in line with what Bey and McAloone (2006) suggest when discussing the role of ecodesign and LCA in PSS development: that a PSS approach inherently promotes thinking at a higher system level.
The waterjet cutting project described in Paper C illustrates this: the first efforts in the project related to building detailed technical models of the machines and machines parts, which were used to better optimize the weight of the parts, and thus improving the energy efficiency of the machine, e.g. an opportunity to reduce the weight of parts by 30 percent lead to overall system improvement; see (Byggeth et al. 2007). Additionally, outside of the scope of those early technical improvements, was the opportunity to optimize the broader system with regard to use of sand as an abrasive in the process as demonstrated in Paper C. The weight optimization of machine parts is at a more focused system level, thus involving a smaller number of actors, and thus easier to modify. The opportunity to optimize the abrasive was out of the scope of the initial focus, and when explored, involved a significantly larger number of actors. There is, however, economic value to be captured and environmental improvement to be made specifically by reducing the sand‐related transportation. One can assume the current situation happens as it does today because it optimizes the economics at a certain level. However, as the market becomes increasingly sustainability‐driven (e.g. increased transportation costs due to energy price
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
34
increases, carbon‐related taxes, etc.) opportunities to optimize at a higher system level will become more economically rational.
Capturing the value created by optimizing at higher system levels is challenging, particularly with business models focused on the sales of physical artefacts. However, Paper D presents an example that appears poised for capturing value at this higher level: long‐life light tubes reduce costs associated with changing the light tubes at the end of their useful life. This value is not typically considered in the development of physical artefacts, and communicating it to customers is also challenging. The PSS approach, however, opens possibilities for win‐win‐win situations for the light‐tube providers, users, and because of improved sustainability‐performance, society.
Innovate the offer, not the artefact The case presented in Paper D also shows that there is an opportunity to use an existing product to focus on a new approach to providing the function that customers want. In the case of long‐life light tubes, the physical artefacts have a specific attribute (a working life several times longer than the average light tube) that (potentially) offers a significant sustainability advantage. Paper D suggests that in order for the sustainability advantage provided by the attribute of that product to also be made into an economic advantage, the business model around the product needs to shift toward a function‐based offer of providing light, rather than remaining focused on selling the physical artefact.
5. Contributions
35
5. Contributions This work aims at supporting the inclusion of sustainability considerations in the product innovation process by articulating how sustainability can be a driver in the innovation process, specifically through a product‐service system approach. This work contributes to both understanding with regard to theory about how sustainability‐driven innovation can occur through product‐service systems, both within the broader research field (summarized in 5.1.1.), and within the author’s research group (summarized in 5.1.2), as well as how to apply that understanding to the state of practice in industry today in order to realize more sustainable PSSs (summarized in 5.1.3).
5.1.1. To the Research Field This research makes these contributions to the field:
‐ Contextualizing existing awareness of the gap between the ideal put forth in theory and the actual practice of design in a backcasting perspective that suggests the development of support needs to meet decision‐makers where they are today while leading them toward a more ideal practice of PSS innovation
‐ Clarification that the pursuit of sustainable PSSs needs to take a full sustainability perspective, rather than only striving for reductions in material and energy use in a PSS
‐ Bringing a strategic sustainable development perspective to the existing body of research in the area of PSS
5.1.2. To the Research Group at BTH This work brings an emphasis on a product‐service system approach as a vehicle to enable or support better life cycle management of physical artefacts and the materials they are made of. In conjunction with this, this work extends a language of “sustainability constraints” toward a language of “sustainability‐driven innovation.”
5.1.3. To Industry This research supports industry by providing:
‐ A mirror reflecting how sustainability is currently included in some companies’ product innovation processes, along with ideas for how to further integrate sustainability considerations into their daily work
‐ A case study showing some insight into the possibility to reconsider an existing physical product in a PSS approach to innovate the business model in order to take advantage of existing sustainability‐friendly aspects of the product
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
36
6. Conclusion For those working in the area of sustainability, “sustainability” often becomes the definition of success. However, companies are typically interested in innovation more than sustainability. Though the logic afforded by the FSSD remains intact: a company cannot be sustainable if it is part of an unsustainable society, the perspective is different from within the business world. The focus is more local, and a company cannot sustain itself unless it is innovating: changing customers, changing products, changing services, changing markets, etc. In recognition of this, this thesis has demonstrated and developed ideas around how sustainability can be used to drive those innovation processes through product‐service systems that companies rely upon, while also supporting global society’s movement toward sustainability.
7. Future Work Future efforts building upon this work could include:
1. Clarifying the argument for shifting inclusion of sustainability aspects from a “do less bad” approach that only emphasizes quantifying and reducing known negative environmental impacts, and moving toward a methodology where sustainability is driving innovation processes;
2. Further reviewing and summarizing sustainability aspects of PSS, with a specific look at the FSSD’s role in understanding and analyzing the value PSS can bring to global sustainability work; and
3. Continuing to support working toward sustainability‐driven innovation through PSS by developing methods, tools and frameworks.
8. References
37
8. References Andersson, K., M. H. Eide, U. Lundqvist and B. Mattsson (1998). "The feasibility
of including sustainability in LCA for product development." Journal of Cleaner Production 6(3‐4): 289‐298.
Andersson, K. and T. Ohlsson (1999). "Including Environmental Aspects in Production Development: A Case Study of Tomato Ketchup." Lebensmittel‐Wissenschaft und‐Technologie 32(3): 134‐141.
Baines, T. S., H. W. Lightfoot, S. Evans, A. Neely, R. Greenough, J. Peppard, R. Roy, E. Shehab, A. Braganza, A. Tiwari, J. R. Alcock, J. P. Angus, M. Bastl, A. Cousens, P. Irving, M. Johnson, J. Kingston, H. Lockett, V. Martinez and P. Michele (2007). State‐of‐the‐art in product‐service systems. Proceedings of the Institution of Mechanical Engineers ‐‐ Part B ‐‐ Engineering Manufacture, Professional Engineering Publishing. 221: 1543‐1552.
Baumann, H., F. Boons and A. Bragd (2002). "Mapping the green product development field: engineering, policy and business perspectives." Journal of Cleaner Production 10(5): 409‐425.
Benyus, J. M. (1997). Biomimicry: Innovation inspired by nature. New York, Harper Perennial.
Bey, N. and T. C. McAloone (2006). "From LCA to PSS ‐ making leaps towards sustainability by applying product/service‐system thinking in product development." Proceedings of LCE 2006, 13th CIRP International Conference on Life Cycle Engineering: 571‐576.
Binswanger, M. (2001). "Technological progress and sustainable development: what about the rebound effect?" Ecological Economics 36(1): 119‐132.
Blessing, L. and A. Chakrabarti (2009). DRM, a Design Research Methodology, Springer.
Broman, G., J. Holmberg and K.‐H. Robèrt (2000). "Simplicity Without Reduction: Thinking Upstream Towards the Sustainable Society." Interfaces 30(3): 13‐25.
Brundtland, G. H., Ed. (1987). Our common future: [report of the] World Commission on Environment and Development. Oxford, UK, Oxford University Press.
Byggeth, S. H. and G. I. Broman (2000). Environmental Aspects in Product Development ‐ an Investigation among Small and Medium‐Sized Enterprizes. SPIE, Environmentally Conscious Manufacturing, Boston, USA.
Byggeth, S. H., G. I. Broman and K. H. Robert (2007). "A method for sustainable product development based on a modular system of guiding questions." Journal of Cleaner Production 15(1): 1‐11.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
38
Byggeth, S. H., H. Ny, J. Wall, G. Broman and K.‐H. Robèrt (2007). Introductory Procedure for Sustainability‐Driven Design Optimization. International Conference on Engineering Design (ICED). Paris, The Design Society.
Bylund, N., O. Isaksson, V. Kalhori and T. Larsson (2004). Enhanced Engineering Design Practice using Knowledge Enabled Engineering with Simulation Methods. International Design Conference, Design 2004, Dubrovnik, Croatia.
Carson, R. (1962). Silent Spring. Boston, Houghton Mifflin Company. Cheng, Y.‐T. and A. H. van de Ven (1996). "Learning the Innovation Journey:
Order out of Chaos?" Organization Science 7: 593‐614. Cooper, R. G. (1990). "Stage‐gate systems: A new tool for managing new
products." Business Horizons 33(3): 44‐54. Damanpour, F. and S. Gopalakrishnan (2001). "The Dynamics of the Adoption of
Product and Process Innovations in Organizations." Journal of Management Studies 38(1): 45‐65.
Downs, R. B. (2004). Books That Changed the World. New York, Signet Classic. Dreborg, K. H. (1996). "Essence of backcasting." Futures 28(9): 813‐828. Ericson, Å. and T. Larsson (2005). A Service Perspective on Product Development
– Towards Functional Products. 12th International Product Development Management Conference, Copenhagen, Denmark, Product Development & Management Association (PDMA).
Ettlie, J. E. and E. M. Reza (1992). "Organizational Integration and Process Innovation." Academy of Management Journal 35(4): 795‐827.
Fagerberg, J., D. Mowery and R. Nelson, Eds. (2006). The Oxford Handbook of Innovation. Oxford, Oxford University Press.
Fritsch, M. and M. Meschede (2001). "Product innovation, process innovation, and size." Review of Industrial Organization 19(3): 335.
Glavic, P. and R. Lukman (2007). "Review of sustainability terms and their definitions." Journal of Cleaner Production 15(18): 1875‐1885.
Goedkoop, M., C. van Halen, H. te Tiele and P. Rommens (1999). Product Service Systems: Ecological and Economic Basics. Report for Dutch Ministries of Environment (VROM) and Economic Affairs (EZ).
Gordon, R. B., M. Bertram and T. E. Gradel (2006). "Metal stocks and sustainability." Proceedings of the National Academy of Sciences of the United States of America 103(5): 1209.
Hallstedt, S. (2008). "A Foundation for Sustainable Product Development." Doctoral Dissertation. Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden.
8. References
39
Holmberg, J. (1995). "Socio‐ecological principles and indicators for sustainability." Doctoral. Institute of Physical Resource Theory, Chalmers University of Technology and University of Gothenburg, Gothenburg, Sweden.
Holmberg, J. and K.‐H. Robèrt (2000). "Backcasting from non‐overlapping sustainability principles‐‐a framework for strategic planning." International Journal of Sustainable Development and World Ecology(7): 291‐308.
International Organization for Standardization. "ISO 9001:2000." Retrieved 6 September 2010.
IPCC (2007). Climate Change 2007: Synthesis Report. Contribution of Working Groups I, II and III to the Fourth Assessment Report of the Intergovernmental Panel on Climate Change. P. Core Writing Team, R.K and Reisinger, A. (eds.). Geneva, Switzerland.
Isaksson, O., T. C. Larsson and A. O. Ronnback (2009). "Development of product‐service systems: challenges and opportunities for the manufacturing firm." Journal of Engineering Design 20(4): 329‐348.
Johnston, P., M. Everard, D. Santillo and K. H. Robert (2007). "Reclaiming the definition of sustainability." Environmental Science and Pollution Research 14(1): 60‐66.
Karlsson, R. and C. Luttropp (2006). "EcoDesign: what's happening? An overview of the subject area of EcoDesign and of the papers in this special issue." Journal of Cleaner Production 14(15‐16): 1291.
Kline, S. and N. Rosenberg (1986). An Overview of Innovation. In The Positive Sum Strategy: Harnessing Technology for Economic Growth. R. Landau and N. Rosenberg. Washington, DC, National Academy Press: 275‐306.
Knight, K. E. (1967). "A Descriptive Model of the Intra‐Firm Innovation Process." The Journal of Business 40(4): 478‐496.
Koput, K. W. (1997). "A Chaotic Model of Innovative Search: Some Answers, Many Questions." Organization Science 8: 528‐542.
Kraft, K. (1990). "Are product and process innovations independent of each other?" Applied Economics 22(8): 1029.
Larsson, A. (2005). "Engineering Know‐Who: Why Social Connectedness Matters to Global Design Teams." Department of Applied Physics and Mechanical Engineering, Luleå University of Technology, Luleå.
Larsson, A., T. Larsson, O. Isaksson and N. Bylund (2008). Rethinking virtual teams for streamlined development. In Virtual technologies : concepts, methodologies, tools, and applications. J. Kisielnicki, Information Science Reference: 19.
Lunn, J. (1986). "An Empirical Analysis of Process and Product Patenting: A Simultaneous Equation Framework." Journal of Industrial Economics 34(3): 319.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
40
Manzini, E. and C. Vezzoli (2003). "A strategic design approach to develop sustainable product service systems: examples taken from the `environmentally friendly innovation' Italian prize." Journal of Cleaner Production 11(8): 851‐857.
Matzen, D. (2009). "A Systematic Approach to Service Oriented Product Development." PhD. Department of Management Engineering Denmark Technical University, Lyngby.
Maxwell, D. (2003). "Developing sustainable products and services." Journal of Cleaner Production 11(8): 883.
Maxwell, D., W. Sheate and R. van der Vorst (2006). "Functional and systems aspects of the sustainable product and service development approach for industry." Journal of Cleaner Production 14(17): 1466‐1479.
Maxwell, J. A. (2005). Qualitative research design: An interactive apprach. Thousand Oaks, California, US, Sage Publications, Inc.
McCarthy, I. P., C. Tsinopoulos, P. Allen and C. Rose‐Anderssen (2006). "New Product Development as a Complex Adaptive System of Decisions." Journal of Product Innovation Management 23(5): 437‐456.
McDonough, W. and M. Braungart (2002). Cradle to Cradle: Remaking the Way We Make Things. New York, North Point Press.
Meadows, D. H. (1999). Leverage Points. Places to Intervene in a System. . Hartland, Vermont, USA, The Sustainability Institute.
Meadows, D. H., D. l. Meadows, J. Randers and W. W. Behrens III (1972). The Limits to Growth: a Report for the Club of Rome's Project on the Predicament of Mankind. London, Earth Island.
Millenium Ecosystem Assessment (2005). Living beyond our means. Natural assets and human well‐being. Statement from the board. J. Sarukhán and A. Whyte, MA.
Mont, O. (2004). "Product‐Service Systems: Panacea or Myth?" Doctoral Dissertation. IIIEE, Lund University, Lund, Sweden.
Mont, O. K. (2002). "Clarifying the concept of product–service system." Journal of Cleaner Production 10(3): 237.
Norris, G. A. (2001). "Integrating life cycle cost analysis and LCA." The International Journal of Life Cycle Assessment 6(2): 118.
Ny, H., J. P. MacDonald, G. Broman, R. Yamamoto and K.‐H. Robèrt (2006). "Sustainability constraints as system boundaries: an approach to making life‐cycle management strategic " Journal of Industrial Ecology 10(1): 61‐77.
Olsson, F. (1976). "Systematic design." Doctoral. Institution for Machine Design, Lund Institute of Technology, Lund, Sweden.
8. References
41
Porter, M. E. and C. van der Linde (1995). "Toward a new conception of the environment‐competitiveness relationship." The Journal of Economic Perspectives 9(4): 97.
Pujari, D., G. Wright and K. Peattie (2003). "Green and competitive: Influences on environmental new product development performance." Journal of Business Research 56(8): 657‐671.
Rittel, H. and M. Webber (1973). "Dilemmas in a General Theory of Planning." Policy Sciences 4: 155‐169.
Robèrt, K.‐H. (2000). "Tools and concepts for sustainable development, how do they relate to a general framework for sustainable development, and to each other?" Journal of Cleaner Production 8(3): 243‐254.
Robèrt, K.‐H., J. Holmberg and E. U. v. Weizsacker (2000). "Factor X for subtle policy‐making." Greener Management International(31): 25‐38.
Robèrt, K.‐H., B. Schmidt‐Bleek, J. Aloisi de Larderel, G. Basile, J. L. Jansen, R. Kuehr, P. Price Thomas, M. Suzuki, P. Hawken and M. Wackernagel (2002). "Strategic sustainable development ‐ selection, design and synergies of applied tools." Journal of Cleaner Production 10(3): 197‐214.
Robinson, J. B. (1990). "Future under glass — A recipe for people who hate to predict." Futures 22(9): 820‐843.
Roozenburg, N. F. M. and J. Eekels (1995). Product Design: Fundamentals and Methods. Chichester, England, John Wiley & Sons Ltd.
Scholl, H. J. and S. E. Phelan (2004). Using integrated top‐down and bottom‐up dynamic modeling for triangulation and interdisciplinary theory integration: The Case of Long‐term Firm Performance and Survival. 22nd International System Dynamics Conference (ISDC), Oxford, UK, System Dynamics Society, Albany, NY.
Shapiro, K. G. (2001). "Incorporating costs in LCA." The International Journal of Life Cycle Assessment 6(2): 121.
Syan, C. S. and U. Menon (1994). Concurrent engineering: concepts, implementation and practice. London, Chapman & Hall.
Tan, A. (2010). "Service‐oriented Product Development Strategies." PhD. Department of Management Engineering, Denmark Technical University, Lyngby.
Tukker, A. (2004). "Eight types of product‐service system: eight ways to sustainability? Experiences from SusProNet." Business Strategy and the Environment 13(4): 246.
Tukker, A., U. Tischner and M. Verkuijl (2006). Product‐services and Sustainability. In New business for old Europe: Product‐Service development, competitiveness and sustainability. A. Tukker and U. Tischner. Sheffield, Greenleaf: 72‐97.
Ulrich, K. T. and S. D. Eppinger (2003). Product Design and Development, McGraw‐Hill/Irwin.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
42
Utterback, J. and W. Abernathy (1975). "A dynamic model of process and product innovation." Omega : The International Journal of Management Science 3(6): 639.
Willard, B. (2002). The Sustainability Advantage: seven business case benefits of a triple bottom line, New Society Publishers.
Wong, M. (2004). "Implementation of innovative product service‐systems in the consumer goods industry." Doctoral Dissertation. Cambridge University, Cambridge, UK.
43
Paper A
Introducing Strategic Decision Support Systems for Sustainable Product-Service Innovation
Across Value Chains
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
44
Paper A is published as:
Ny, H., A. W. Thompson, P. Lindahl, G. Broman, O. Isaksson, R. Carlson, T. Larsson and K.‐H. Robert (2008). Introducing Strategic Decision Support Systems for Sustainable Product‐Service Innovation Across Value Chains. Sustainable Innovation 08: Future products, technologies and industries. The Centre for Sustainable Design. Malmö, Sweden.
Paper A
45
Introducing Strategic Decision Support Systems for Sustainable Product-Service Innovation
Across Value Chains
Ny, H., A. W. Thompson, P. Lindahl, G. Broman, O. Isaksson, R. Carlson, T. Larsson and K.‐H. Robèrt
Abstract Most companies do not have a coherent and systematic approach for incorporating sustainability criteria into their decision support systems. Given this, what would such a strategic decision support system (SDSS) look like that that is coherent throughout a development process and systematically incorporates (1) a full sustainability perspective, including (2) a broader approach to meeting needs by product‐service systems, and (3) interfaces toward both specific groups of decision makers and specialized in‐depth tools? We anticipate such an SDSS being structured by a framework for strategic sustainable development that provides a principle‐based definition of sustainability and a systematic method to identify problems and solutions by backcasting from that definition. This should aid identification of potential benefits and challenges of shifting from a product‐only focus to a focus on product‐service systems. Additionally, the new sustainability and product‐service system decision support should be flexible enough to be incorporated into existing decision‐making processes. It will likely be formed around a built‐in product development process at the companies.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
46
1. Introduction Product developers have traditionally focused on a relatively narrow set of technical and business economic aspects, but the sustainability problems in today’s society provide good reason to widen the (Charter and Chick 1997; Ritzén 2000; Hallstedt 2008). Current impacts of raw material extraction, production, distribution, use and disposal show that new practices are needed. A product’s impacts ‐ positive and negative throughout its life‐cycle ‐ are largely determined by decisions during early development phases (Roozenburg and Eekels 1995, Charter and Chick 1997; Ritzén 2000; Hallstedt 2008).
The increasingly competitive global economy makes it harder for companies to maintain market share solely by offering high quality physical products. To remain competitive, companies often find it necessary to provide more services with their products. It is often not so much the physical artefacts that consumers necessarily demand, but the services (functions) they provide (Alonso‐Rasgado et al. 2004; Ericson and Larsson 2005). Furthermore, many products are increasingly containing electronics and software. This integration not only increases the complexity of the initial product development, but also increases the need for services to support them. It is often not possible for a single company to generate such a total offer. Even though business developers and managers may have frequent contacts with customers and suppliers it is yet almost unheard of that companies are able to create direct working relationships between product developers from companies along value‐chains (Larsson et al. 2008). A mindset focused on product functions thus drives towards extended value‐chain cooperation among companies – the “extended” or “virtual” enterprise (VIVACE‐Project 2007).
Today there are many overarching methods and tangible specialized tools intended to take sustainability issues, value chains and life‐cycle perspectives into account during product and business development. This includes life cycle assessment (LCA), casual loop diagramming (CLD), investment calculus, computer aided design (CAD), and design for product‐service systems (PSS)—sometimes called functional product development (FPD) (Ericson and Larsson 2005). Many of these tools are possible because and strengthened by an increasing sophistication of computer‐based decision support systems (DSS) (Alter 1980; Power 2004).
Our approach to sustainable product innovation (SPI) is based upon a framework for strategic sustainable development (FSSD) that incorporates backcasting from sustainability principles. The FSSD has been developed and continues to be elaborated in international collaboration with researchers and practitioners (Broman et al. 2000; Holmberg and Robèrt 2000; Robèrt 2000;
Paper A
47
Robèrt et al. 2002). In Robèrt et al. (2002), pioneers of several tools for sustainable development concluded that this framework is well suited for structuring other tools, clarifying overlaps and gaps, and for coordinating an optimal use of each tool.
To help practitioners work at both strategic and operational levels, we have created bridging tools. These are created by scrutinizing different tools against the FSSD to find synergies and gaps. Examples of tools include templates for sustainable product development (TSPD) (Ny et al. 2008) and strategic life cycle management (SLCM) (Ny et al. 2006). Bridging tools can be used as part of a process referred to as a method for sustainable product development (MSPD), which combines the sustainability thinking provided by the FSSD with a concurrent engineering development model (Byggeth et al. 2007; Hallstedt 2008). All these bridging tools (and others) are helpful when making individual decisions during the product development process. However, tools will be of even greater help if they can be structured in an SDSS such as the “design space” concept suggested by Ny et al. (2006).
2. Objectives In this paper we present an idea for a strategic decision support system (SDSS) that should systematically:
1. Incorporate a full sustainability perspective to respond to increasingly‐important market demands and opportunities,
2. Provide opportunities to optimize value chains by enabling a life‐cycle overview of the entire value chain,
3. Support transitioning of traditional product solutions into product‐service systems focused on meeting (market and basic human) needs, and
4. Connect operational and strategic levels in companies.
3. Suggesting an SDSS 3.1 Theoretical Foundation 3.1.1 Sustainability through FSSD Integration To incorporate sustainability, we suggest the SDSS being structured by a framework for strategic sustainable development that provides a principle‐based definition of sustainability and a systematic method to identify problems and solutions by backcasting from that definition. In practice, based upon the MSPD, this integration can be done through guiding questions that product/business developers need to answer at different stages in the PSS innovation process. Obtaining an answer may require, among other things,
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
48
different types of modeling and simulation, including causal loop diagrams linking the PSS with socio‐ecological implications.
3.1.2 Value Chain Optimization through PSS Focus Further, the SDSS will provide opportunities to identify potential benefits and challenges of shifting from a product‐centric focus to a focus on product‐service systems. In practice, this is also done by questions that are presented to product/business developers, who may answer those questions by utilizing modeling and simulation support tools.
3.1.3 Connecting Strategic and Operational Company Levels
Additionally, the SDSS interfaces are expected to be flexible in design and implementation so that they can be incorporated into business and product developers’ existing decision‐making processes. They will likely be formed around an optional built‐in product development process and include interfaces toward increasingly specific in‐depth tools within areas like life cycle modeling, technical simulation and investment calculus.
Referring to figure 1, multiple user interfaces will be designed around an SDSS or “portal” to provide access to the tools necessary to support a specific type of user. A product developer focused on detailed technical aspects of a physical product will access tools that are different than tools accessed by a business manager making decisions regarding the business model around the PSS. Product‐Service questions will guide the design of the physical products and services intended to meet customer needs. Business development questions will guide the development of the business model around the PSS. An SDSS manual will communicate both how to use the portal and also the theory that underlies the portal. An experience database will collect and provide access to users’ experiences so that, where appropriate, knowledge can be shared across companies, value chains and even industries. Specialized tools aid users in considering specific details of certain aspects throughout the innovation process, often requiring significant time or other resources. Bridging tools aid a user in knowing when and how to apply specialized tools, as well as if it is possible to narrow the specific application of the specialized tool in order to both conserve resources and ensure that simulation results are framed within a sustainability context. An example of a bridging tool is SLCM, which focuses LCA efforts into areas of primary concern from a full strategic sustainability perspective (Ny et al. 2006). Experts on specialized tools are also made available to aid portal users. A theoretical foundation is created by bringing together sustainable product innovation, product‐service system innovation and a framework for strategic sustainable development.
Paper A
49
Figure 1. How a Strategic Decision Support System (SDSS) could link Business and Product‐Service Developers with suitable tools and experts throughout innovation processes by building systematically upon a theoretical foundation.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
50
3.2 Practical Use Business/product developers access the SDSS through their workstations. Depending upon the stage of innovation, different guiding questions will be presented. When the choice of materials is relevant, guiding questions will help to choose materials that are less likely to be problematic from a sustainability standpoint. To answer this question, support tools (e.g. LCA) may be helpful, though require substantial amounts of time. Bridging tools can help to guide the user to which specific aspects or applications of the support tools that can be used to aid in making decisions. Direct links to experts on both the bridging and the specialized tools are also included (e.g. a product developer could contact an expert in SLCM and/or LCA). As guiding questions are answered, those answers can be saved for future reference so that sometimes lengthy investigations need not be repeated.
A user will have access to both a public and a company‐specific component. The public component will interact with a network of users from other companies and it will offer several services, such as:
1. Guidelines on how to use the tools and services available through the public component.
2. Reports on strengths and challenges of certain established methods and tools and hands‐on guidelines for how they can be helpful when the FSSD is used to support sustainable product innovation.
3. Generic questions that guide users in considering sustainability aspects throughout the innovation process.
4. Newly developed methods and tools that are integrated “bridges” between the FSSD and the established methods and tools, helping users to start from the sustainability overview that the FSSD provides before, if needed, going into more detailed studies.
5. Links to a network of experts and institutions that may give further support and background information on each method and tool.
6. A “global” experience library or database which collects experiences from all companies and experts on experiences from using the methods and tools of the SDSS.
The company‐specific component is expected to contain local applications of the SDSS solution, including:
1. Guidelines on using the company‐specific aspects of the SDSS. 2. Guiding questions that support users in considering sustainability
aspects throughout the innovation process that are customized for the company.
Paper A
51
3. Company‐specific tools that are contextualized by the SDSS. 4. A library containing experiences shared only within the company.
3.3 Discussion 3.3.1 Challenges Intellectual property rights and traditional business models provide barriers for optimization across a value‐chain. This means that the reluctance to share detailed product information with other companies may hinder total value‐chain optimization. This could be dealt with through, among other things, new methods to support a clearer distinction between what information that can be shared and what needs to remain confidential.
In addition to knowing what content to share, there is a technical challenge of sharing that information across multiple computer systems among many actors in a value chain. The field of knowledge enabled engineering aims to deal with such issues (Bylund et al. 2004) and therefore could be helpful in the development of SDSS.
The intent is to make the SDSS general enough to be broadly applicable to industry at large but still adaptable to specific company needs. Such needs include interfacing with local technology systems, e.g., computer aided design/computer aided manufacturing, accounting and customer relationship management systems. We intend to work with several case studies in order to be exposed to multiple working environments and thereby gaining experience from which to derive generic approaches for the SDSS that could be applied in any company. We have experience from using this approach when developing the generic MSPD (Byggeth et al. 2007). In this case the FSSD was incorporated in a generic concurrent engineering development model and tested in several companies.
3.3.2 Opportunities
We believe effective application of SDSS could significantly aid in optimizing value chains by supporting decision‐makers in taking a full value‐chain perspective throughout the innovation process, (e.g. through waste reduction, selection of materials with less end‐of‐life consequences or expenses, etc.).
In addition, the whole‐system perspective gained through using the SDSS could enable decision‐makers to early on identify potential market changes due to sustainability‐related issues (e.g. increasing water demand, increasing oil prices, climate change legislation, etc.) with the benefits of anticipating/avoiding costs, gaining market share, or major investments that are not suitable for the long term. Moreover, specialized tools are often time and/or resource intensive, so
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
52
the suggested bridging tools are focused on providing guidance on where and how the specialized tools can provide the most benefit.
Furthermore, the SDSS concept inherently connects the strategic and operational levels within a company by offering tailor‐made interfaces that are based upon the same foundational concepts to both business developers/managers and traditional product developers.
3.3.3 Further work
We expect implementation of the SDSS concept to start with an overview study of existing tools and methods for sustainability integration (steps 1 and 2 in figure 2) and onsite case studies with product developers and business‐related decision‐makers in companies (steps 3‐5). The case studies will include identifying the gap between the company’s current DSS and an envisioned SDSS and then identify ways to close that gap. From these specific experiences we will draw generic guidelines for how other companies could implement an SDSS (step 6 in Figure 2).
Paper A
53
Figure 2: Iterative research approach & expected results.
Case Study ‐Co
mpany n
Inno
vatio
nsNew
business ide
as & PSS improvem
ents
6. Analyze,
dev. portal &
integrate into
working
env.
Case Study ‐Co
mpany 2
Case Study ‐Co
mpany 1
3. M
apcurren
tmetho
ds/too
ls4. Develop
portal con
tent
5. Run
coord. te
st simulations
2. Challenge
validation
Decisio
n supp
ort p
ortal
‐Manuals for e
ducatio
n& coo
rdination
‐MergedSPI and
PSSI dev. process m
odels
‐Guide
lines/brid
ging
tools
‐Adapted
specifictools
1. Lite
rature
stud
y
Case Study ‐Co
mpany n
Inno
vatio
nsNew
business ide
as & PSS improvem
ents
6. Analyze,
dev. portal &
integrate into
working
env.
Case Study ‐Co
mpany 2
Case Study ‐Co
mpany 1
3. M
apcurren
tmetho
ds/too
ls4. Develop
portal con
tent
5. Run
coord. te
st simulations
2. Challenge
validation
Decisio
n supp
ort p
ortal
‐Manuals for e
ducatio
n& coo
rdination
‐MergedSPI and
PSSI dev. process m
odels
‐Guide
lines/brid
ging
tools
‐Adapted
specifictools
1. Lite
rature
stud
y
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
54
4. References Alonso‐Rasgado, T., G. Thompson and B.‐O. Elfström (2004). "The design of
functional (total care) products." Journal of Engineering Design 15(6): 515‐540.
Alter, S. (1980). Decision Support Systems: Current Practice and Continuing Challenges. Reading, MA, USA, Addison‐Wesley.
Broman, G., J. Holmberg and K.‐H. Robèrt (2000). "Simplicity Without Reduction: Thinking Upstream Towards the Sustainable Society." Interfaces 30(3): 13‐25.
Byggeth, S. H., G. I. Broman and K. H. Robert (2007). "A method for sustainable product development based on a modular system of guiding questions." Journal of Cleaner Production 15(1): 1‐11.
Bylund, N., O. Isaksson, V. Kalhori and T. Larsson (2004). Enhanced engineering design practice using knowledge enabled engineering with simulation methods. Proceedings of Design 2004, 8th International Design Conference, University of Zagreb, Croatia.
Charter, M. and A. Chick (1997). "Welcome to the first issue of the journal of sustainable product design." Journal of Sustainable Product Design 1(1): 5‐6.
Ericson, Å. and T. Larsson (2005). A Service Perspective on Product Development – Towards Functional Products. 12th International Product Development Management Conference, Copenhagen, Denmark, Product Development & Management Association (PDMA).
Hallstedt, S. (2008). A Foundation for Sustainable Product Development. Doctoral Dissertation. Department of Mechanical Engineering. Karlskrona, Sweden, Blekinge Institute of Technology.
Holmberg, J. and K.‐H. Robèrt (2000). "Backcasting from non‐overlapping sustainability principles‐‐a framework for strategic planning." International Journal of Sustainable Development and World Ecology (7): 291‐308.
Larsson, A., T. Larsson, O. Isaksson and N. Bylund (2007). Rethinking virtual teams for streamlined development. In Higher creativity for virtual teams: developing platforms for co‐creation. Hershey, USA, Idea Group Publishing.
Ny, H., S. Hallstedt, K.‐H. Robèrt, G. Broman and J. P. MacDonald (2008). "Introducing templates for sustainable product development through a case study of televisions at Matsushita Electric Group." Journal of Industrial Ecology 12(4): 600‐623.
Paper A
55
Ny, H., J. P. MacDonald, G. Broman, R. Yamamoto and K.‐H. Robèrt (2006). "Sustainability constraints as system boundaries: an approach to making life‐cycle management strategic." Journal of Industrial Ecology 10(1): 61‐77.
Power, D. J. (2004). "Specifying an Expanded Framework for Classifying and Describing Decision Support Systems." Communications of the Association for Information Systems 13(1): 13.
Ritzén, S. (2000). Integrating environmental aspects into product devlopment: proactive measures. Doctoral Dissertation. Department of Machine Design. The Royal Institute of Technology, Stockholm, Sweden.
Robèrt, K.‐H. (2000). "Tools and concepts for sustainable development, how do they relate to a general framework for sustainable development, and to each other?" Journal of Cleaner Production 8(3): 243‐254.
Robèrt, K.‐H., B. Schmidt‐Bleek, J. Aloisi de Larderel, G. Basile, J. L. Jansen, R. Kuehr, P. Price Thomas, M. Suzuki, P. Hawken and M. Wackernagel (2002). "Strategic sustainable development ‐ selection, design and synergies of applied tools." Journal of Cleaner Production 10(3): 197‐214.
Roozenburg, N. F. M. and J. Eekels (1995). Product Design: Fundamentals and Methods. Chichester, England, John Wiley & Sons Ltd.
VIVACE Project (2007). VIVACE: Value Improvement through a Virtual Aeronautical Collaborative Enterprise. http://www.vivaceproject.com/.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
56
Paper B
57
Paper B
Decision Support Tools for Sustainability in Product Innovation
in a few Swedish Companies
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
58
Paper B is accepted to ICoRD as:
Thompson, A. W., P. Lindahl, S. Hallstedt, H. Ny and G. Broman (2011). Decision Support Tools for Sustainable Product Innovation in a few Swedish Companies. 3rd International Conference on Research into Design (ICORD). Centre for Product Design and Manufacturing. Bangalore, India.
Paper B
59
Decision Support Tools for Sustainability in Product Innovation in a few Swedish Companies
Thompson, A. W., P. Lindahl, S. Hallstedt, H. Ny and G. Broman
Abstract:
Companies are finding that customers increasingly demand “sustainable products” while also noticing economic benefits from eco‐efficiency and other sustainability‐related design approaches. Employees making product‐related decisions need support tools to incorporate sustainability considerations – both at strategic (e.g. regarding product lines to develop) and operational levels (e.g. detailed design). This paper presents the results from a set of interviews that explored where and how sustainability considerations are taken into account in the product innovation processes of six Swedish companies. Results are presented as a map of the overall company operations in relation to a generic product innovation model, followed by a map of the places where sustainability considerations are made in that model. Some of the tools that are used to support those sustainability considerations are also briefly described. The conclusion is that there are some, but not sufficient, tools and methods to support inclusion of sustainability aspects in the product innovation processes of these companies.
Keywords: Sustainability, product development, innovation, tools
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
60
1. Introduction 1.1 Sustainability Challenges and Product Innovation The major global sustainability challenges now facing society, e.g., climate change, access to potable water, biodiversity loss, etc. provide cause for major concern with the long‐term viability of human society (Steffen et al. 2004). Product innovation is a particularly critical intervention point for the transformation of society towards sustainability. Current socio‐ecological impacts over product life‐cycles are evidence that current practices are insufficient. Previous studies have focused on environmental aspects in product development (e.g. Wenzel et al. 1997, Mazwell and van der Vorst 2003, Simon et al. 2000, Byggeth and Broman 2000, Baumann et al. 2002, and Steen 1999), including case studies with companies in Sweden (e.g. Andersson and Ohlsson 1999, Tinsgtröm et al. 2006). This study differs in two ways from these studies: first, by utilizing an alternative approach to sustainability considerations that extends beyond a focus on known environmental issues (presented in section 1.2), and second, by using a general model of the product innovation process to identify where in the product innovation process sustainability aspects are considered (presented in section 1.3).
1.2 A Framework for Strategic Sustainable Development
This study uses a framework for strategic sustainable development (FSSD) to provide an underlying framework to keep the ultimate goal of socio‐ecological sustainability in focus. This FSSD emphasizes that for human society to be sustainable, it should stop systematic destruction of the ecological and social systems that it depends upon (Broman et al. 2000; Missimer et al. 2010). This differs from some other working definitions of sustainability, which often suggest that “less bad is sustainable,” e.g. products that use less energy or less water or emit less CO2 are “sustainable products” (Glavic and Lukman 2007). This FSSD‐based sustainability perspective has previously been integrated into product development procedures and processes (e.g. Byggeth and Broman 2000, Hallstedt 2008) and one study incorporates the FSSD’s basic principles for socio‐ecological sustainability into the main steps of life cycle assessment to then support product development (Andersson et al. 1998).
1.3 A Product Innovation Model This study uses a model of a generic product innovation process from Roozenburg and Eekels (1995) (see Figure 1) to guide the interviews. This model distinguishes between product development and innovation, such that product development is part of – but not the entire – innovation process. This
Paper B
61
model also distinguishes processes from the result of the processes. When exploring where tools are used, this model helped to differentiate between process‐oriented tools (i.e. tools used during a process) and assessment or analysis tools (tools used to assess the outcome after a process has been completed).
1.4 Study Purpose This study addressed the question: how and where is sustainability considered in the product innovation process at some different companies? Results from this study contribute to an initial descriptive phase of an ongoing project described in (Ny et al. 2008), and will be used to inform opportunities to better: 1) incorporate sustainability into the product innovation process, 2) connect strategic and operational levels in companies, and 3) develop specific methods and tools to support the previous two points. This study is guided by the extensive literature study by Baumann et al. (2002), specifically with regard to how management, environmental, and product innovation issues are integrated, as well as where in the product innovation process various tools are used to consider both management and engineering perspectives.
2. Research Approach 2.1 The Companies Six companies that were interviewed for this study:
(A) A producer of light tubes that last about four times longer than average tubes. The company has approximately 200 employees and an annual turnover of €40M. One product engineer and the environment/quality manager were interviewed
(B) A manufacturer of compaction machines with approximately 800 employees and an annual turnover of €230M. The product development manager was interviewed.
(C) A company that develops, manufactures, and sells adaptable sealing solutions for sealing around cables or pipes that pass through walls. They have approximately 450 employees and an annual turnover of €95M. The environmental manager and two product developers were interviewed at this company.
(D) A recycler of electronic materials with approximately 150 employees and an annual turnover of €22M. The plant manager was interviewed.
(E) A product / technology development support company that has around 4000 employees. Four people were interviewed: Environmental Manager and
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
62
Feature Specialist, Feature leader for the Environment and Fire Safety, Purchasing Director, Product Development Manager
(F) A producer of jet engine components that has around 2300 employees and an annual turnover of around €465M. One project manager, one product development engineer, and the environmental impact specialist were interviewed.
2.2 The Interviews Between one and four people working with product innovation or environmental management systems were interviewed at each of the six companies. An interview guide with three sections was used to perform semi‐structured interviews. The questions in that interview guide were sent to the interviewees two weeks prior to the interviews. Four researchers from BTH were involved in these interviews, with between one and three involved in each interview. The sections were as follows:
i) Company Product Innovation Processes Compared to the Model: Using the Roozenburg and Eekels diagram of the product innovation process (shown in Figure 1), a comparison was made between where the company is working and where the company is including sustainability. First, it was determined where the company sees itself working within that diagram, e.g. is it mainly focused on product development (without production), is it mainly focused on production (without the development), or does it focus somewhere else? This is presented in section 3.
ii) Where Sustainability is Considered in the Company’s Process: Where, with regard to the innovation model, are sustainability‐related decisions taken? (presented in section 4), and what sustainability‐related tools are used, and where are they used? (presented in section 5).
iii) Sustainability‐Related Opportunities: Where, with regard to the innovation model, do the interviewees feel that additional tools would be helpful, or where should additional decisions be taken with regards to sustainability considerations? (presented in section 6).
3. Company Product Innovation Processes Compared to the Model
Primary activities in four of the companies (A,B,C,F) essentially covered the entire innovation diagram, i.e. each of these processes at the companies are addressed in the daily work. This is represented by the shaded area in Figure 1. The other two companies (D,E) had more targeted areas in daily operations. One is primarily a technology development company (E) and does not produce
Paper B
63
any physical products; this is indicated by the dotted line in Figure 1. Company (D) works with electronic waste, and as such is not involved in product innovation, though the company does have its own production plan regarding how to process the electronic waste.
Interviewees generally agreed that the Roozenburg and Eekels model was a good enough generic representation of their processes. One modification suggested by several of the companies was that “Product designing” and “Marketing planning” often have a significant influence on “Generating and selecting ideas”, so there could be a link back to that box.
Figure 1: Operational activities at the participating companies mapped onto a generic product innovation diagram (adapted from Roozenburg and Eekels 1995). Four companies (A,B,C,F) work in the shaded areas, while one (E) focuses in the area of the dotted line and another (D) focuses in the area of the dashed line.
4. Where Sustainability Aspects are Considered All six companies have a sustainability aspect that plays a significant role in their product policy, as will be described in 4.1. However, none of these companies incorporated tools or decisions that suggested they include a strategic sustainability perspective in their complete process (i.e. a conscious step‐by‐step approach towards eliminating its contribution to global social and ecological un‐sustainability while improving its competitiveness).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
64
4.1 Policy Formation All five of the companies that had daily activities in the policy formation area (A,B,C,E,F) had something in their product policy related to improving the sustainability performance of their products. For example, Company A’s product inherently has an attribute that is generally considered positive from an environmental perspective: it is designed for long life times, so that fewer of the light tubes and thus the life cycle activities associated with production, transport, end‐of‐life, etc. are used. Company B has a strong focus on reducing energy use in their machines. Company C develops “sealing solutions” that are intended to improve safety and efficiency of the structures they are used in. Company E has 32 product features that must be addressed for the products they develop; five of these are specifically focused on sustainability‐related issues. Company F has a strong emphasis on reducing component weight in recognition that the lighter their components are, the less fuel the airplanes will require.
In addition, two of the companies (E,F) have “environmental care” as one of their three core values. While it is not clear how this affects the product innovation process, these core values were repeated multiple times by interviewees when they were asked about sustainability. They also stated that they have environmental issues in their minds during their daily work, and suggested that is largely influenced by these core values.
4.2 Idea Finding Companies used the sustainability aspects from their product policies as inspiration for idea finding. For example, long‐life, light‐weight, or low energy use over the life cycle were motivating factors in the generation/selection of ideas, and in the assessment of new business ideas. It was not clear, however, if or how a more comprehensive or strategic sustainability perspective was explicitly included in any of the companies during idea finding, either for the generation of new ideas or for the evaluation of ideas.
4.3 Strict Development There was consistently good alignment between product policy and the strict development phase for those sustainability considerations that were included in the policy formation phase, i.e. if something was stated in the product policy, it was taken into account in some way during the development phase. Similarly, if something was lacking in the product policy, it was not likely to be considered in the development process. In short, sustainability aspects were not added for the first time in the development phase.
Paper B
65
4.4 Realization (Production, Distribution, and Sale) All companies have an environmental management system (EMS), which is typically focused on facilities and operations management during production. Several companies also stated that they considered impacts outside of their own facilities, such as the distance between suppliers and their own facilities when choosing suppliers in an effort to reduce transports for both economic and environmental reasons.
Social aspects of sustainability were often mentioned here, also, with regard to the company’s own production facilities, e.g. worker exposure to hazardous emissions, high noise levels, or ergonomically unfriendly conditions. With the two larger companies (E, F), there was explicit reference to also considering working conditions at their suppliers.
4.5 Realization (Use) All of the companies in this study had a life cycle perspective of their product that included the use phase, thus they saw value in improving the sustainability performance of their product during its use phase even though the product would no longer be in the company’s possession. At the same time, the sustainability aspects that companies considered were usually partially aligned with other considerations in the process, primarily legislation and cost. For example, fuel efficiency is a significant consideration when developing products at several companies both to comply with legislation and to lower operating costs for their customers. Of course, fuel efficiency is also commonly considered a sustainability aspect.
One of the companies (E) had done a significant amount of work to determine the life cycle environmental impacts of their product, and had taken steps to develop key indicators to address the major environmental impacts. This resulted in five features that were included in the overall 32 product features that were set for each development project. The other companies had made educated estimations of sustainability impacts across their products’ life cycles, though they seemed less thorough in their identification of the key sustainability impacts.
5. Tools to Support Sustainability Considerations Here tools are listed that were identified during this study, along with a brief description of how they were being used. During these interviews, the interviewees showed relatively limited tools or decision support in the area of social sustainability. Additional tools are used for other, though sometimes related, purposes; e.g. prioritization matrices, computer‐aided design (CAD)
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
66
and other simulation tools, etc. Focus here is on those tools that are more directly and distinctly connected to sustainability.
5.1 Material Lists All of the companies had some type of guidance for material choices in the form of a list. These lists were typically based on substance lists directly from legislation such as Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) and customized specifically for the company. They often took the form of lists of “banned substances” that should not be used at all and a list of “substances to avoid” that should only be used in special circumstances or with the intent of phasing the substance out. Sometimes these lists applied only to substances that would be used in products, and other times these lists applied also to substances that might be used in the production process. Other material lists include PRIO – a web‐based tool developed and maintained by the Swedish Chemicals Agency – to work toward reducing risks to human health and the environment. Companies also stated that they often must comply with requests from customers to not use particular substances. Nearly always, these material lists were used in product designing and often also for verification after the product design was finalized.
5.2 Environmental Management System (EMS) All of the interviewed companies had an Environmental Management System (EMS) following ISO 14001. The EMSs were mainly used in connection with production to structure and organize the companies’ work regarding known environmental impacts like reduction of emissions, substitution of chemical, and reduction of transport.
5.3 (Product-based) Environmental Impact Assessment (EIA)
Three of the six companies (C,E,F) used Environmental Impact Assessments (EIA) to assess their products’ environmental impacts. These EIA tools were company specific, and vary somewhat in complexity and completeness with regard to both environmental impacts that were considered, and to the extent that the product’s life cycle activities were addressed. Common among the companies is that the EIA was mainly used late in the product development process to assess already developed concepts or products where many design decisions had already been taken. Thus, the tool was in the “product design” circle of the product innovation model (and not the “product designing” box), and had relatively little impact on the development of the current product. Learning from the EIA, however, was sometimes utilized in significant ways to innovate in future development projects.
Paper B
67
5.4 Life Cycle Assessment (LCA) Two companies (E, F) have in their product development process the option to conduct an LCA on their products after they are designed in order to verify environmental performance. Two other companies (A,B) do not currently use LCA , but would like to explore its use for comparing new products with existing or older products to ensure that newer products do have an improved environmental performance or in order to have a better understanding of the relative environmental impacts of various aspects of their product. Company (C) expressed interest in LCA‐like approaches to better understanding the environmental consequences of their product, but were mostly interested in the life cycle approach, not LCA specifically.
6. Sustainability-related Opportunities Interviewees were asked about the sustainability‐related gaps that they saw in their companies; this section presents a summary of their responses.
6.1 Use of an LCA-based Tool Three companies (A,B,C) expressed an interest in having an LCA‐based tool that would enable them to quantitatively compare product concepts, as well as to compare existing products with new products to see if they have improved sustainability performance. As noted above, two of the companies were already using LCA tools.
6.2 More Information about Early Life Cycle Stages of Materials
There is a need for more data regarding the sustainability impacts from early life cycle stages of materials. A distinction can be made between general data regarding sustainability impacts for a type of material (e.g. aluminum requires X% more energy than steel to produce) and specific data from a company’s own supply chain. While access to and use of this information varied greatly among these six companies, all were interested in having more data.
6.3 Clearer Guidance During Idea Generation Understanding that the only concepts that can be developed are those that are thought of during idea generation, one interviewee suggested that it would be helpful to have more sustainability‐focused thinking during the idea generation. Interviewees at other companies echoed this to greater or lesser extents.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
68
6.4 Support in Connecting Sustainability Aspects to “The Bottom Line”
Though suggested in different ways by different companies, there is clearly a need for evaluating how the consideration of sustainability aspects during product innovation can influence the economic success of the company. To one company (C) this meant showing how a focus on sustainability issues could directly reduce costs or lead to improved efficiency and production. Another company (B) talked about this with regard to the cost of operating their product, with the explicit assumption that if they could show reduced life cycle costs, this would lead to more success for the company.
6.5 Life Cycle Consideration of Other Impacts of Substances
The electronics recycling company (D) pointed out that many companies have lists that guide substance selection, and that often those lists are directly or indirectly based largely upon known environmental impacts. The interviewee said that there are other substances that might not be toxic, but that they can cause other “problems” in the material life cycles, e.g. with regard to the recyclability of other materials. He suggested that material guidance lists could be adapted so that they guide toward the use of materials that have more favorable life cycle attributes, e.g. are more easily recycled.
7. Discussion Most of the decision processes and tools described by the companies were based upon known environmental impacts. In some ways this is considered to be the most practical, i.e. why worry about something if it is not known to be a problem? On the other hand, increasing dependency on technologies that are not known to be ‘safe’ can lead to future problems (Byggeth and Hochschorner 2006). For example, the material lists used by the companies in this study are mainly intended to avoid using materials that have known environmental impacts and materials that are prohibited by legislation. Material lists that can be used for sustainability considerations also could consider other socio‐ecological aspects, e.g. material scarcity, working conditions for people involved in the material’s life cycle, and more directly: materials that are not currently known to cause problems, but are also not known to be ‘safe’. In line with the above‐mentioned FSSD, a precautionary approach is more strategic, especially given the rapid development and increasing pace at which new technologies are implemented and this necessitates ensuring that today’s solutions do not lead to future problems.
Paper B
69
Identification of key sustainability features in product requirements is an example of how to insert the sustainability aspects in an operational way. One of the six companies (E) has undergone a rigorous process to identify key sustainability features that it can then include at the requirements level. This process was specifically focused on identifying sustainability features, and resulted in five features that insert the sustainability aspects in an operational way into the workspace of the designers and engineers. These requirements must be set and met during product development. Several of the other companies have included sustainability‐related aspects at the product policy level. This often translates into one (possibly more) specific requirements that also come into the workspace of the designers and engineers. With these other companies, the selection of these key aspects at the product policy level appears to be less rigorous from only a sustainability perspective, and instead more of a combination of what is perceived to be good for both socio‐ecological sustainability and economically for the company and its customers. This is not to say that one approach is better, but only to acknowledge a different approach and raise the question for possible further exploration.
There are opportunities for knowledge and experience from working with a company’s environmental management system (EMS) to support product innovation, e.g. to inform material and process selection during product development. EMSs are often in place in order to ensure compliance with legislation regarding substance use and handling, and these systems are reviewed periodically in order to ensure that the company keeps the certificate.
All of the companies, to a greater or lesser extent, use a forecasting mindset that suggests that the main negative environmental impacts should be identified and reduced. This is a good approach when there are significant opportunities with “low‐hanging fruit” – opportunities for major environmental improvement in the short term. However, a different approach is needed when these “low‐hanging fruit” have been “harvested” and it is desirable to continue to advance the way in which sustainability is used to drive innovation. In order to continue to find significant sustainability improvements, it is possible to use the FSSD approach to look to different system levels and explore opportunities for optimization and innovation. These opportunities bring new challenges with regard to how companies collaborate across value chains.
Using a general model of the product innovation process to map where various tools or methods are actually used to consider sustainability aspects in company processes is expected to aid in the continuation of this research project with its aims as described in section 1.4.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
70
8. Conclusions This study maps sustainability considerations of six companies on a general model of the product innovation process, and shows how all six companies have taken steps to consider sustainability aspects through the tools used and decisions taken during their product innovation processes. However, there is significant opportunity to better incorporate tools and decisions that demonstrate a strategic sustainability perspective throughout the process that will allow for an intentional step‐by‐step approach towards eliminating its contribution to global social and ecological un‐sustainability while improving the company’s competitiveness.
9. References Andersson, K., M. H. Eide, U. Lundqvist and B. Mattsson (1998). "The feasibility
of including sustainability in LCA for product development." Journal of Cleaner Production 6(3‐4): 289‐298.
Andersson, K. and T. Ohlsson (1999). "Including Environmental Aspects in Production Development: A Case Study of Tomato Ketchup." Lebensmittel‐Wissenschaft und‐Technologie 32(3): 134‐141.
Baumann, H., F. Boons and A. Bragd (2002). "Mapping the green product development field: engineering, policy and business perspectives." Journal of Cleaner Production 10(5): 409‐425.
Broman, G., J. Holmberg and K.‐H. Robèrt (2000). "Simplicity Without Reduction: Thinking Upstream Towards the Sustainable Society." Interfaces 30(3): 13‐25.
Byggeth, S. and G. Broman (2000). Environmental Aspects in Product Development ‐ an Investigation among Small and Medium Sized Enterprises. International Symposium on Intelligent Systems for Advanced Manufacturing, Environmentally Conscious Manufacturing (RB12). Boston, Society of Photo‐Optical Instrumentation Engineers: 261‐271.
Byggeth, S. and E. Hochschorner (2006). "Handling trade‐offs in Ecodesign tools for sustainable product development and procurement." Journal of Cleaner Production 14(15‐16): 1420‐1431.
Glavic, P. and R. Lukman (2007). "Review of sustainability terms and their definitions." Journal of Cleaner Production 15(18): 1875‐1885.
Hallstedt, S. (2008). "A Foundation for Sustainable Product Development." Doctoral Dissertation. Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden.
Maxwell, D. and R. van der Vorst (2003). "Developing sustainable products and services." Journal of Cleaner Production 11(8): 883‐895.
Paper B
71
Missimer, M., K.‐H. Robèrt, G. Broman and H. Sverdrup (2010). "Exploring the possibility of a systematic and generic approach to social sustainability." Journal of Cleaner Production 18(10‐11): 1107‐1112.
Ny, H., A. W. Thompson, P. Lindahl, G. Broman, O. Isaksson, R. Carlson, T. Larsson and K.‐H. Robert (2008). Introducing Strategic Decision Support Systems for Sustainable Product‐Service Innovation Across Value Chains. Sustainable Innovation 08: Future products, technologies and industries. The Centre for Sustainable Design. Malmö, Sweden.
Roozenburg, N. F. M. and J. Eekels (1995). Product Design: Fundamentals and Methods. Chichester, England, John Wiley & Sons Ltd.
Simon, M., S. Poole, A. Sweatman, S. Evans, T. Bhamra and T. McAloone (2000). "Environmental priorities in strategic product development." Business Strategy and the Environment 9(6): 367.
Steen, B. A Systematic Approach to Environmental Priority Strategies in Product Development (EPS): Version 2000 – General System Characteristics, in CPM Report 1999:4, Centre for Environmental Assessment of Products and Material Systems (CPM) Chalmers University of Technology: Gothenburg, Sweden.
Steffen, W., A. Sanderson, J. Jäger, P. D. Tyson, B. Moore III, P. A. Matson, K. Richardson, F. Oldfield, H.‐J. Schellnhuber, B. L. Turner II and R. J. Wasson, Eds. (2004). Global Change and the Earth System: A Planet Under Pressure. IGBP Book Series. Heidelberg, Germany, Springer‐Verlag.
Tingström, J., L. Swanström and R. Karlsson (2006). "Sustainability management in product development projects ‐ the ABB experience." Journal of Cleaner Production 14(15‐16): 1377‐1385.
Wenzel, H., M. Hauschild and L. Alting (1997). Environmental assessment of products. Vol. 1, Methodology, tools and case studies in product development. London, Chapman & Hall.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
72
Paper C
73
Paper C
Success with Sustainability Constraints through
Systems Modeling and Simulation: The Case of Waterjet Cutting
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
74
Paper C is submitted for publication as:
Ny, H., A. W. Thompson, K.‐H. Robert, G. Broman, H.V. Hardaldsson, D. Koca, and H. Sverdrup. Success within Sustainability Constraints through Systems Modeling and Simulation: The Case of Waterjet Cutting.
Paper C
75
Success within Sustainability Constraints through Strategic Systems Modeling and Simulation
-The Case of Waterjet Cutting-
Ny, H., Thompson, A., Robèrt K.‐H., Broman, G, Haraldsson, H.V., Koca, D. and Sverdrup, H.
Abstract A Framework for Strategic Sustainable Development (FSSD) has previously been developed to frame strategic planning as a stepwise approach towards a rigorously principled definition of sustainability. Experience has shown that this framework often suffices for the guidance of quite complex decisions. In other cases, aspects that surface when the FSSD is applied may be interrelated in complex webs of feedback loops and delays leading to difficulties to optimize optional investments and routes towards sustainability. To that end, modeling with or without numerical analyses, may be needed.
This article investigates the theory of complementing the FSSD with ‘systems modeling and simulation’ (SMS) tools from systems analysis, system dynamics, agent based and discrete event modeling. We use a case—waterjet cutting—to assess the practical feasibility along the FSSD planning process. The resulting new planning approach is named ‘Systems modeling and simulation within sustainability constraints’. It frames the planning by identifying critical current practices in relation to a principle‐based goal of global socio‐ecological sustainability, long term solutions and visions, and guidelines for strategic step‐by‐step approaches. SMS tools are applied as needed throughout the process to study tradeoffs and interrelationships between listed items to create more robust and refined analyses of the problems at hand, as well as of the possible solutions and investment paths. The result is promising in that it shows a clear way forward for the integration of two powerful concepts of systems thinking that are used more and more for analysis and planning in sustainable development.
Keywords: Strategic sustainable development (SSD), The Natural Step (TNS), systems science, systems analysis, systems dynamics, agent based, discrete event, life cycle assessment (LCA), modeling, simulation, backcasting
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
76
1. Introduction 1.1 The Complex Sustainability Challenge Today’s complex global socio‐ecological sustainability problems (Meadows et al. 2004; Steffen et al. 2004; Millennium Ecosystem Assessment (MA) 2005; Stern 2006; Intergovernmental Panel on Climate Change 2007) have called for many tools for analysis, decision support and monitoring like ecological footprinting (Rees and Wackernagel 1994); material intensity per service unit (MIPS) Factor 10 (Schmidt‐Bleek 1997); and life‐cycle assessment (LCA) (International Organization for Standardization (ISO) 2006). Without a unifying theory it is, however, unclear how these methods and tools can support strategic progress towards sustainability and how they relate to each other (Robèrt et al. 2002; Ny et al. 2006).
1.2 A Strategic Planning Framework for Sustainability A previously presented framework for planning in complex systems (Robèrt 2000) has been developed both for strategic planning in business (Nattrass 1999; Broman et al. 2000; Everard et al. 2000; Robèrt 2002a) and municipalities (James and Lahti 2004; Resort Municipality of Whistler (RMOW) 2007), and for creating cohesion between various tools and concepts (Robèrt et al. 1997; Holmberg et al. 1999; Robèrt et al. 2000; Robèrt et al. 2002; Korhonen 2004; MacDonald 2005; Byggeth and Hochschorner 2006; Ny et al. 2006). The framework operates at five distinct and mutually interacting levels:
1. The System. Description of overall system behavior, in this case how the planning topic (e.g. product or organization) operates within society and its surrounding ecosphere system. Using chess as an analogy, the systems level contains the rules of the game.
2. Success. A principled definition of a future state that the planning should result in. This does not prescribe certain actions but opens up to anything that can meet the success principles. In sustainability planning this corresponds to basic principles for sustainability and any other desired principles of success for the planning topic. Similarly, chess has a few principles of checkmate that can be met in numerous ways by different constellations on the board.
3. Strategic Guidelines for how to prioritize between alternative actions to gradually reach success, focusing on actions that are likely to move the planning topic towards success while being affordable and serving as logical and flexible platforms for future measures and investments. Chess players use similar principles to prioritize between alternative moves to take strategic steps towards checkmate.
Paper C
77
4. Actions. Concrete measures that comply with the strategic guidelines for the process to reach a favorable outcome in the system. In this case any concrete measure like implementing a recycling system or developing a new product that can run on renewable energy. In chess, every individual move is an action.
5. Tools. Methods and tools like sustainable development indicators, environmental management systems and life cycle assessments that are required to monitor the actions (level 4) to ensure they are chosen strategically (level 3) to achieve success (level 2) in the system (level 1). Tools for chess may include categorizations of typical and classical games, statistics, etc.
1.3 A Process to Apply Strategic Planning for Sustainability
The practical application of the Framework for Strategic Sustainable Development (FSSD) is facilitated by a previously‐presented manual called the ABCD process (Holmberg and Robèrt 2000). The FSSD emphasizes, in line with the business planning literature (e.g. Montgomery and Porter 1991; Mintzberg et al. 1998), that strategic planning first of all requires enough knowledge about the system (level 1 in the framework above) to carefully describe success (level 2) and only thereafter levels 3‐5 can be strategically approached. The first step (A) of the ABCD therefore includes that the planning team analyzes the planning topic within its system enough to agree on robust principled definitions of objectives and how those relate to the FSSD’s basic principles of global socio‐ecological sustainability. Then, in step B, they use backcasting from the principled objectives to identify significant current problems and assets along the life‐cycle of the planning topic in that context. In step C they brainstorm and list desirable future solutions, visions and actions that are possible within the principled constraints of success. Finally, in step D, prioritization (using the guidelines of level 3 of the framework) is done among the actions (level 4) to arrive at a strategic plan, and the possible need of tools for management and monitoring is identified (level 5).
1.4 Complementing the Framework for Strategic Sustainable Development
When applying the FSSD in business and policy‐making, the rigor of application has largely depended on intuitive processes in creative brainstorming sessions amongst decision makers. Sometimes robust solutions to complex questions have been possible to deduce directly from the principles and guidelines of the framework. At other occasions, however, optimization and prioritization between alternative possible strategic planning routes towards success may
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
78
require multidimensional conceptual and numerical decision support (Ny et al. 2006). Such support is here termed Systems Modeling and Simulation (SMS).
1.5 Article Purpose In this article we use theoretical reasoning and a case study to investigate how, under what conditions, and in what ways SMS methods could add to the FSSD. The following research questions are in focus:
1. What SMS methods are most applicable to use in sustainability planning?
2. What might a new sustainability planning approach look like that integrates the FSSD with SMS?
2. Methods We review SMS approaches and put them in the context of the FSSD with its ABCD process. Deductive methods are used to identify possible needs and methods for empowering this framework with SMS. The results are tested for applicability and relevance in reality. We use waterjet cutting, a manufacturing technology with a reputation to have good basic potential to be effective and sustainable, as the case. A generic sustainability plan for a typical waterjet machine producer (WJC) is designed and then tested and applied in real data gathering, modeling and simulation together with experts from the real waterjet machine producer Waterjet Sweden. Finally, conclusions are validated against their experience.
3. Systems Modeling and Simulation Approaches In this article, systems modeling is defined as describing how interrelated actors, components or other variables of a system are connected at a given point in time. Using a geographical metaphor, this corresponds to the drawing of a roadmap of a town. With systems simulation, we mean to estimate the future behavior of certain variables of a system. Similarly, this may correspond to studying how traffic is likely to flow on the roads of the drawn map. Systems Analysis and Dynamics (SA/SD) and Agent Based (AB) and Discrete Event (DE) are mentioned in the literature as leading and complementing approaches to modeling and simulation (e.g. Borshev and Filippov 2004). The first two are continuous and focused on the dynamic interactions between variables over time, while the latter represents the analyzed system as a discontinuous sequence of isolated events performed on system actors. Before we enter a more detailed analysis of different modeling approaches below, it is important to contemplate the assumptions on which the modeling is made, and the way those assumptions are fully understood by individuals taking part in the
Paper C
79
modeling and making use of the results. A related and very important aspect concerning assumptions is whether those are transparent and brought to the table as a shared mental model, or if they are only vaguely discussed, or even hidden. This question is neutral to all the different ways of modeling described below. Goals could be distinct and shared or not, collected knowledge and experience of modelers high or low, and the scope vary from detail to more holistic attempts. These considerations are underpinning our interest to study modeling in the context of a robust framework for sustainability, large enough in time and space, and expressed through a clear vocabulary to serve as a shared mental model, or language, for cohesive cooperation.
3.1 Systems Analysis and Systems Dynamics These approaches both study how system variables influence each other through causal feedback relationships and affect the system behavior (Forrester 1961; Sterman 2000). Systems Analysis (SA) uses Causal Loop Diagrams (CLDs) to make mental or conceptual models and Reference Behavior Patterns (RBPs) to simulate potential behavior over time for key variables of the system. With the help of Systems Dynamics (SD), the mental model structures, developed with SA, can then be taken one step further and be transferred into dynamic numerical models that can be simulated in a computer (figure 1). Models and simulations are updated through ‘Learning loops’ (Sterman 2000) based on how well the models are able to predict real outcomes.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
80
Figure 1. Modeling and Simulation Distinctions. Using Systems Analysis and Dynamics to exemplify the distinction between conceptual (i.e. Causal Loop Diagrams (CLDs) and Reference Behavior Patterns (RBPs)) and numerical support tools (i.e. Computer Models and their Use) for Systems Modeling and Simulation, respectively.
SA and SD are ‘top‐down’ approaches (Scholl and Phelan 2004), which look at system behavior from an aggregated perspective and they are therefore mostly used in long‐term, strategic models. They also often make it possible to identify leverage points for interventions in the system that can lead to significant changes with minimal amounts of effort (Meadows 1999). Using the same town road map metaphor, SA and SD do not aim to understand individual commuters’ behavior but attempts to understand the traffic system by modeling and simulating the dynamics at the town level (e.g. effects of various traffic policy interventions on the average congestion frequency in traffic).
3.2 Agent-Based Modeling and Simulation This is a ‘bottom‐up’ approach that starts from relatively simple rules that govern the interaction between agents as well as the interaction between an agent and its environment. The behavior of those individual actors can then be aggregated to show an emerging behavior of the system. This corresponds to attempting to understand the above mentioned traffic system by modeling and simulating how the choices and interactions between individual drivers and other stakeholders depend on road pricing and other traffic policies. The Agent‐Based (AB) approach has its roots in modeling human social behavior and individual decision‐making (Bonabeau and Meyer 2001) and stems from the field of complex adaptive systems which addresses “how complex behaviors arise in nature among myopic, autonomous agents” (Macal and North 2005).
Paper C
81
The Agent‐Based approach has also been suggested for use in new product development (Garcia 2005).
3.3 Discrete Event (Process-Centric) Modeling and Simulation
The ‘Process‐Centric’ nature of Discrete Event (DE) modeling and simulation means that it represents the analyzed system as a sequence of isolated and discontinuous operations: (e.g. arrival, delay, use resource, split, combine, etc.) being performed on entities (transactions) like customers, documents, parts, data packets, vehicles, phone calls, etc (Cassandras 2005). In the town road map and traffic example, DE could be used to model and simulate the sequence of events that commuters need to go through to get from their homes to their workplaces.
4. Investigating What SMS could Bring to the FSSD
The FSSD is a framework for strategic planning in complex systems. As such, the FSSD does not in itself contain rigorous tools for aiding understanding of the dynamics of the systems of study. Experience shows that a well‐composed group (with representatives from various stakeholders) that knows the framework well will, by sharing one and the same mental model for how to frame the planning, be able to apply experience, intuition, and the collective knowledge to arrive at strategic paths towards sustainability (Robèrt 1997; Nattrass 1999; Broman et al. 2000; Leadbitter 2002; Robèrt 2002b; James and Lahti 2004). Nevertheless, we know from systems science that many essential system aspects are difficult to explore with group‐modeling alone, or may even be counterintuitive in such settings (Senge 1990; Meadows 1999; Sterman 2000). Planning without additional support at such occasions may then mean that important system mechanisms remain hidden or incompletely described. Our hypothesis is that this combined approach should identify relevant current problems and assets in relation to the ABCD steps, while adding SMS tools as needed throughout the process (figure 2).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
82
Figure 2. Systems Modeling and Simulation (SMS) within Sustainability Constraints. How SMS tools add to the ABCD planning process of the FSSD by modeling and simulating, among other things, how alternative timing and strength of human activities (e.g. Resource Use) might push key system variables (e.g. ecosystem health) towards the future vision within sustainability constraints.
Specifically, SMS may support the FSSD:
• At the systems level, by providing a deeper understanding of the system of study (e.g. project or organization), including the relationships the system has with its surroundings.
• At the current and success levels, by scrutinizing the relationships between the sustainability principles on the one hand, and aspects of the current situation (B) as well as of proposed solutions and measures, on the other (C).
• At the strategic prioritization level (D), by helping to answer guiding questions and thereby supporting evaluation and prioritization on suitable timing and strength of proposed actions. This means to identify
Paper C
83
the smartest of some alternative investments with regard to their feasibility to act as flexible platforms for forthcoming investments.
With the above in mind, what are potential contributions of specific SMS tools like SD, DE, AB and LCA to the ABCD planning process of the FSSD?
5. A New Integrated Planning Process 5.1 Planning Process Planners may first get a structured overview by using the ABCD process and when needed use SMS tools both at a mental or conceptual level (e.g. systems analysis column in figure 1 above) and at a more detailed numerical level (e.g. the systems dynamics column in figure 1). The workflow would be:
1. Run the iterative ABCD Planning Process. Planners first agree on the system of study and what success in the system would entail on an overarching and principled level including the sustainability principles (A). Then, in that context, they identify challenges and strengths in the current situation (B) as well as potential solutions for the future (C), and, finally, move on to prioritization and planning (D). The process is iterated as the plan unfolds in reality, requiring re‐evaluation and new, adapted, planning. It may be an advantage to allow some time spent on this kind of free and explorative stage, before more sophisticated tools of any kind are brought into play. This is to avoid risks like unnecessary modeling if the big picture presented from the ABCD is enough to arrive at a decision, or that some thoughts would not surface if there are uncertainties as regards how to express them in a format that suits the modeling.
2. Check the need for Conceptual Modeling and Simulation Support. Are there issues or ‘hotspots’ that seem interconnected in a fashion that is too complex to understand or foresee only by experience and group‐modeling methods? If we are dealing with a strategic issue and if an aggregated whole‐systems overview is desirable the, SA approach should be used. If individual actors and their histories are of particular interest, AB is suitable. And, finally, if a case concerns mainly a sequence of events, this points towards using DE. If no conceptual support is needed move on to step 6.
3. Conduct the Conceptual Modeling and Simulation. Make an overview model covering business model, physical consumption, sustainability impacts and resulting stakeholder pressure. If necessary, zoom in on the ‘hotspots’ revealed from the ABCD and the overview model,
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
84
identify important related variables and estimate likely system behavior over time.
4. Check the need for Numerical Support. Are numerical estimations of timing and strength of problems and interventions necessary? If no, then move on to step 6.
5. Conduct the Numerical Modeling and Simulation. Make computer models based on the conceptual models, identify suitable indicators and assess the effect of alternative intervention scenarios.
6. Formulate recommendations. Complement or refine the ABCD analysis and present a prioritized list of actions and a time plan.
6. Case Study Part 1: ABCD Planning for Waterjet Cutting
6.1 Step A1. Exploring the Waterjet System and its Success Criteria
6.1.1 The Waterjet Cutting Technique Waterjet cutting machines (figure 3) use the erosion power of water and sand to cut the work piece. The cutting is typically done either with water only (20%), or with water and some additives, mostly sand abrasives (75%). Pure waterjet cutting (only water) is typically used to cut foodstuff, rubber, fibre wool, corrugated cardboard, plastic, fibre‐reinforced plastics, fibreglass, carbon fibre, lead and tin. Abrasive Waterjet Cutting (AWJ) (water and sand) is typically used to cut in tougher materials such as stainless steel, tile, brass, wood, titanium, copper, granite, and aluminium up to a thickness of about 300 mm.
Figure 3. A waterjet cutting machine with (1) a tank with water that dampens the waterjet beam, (2) a work bench where the cut piece is placed, (3) cutting heads that
2 34
1
Paper C
85
press water through the workpiece into the water tank, and (4) a supporting frame for the mobile cutting heads.
6.1.2 The Waterjet Cutting Market From 2000 to 2007, the global waterjet cutting market increased from about 200 to 1000 million USD. We will focus on high quality cutting systems with higher cutting performance and price than the market average. Of course companies with such a focus were extremely vulnerable to the rapid and drastic drop in industrial demand that resulted from the financial crisis that erupted in late 2008.
6.1.3 Case Justification Compared to most other cutting techniques (e.g. oxyfuel flame cutting, plasma and high definition plasma cutting and laser cutting) waterjet cutting has high accuracy and flexibility, low work piece material losses and inert, abundant main processing substances (mainly water and sand) and, thanks to its cold cut, a lesser need for post‐operations with accompanying resource consumption and costs. Waterjet cutting therefore seems to have a good basic potential to be an effective and sustainable manufacturing technology.
6.1.4 Studied System
In line with both FSSD and SMS practice, we first agreed upon the below described boundaries for the studied waterjet cutting life‐cycle system and how it relates to other systems, human society (with external stakeholders) and the ecosphere (figure 4).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
86
Figure 4. Systems map with focus on waterjet machine production and its life cycle phases. The map describes key material and energy flows in the context of waterjet cutting of some materials, the ‘parent’ Ecosphere system and the connected Lithosphere system. Other interactions within the product life cycle and between the product life cycle and societal stakeholders are also covered.
6.1.5 Success Since the system is dependent upon ‘parent’ systems, the definition of success for the system being planned must inherit the principles of success (minimum constraints) for those higher system levels. In this case, a future sustainable Waterjet Cutting system must therefore comply with the four previously presented sustainability principles (SPs) that establish minimum constraints for global socio‐ecological sustainability (Holmberg and Robèrt 2000; Ny et al. 2006). This means that the Waterjet Cutting system must not contribute to:
Exposing the ecosphere to systematically increasing…
I. …concentrations of substances extracted from the Earth’s crust
II. …concentrations of substances produced by society
III. …degradation by physical means
Systematic …
IV. … undermining of people’s capacity to meet their needs
6.2 Step B1 – Benchmarking against Success In this step we identify current strengths and challenges in relation to the definition of success agreed upon in step A1. We have focused the assessment
Paper C
87
below on two key topics; the product function throughout its life cycle on the one hand, and the stakeholder perspective on the other. According to our experience, those are shortcuts to overview and clarity in the B step of the ABCD (Ny et al. 2008):
6.2.1 Current Product Function and Life-Cycle Implications The waterjet cutting machine is mainly used in industry sector applications that demand high cutting accuracy, as, for example, the aircraft industry and the car industry. Some of its advantages are that it can cut:
• in almost any material in various thicknesses; • without deforming the work material (reducing the need for resource
consuming post processing); • with low total cutting costs even in small series; and • in a way that contributes to a good working environment.
The main sustainability problems (SP violations) in relation to Waterjet cutting are that it:
• often uses unsustainable fossil‐ or nuclear‐based electrical energy (SPs 1 and 2);
• consumes relative large amounts of water and special quality sand that is a rare resource and therefore only available in limited amounts in some parts of the world (in this case Australia) (SP3);
• requires significant fossil energy supply for sand transports (SP 1); • can occupy land from deposits of waste sediment (SP 3); and • can emit hazardous cutting remainders through the waste sediment
(SPs 1, 2)
6.2.2 Current Communication and Cooperation with Stakeholders Here we gather societal stakeholder consequences from the product concept and how they are currently influenced. Other sustainability‐related stakeholder challenges for the waterjet companies include:
• too little value‐chain co‐operation on recycling (SPs 1, 2, 3 and 4); and • sub‐optimized design due to insufficient pressure from sustainability‐
related legislation and economic incentives and disincentives (SPs 1, 2, 3 and 4).
6.3 Step C1 – Creating Visions and Potential Actions In this step we use brainstorming to identify ideas of what waterjet cutting might look like in a sustainable society and actions and measures that can deal with problems identified in the B‐step to start closing the gap between the
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
88
present situation and the vision. We focus the assessment on the same two key topics as in step B1.
6.3.1 Potential Future Product Function and Life-Cycle Implications
The following new market requirements on waterjet functions and conceptual design are likely to evolve in the future as responses to the sustainability challenges:
• Faster cutting with preserved accuracy; • Staff education and incentives on efficiency and sustainability; • Energy‐efficient cutting beam and lighter moving parts; • Recycling of machine raw materials and cutting consumables (mainly
water and sand); • Module‐based machines for easier maintenance, reuse and recycling; • Safe separation of hazardous materials from the sediment; • Purification of the customers’ sediment and selling it back to them; • Magnification of research and development efforts through university
sustainability projects; • Renewable electricity (e.g. from wind, hydro, or photovoltaics); and • New cutting concepts (e.g. a mobile unit for road construction).
6.3.2 Potential Future Communication and Cooperation with Stakeholders
The development of more sustainable product‐service concepts will probably be favored by increased prices and taxes that make it more profitable to save scarce resources and nature’s receptive capacity. Resource efficient companies and companies with proactive resource and emissions strategies will become leaders in this situation. To that end, some possible measures to consider are to:
• Dialogue with value‐chain companies on sustainability and efficiency; • Support sustainability‐related tax policies; • Cooperate with experts on recycling of cutting remainders from the
sediment; • Work with experts on life‐cycle optimization of machines; • Replace virgin sand with locally sourced abrasives (e.g. crushed rock); • Lease machines as part of a total function‐selling offering; • Create a network of companies for a total cutting service and recycling; • Promote expanded railroads for easier waterjet machine transport; • Strengthen marketing by pushing eco‐labeling of waterjet cutting; and
Paper C
89
• Work through Waterjet Associations to inform customers on how to deal with waste products and how to take extra precautions when cutting in certain problematic substances (e.g. lead).
6.4 Step D1 – Prioritize Actions This assessment step prioritizes the above identified sustainability problems and solutions to arrive at some recommended action steps for waterjet companies and their stakeholders. Actions are prioritized based on how well they are expected to be:
1. Exploring its potential to serve as platform for forthcoming investments captured in the C analysis, to arrive at full compliance with all sustainability principles and other success criteria.
2. An immediate improvement in relation to one or all sustainability principles or criteria.
3. Profitable soon enough (sufficient return on investment) to sustain the transition process towards full compliance with all sustainability principles and other success criteria.
The following early action steps came at the top of the prioritized actions list for the waterjet companies:
6.4.1 Short Term Steps (1-2 yrs)
• Educate staff and provide incentives for efficiency and sustainability; • Improve cutting beam efficiency and cut weight of moving parts; and • Initiate value‐chain dialogues on sustainability and efficiency.
6.4.2 Medium to Long Term Steps (5 yrs+)
• Buy eco‐labeled electricity and recycled raw materials; • Replace ‘virgin’ sand with locally sourced abrasives (e.g. crushed rock);
and • Offer a cutting service with guaranteed continuous operation for an
annual and low fixed fee.
6.4.3 Check the Need for Support from Conceptual Systems Modeling and Simulation
The first round of sustainability assessment resulted in the above list of prioritized actions over five years. This is a good starting point but is it certain that this makes the company sufficiently prepared for major sustainability challenges like climate change and ‘peak oil’ (Campbell 2005) that will escalate within the next ten to fifty years? Is the list of early actions steps really complete and are all relevant interactions between them identified? To look deeper into these questions, and given that they are not easily modeled as a
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
90
series of discrete events and that we at this stage are not interested in the behavior of individual actors, we continue by using systems analysis tools.
7. Case Study Part 2: Conceptual Systems Modeling and Simulation
7.1 Step A2 – Overarching System and Success Description through Causal Loop Diagrams
Here we use Causal Loop Diagrams (CLDs) to systematically organize and potentially complement the system of study and its success definition that we identified in step A1 above. CLDs map out causalities between system variables through positive and negative arrows. A positive arrow denotes that a change in one variable gives a change in the same direction on the affected variable (positive or negative). And conversely, a negative arrow denotes that the variables are going in opposite directions; if one increases the other will decrease and vice versa (e.g. Sterman 2000). The key system actors in this case include the waterjet machine producer (WJC) with its cutting customers and stakeholders and the competing producers with their customers and the system is the market for waterjet cutting which – like other markets – is exposed to increasing threats from societal unsustainability.
7.1.1 System Description CLD The system of study is mapped through the competitiveness of a typical waterjet machine producer in relation to competing techniques like thermal cutting on an increasingly sustainability‐driven market. We translate this into the following concrete question: “What are some major sustainability‐related enablers and barriers to the competitiveness of waterjet machine producers?”
The resulting CLD (figure 5) consists of three loops covering the basic profit‐enhancing mechanism of WJC (loop R1), the profit dampening effects from physical consumption and costs (loop B1) and the indirect sustainability consequences and resulting stakeholder pressures (loop B2) that also reduce profitability. WJC & Customer Profitability represents the companies’ financial strength and investment ability. Tax & Legislation & Stakeholder Pressure summarizes external stakeholders’ enhancing effects on WJC Life‐Cycle Costs. The profitability loop is also related to the total number of high tech cutting devices demanded on the market in a certain year (High Tech Cutting Market) and thereby also dampened by competing thermal cutting.
Paper C
91
Figure 5. System Description CLD. How the competitiveness of Waterjet Cutting producer (WJC) is strengthened by the size of its high tech cutting market and profitability (R1) and dampened by the profitability of competing thermal cutting and consumption (B1) and sustainability costs (B2).
7.1.2 Success Description CLD In step A1, we defined the minimum constraints for success through a series of sustainability principles that should not be violated in the system. But what could be actively done to promote sustainability in this system? In the CLD (figure 6) we start from the systems description CLD in figure 5 and categorize the answers to this question under either Research and Development (R&D) based efficiency increases in existing machine concepts (loop R2) or innovations (loop R3) that bring about new machine concepts that are able to take market shares from less sustainable or otherwise less efficient machines. From a business point of view this is not trivial of course, since there is a chance for waterjet cutting to grow even if the market for cutting at large would decline due to increasing pressures from sustainability‐concerns, financial recession, or other reasons. The new machines concepts also have negative impacts but, as long as they are less damaging than the machines they replace, the innovation benefits (loop B3) outweigh the costs (loop R4).
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
92
Figure 6. Success description CLD. How the competitiveness of Waterjet Cutting (WJC) is further strengthened by either increased efficiency through R&D efforts (R2) or through innovation efforts (R3) that result in the replacement of less sustainable machine types on new markets (R4).
7.1.3 Conclusions and Added Understanding from System and Success CLDs
The systems description CLD displays that the size of the high tech cutting market sets an overall limit to the number of machines the company can sell. In line with this, the success description CLD emphasizes the importance to be competitive not only from improving the efficiency of existing machine concepts but to innovate and find new concepts that can thrive on a sustainability‐driven market. The need for such innovations is further emphasized by the downturn on the high tech cutting market in the current (2009) global financial crisis (Jönsson 2009). The CLDs also identified an important delay from the WJC Contribution to Socio‐Ecological Sustainability Problems to the Tax & Legislation & stakeholder responses. This is a strong argument for companies to become proactive since they otherwise might be exposed to sudden and unforeseen reduced competitiveness during the delay time, even though they might have fixed their sustainability problems one by one as they appeared.
Paper C
93
7.2 Step B2 – Identification of Sustainability ‘Hot-Spots’ At this step we complement the list of sustainability violations from step B1 presented in previous section:
• large amounts of fossil CO2 and other emissions due to long transportation of sand (SPs 1 and 2); and
• too much focus on current sustainability problems at the expense of new market opportunities where waterjet cutting has advantages compared to other cutting techniques (SPs 1, 2, 3 and 4).
And, other sustainability‐related stakeholder challenges for the waterjet companies include:
• That the high‐tech cutting market is proportional to global GDP output and subject to its sustainability limitations (SPs 1, 2, 3 and 4); and
• That the sustainability performance of waterjet cutting is restricted by the efficiency of their cutting customers and society at large (SPs 1, 2, 3 and 4).
7.3 Step C2 – Identification of Suitable Sustainability Interventions
Here we identify some new suitable sustainability interventions for the hotspots from B2:
• Magnify the efficiency increasing effect of waterjet cutting in the sustainability driven market at large by research to identify: (i) new market opportunities; (ii) new ways of providing cutting services as well as machines; and (iii) value‐chain cooperation; and
• Divert a portion of the company profits to build up innovation competence (in line with the above bullet) through cooperation with other actors like business incubators and academia.
7.4 Step D2 – Prioritize Actions The experiences from the CLDs, B2 and C2 led to the following updated list of prioritized actions for the waterjet company and some new questions:
7.4.1 Short Term Steps (1-2 yrs)
• Divert a portion of the company profits to build up innovation competence through cooperation with other actors like business incubators and academia to explore new ways of making business in the waterjet cutting industry on a sustainability driven market.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
94
7.4.2 New Questions The issue of efficient recycling and management of materials have surfaced several times during the assessment so far, and the CLD of A2 expanded the scope to see the market at large, with potential repercussions of great importance to the waterjet cutting industry. This leads to a new question. What resource flows most urgently needs to be better managed? This will be addressed by identifying key sustainability indicators and follow them in an overview waterjet cutting life‐cycle inventory study.
7.5 Life-Cycle Inventory Study 7.5.1 Indicator Selection Criteria To be able to manage many elements in complex interrelationships, it is important to begin with a small number of relevant and preferably pedagogical indicators. In this first application of the new combined FSSD and SMS methodology, we have chosen to cover some key social, ecological and economic sustainability aspects of the waterjet life‐cycle activities.
7.5.2 Social and Ecological Indicator Selection To conveniently meet the indicator criteria, the social and ecological indicators were derived from the above identified key violations of sustainability principles (SPs) throughout the waterjet lifecycle. This should ensure that the indicators are relevant for sustainability and help keep their number to a minimum.
• SP 1. One of the key SP1 violations was the transport and energy use related emissions of carbon dioxide from non‐renewable energy sources. A standardized and easily accessible indicator would then be the Global Warming Potential (GWP100). Another SP1 indicator could be focused on the waste pieces of the cut material (mostly metals) that will mix with the sand to form waste sediment at the bottom of the water tank. It is excluded here since we focus on a typical cutting case with sediment that is classified as inert waste. It is only in rare cases, when toxic materials like heavy metals have been cut, that the sediment is considered harmful.
• SP 2. The waterjet machine is assembled from relatively few materials and chemical processes (except for welding and painting). The cutting operations use inert sand and water that do not react chemically to the cut material. This means that there are not many chemical emissions in the key production and cutting stages of the life‐cycle. We have therefore decided to not include an SP2 indicator.
Paper C
95
• SP 3. The most influential SP3 violations in the key life‐cycle stages were that the cutting process uses sand that is a rare resource (this gives impacts at the extraction sites) and water. These two flows were therefore selected as SP3 indicators.
• SP 4. Except for the work‐related risks (that still probably is lower than for competing techniques that may cause in‐door gas emissions) not much serious SP4 violations were identified. The work related risks should be measured when comparing cutting with other techniques but in this case, when we focus on waterjet cutting, we have decided to exclude it.
7.5.3 Economic Indicator Selection We wanted to capture the profitability that waterjet producers and cutters get from selling and using the machines. We then adapted some standardized economic indicators. We therefore mapped out the producer’s costs and revenues throughout the machine life‐cycles and let that add up to the total producer profitability (represented by their profits after taxes). Since the cutting process is part of the customers’ production process and not their core business it is most relevant and accessible to estimate their profitability on waterjet cutting by their ability to keep total cutting costs down.
7.5.4 Data gathering Figures for sand and water use and related GWP100 were accessed through a simplified life‐cycle inventory study for a typical South Swedish waterjet manufacturer. It covers cradle‐to‐gate impacts for production of a 40 kW machine with 2 cutting heads (table 1) and 1500 hours operation of the same machine (table 2). Generic consumption and sustainability data was collected from the Ecoinvent2 life‐cycle inventory database. The generalized economic data were based on waterjet research (Öjmertz 2006), marketing studies (Öhrlings Pricewaterhouse Coopers 2003) financial reports (Water Jet Sweden AB 2007, 2008) and a dialogue with experts at Water Jet Sweden AB and the Swedish Waterjet Lab.
7.5.5 Life-Cycle Inventory Results The production of a waterjet machine results in about 9 ton GWP100 (table 1) and the use of the same machine emits 14 ton GWP100 per year (table 2). The production figure also has to be distributed evenly over the expected economic life‐time of the machine (20 years). This means that the yearly contribution from the production phase is about 0,5 ton. The current climate change issue indicates that fossil CO2 emissions, in a not too distant future, probably will need to approach zero for all actors and sectors in society. As long as this demand is remembered, it is adequate to put the current CO2 emissions from
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
96
the recycling phase at zero or less due to the emissions that are avoided when it replaces ‘virgin’ metal production. Furthermore, recycling per se is neutral to the energy sources we use for it, and will always save resources also in a CO2 neutral future scenario. So, the use phase is clearly most important in relation to this indicator and, among the materials used in this phase, the sand and its transport from Australia to Sweden is the dominant factor (8 tons per year).
Table 1. Waterjet Machine (40 kW, 2 cutting heads) Cradle to Gate Life Cycle Inventory Data and Global Warming Potential.
Machine Components and
Assembly
Qty Distance Final transport to Waterjet Assembly
(km)
Transport Mode
GWP h Cradle to Gate for
Machine Component (kg CO2 eq)
GWP h Final transport to
Assembly (kg CO2 eq)
GWP h Assembly
(kg CO2 eq)
Total GWP h
(kg CO2 eq)
Compressor 400 kg (1 unit)
500b Truck 4050a 20,7 4070
Control Electronics
50 kg 17000c
350d Ship Truck
1380 11,69 1400
Copper Cable 75 kg 500b Truck 413 5,8 419
Electric motors 80 kgf (4 units)
500b Truck 868e 6,16 874
Steel Frame 1500 kgg 500b Truck 2177 116 2290
Water 1,2 m3 n/a 0,373 0,373
Electricity 75 kWh n/a 3,24 3,24
Total for Cradle to Gate 9086 a Emissions data based on a compressor for 5000 USD in US Input/Output database b Central Sweden to Ronneby (Sweden) c Ningbo (China) to Gothenburg (Sweden) d Gothenburg to Ronneby (Sweden) e Emissions data based on each electric motor for 200 USD in US Input/Output database f 20 kg for each transported electric motor g Steel (900 kg), stainless steel (600 kg) h Global Warming Potential (GWP) based on 100‐year CO2 equivalents
Table 2. Waterjet Machine (40 kW, 2 cutting heads) Operation (1500 hrs) Life Cycle Inventory Data and Global Warming Potential.
Consumables during Operation
Qty Distance Final transport to
Operation (km)
Transport Mode
GWPa Cradle to Gate for Consumables (kg CO2 eq)
GWPa Final transport to
Operation (kg CO2 eq)
GWPa Operation
(kg CO2 eq)
Total GWPa
(kg CO2 eq)
Sand 27 tonsb 18260c 350
ShipTruck
97,2d
7682e 7779
Other Consumablesf 500 truck 2650 3 2653
Water 133,2 m3 g 0 414 414
Electricity 75 MWhh 0 3240
3240
Total for Operation 14085
a Global Warming Potential (GWP) based on 100‐year CO2 equivalents b At a use rate of 300 g/min c Australia to Gothenburg (Sweden) d 3,6 kg CO2 eq/ton e 7182 kg (266 kg/ton raw material sand) + 499,5 kg (18,5 kg/ton disposed sand) f E.g. spare parts such as oil filters cutting heads, grates, nozzles, etc. g 3,8 l/min cutting, 11 l/min cooling * 60 min/hour * 1500 hours; 1000 liters = 1 m3 h 40 kW pump, 10 kW motors/controls * 1500 hours
Paper C
99
7.6 Check the Need for Numerical SMS Support? Several important sustainability issues have been identified in the various assessment steps so far, including the need to improve sand and water management to save on limited resources. The life‐cycle inventory study re‐emphasized that the sand, and its long transport from Australia, needs to be a focus for efficiency measures. But how could this efficiency be achieved in practice? How soon will the interventions need to come and how strong? Are there tradeoffs between sustainability gains and short term economic gains? Such questions will be addressed through numerical systems dynamics that zooms in on the sand issue.
8. Case Study Part 3: Numerical Systems Modeling and Simulation
8.1 Numerical STELLA Computer Model 8.1.1 Model Focus The model focuses on the above described issue of sand management and translates this into the following question: “How could alternative sand management strategies influence the profitability for WJC and its cutting customers on a sustainability‐driven market”.
8.1.2 System Boundaries and Assumptions The sand‐focused question sets an overarching model boundary. The following assumptions have further specified the content of the model:
• The WJC and its customers are treated as one company with one combined net profit. This means that monetary transactions between them (e.g. producer sales and aftermarket revenues) are excluded from the model. The WJC production cost is included and spread out over the assumed machine lifespan (20 years). The cutters’ revenues are excluded since they often depend on other external factors and not so much the small manufacturing step that waterjet cutting normally represents for them. This means that profitability efforts in this model are focused on cost minimization rather than profit maximization;
• Sand costs are included but other costs to run the machines (salaries, consumables other than sand, etc) are assumed to be unaffected by the measures taken to improve sand management and are therefore excluded;
• All tax, legislation and other cost‐enhancing stakeholder responses to sustainability problems are aggregated into one variable‐ the GWP tax rate;
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
100
• The high tech cutting market and WJC’s share of it are both assumed to be constant for the simulation period (2010 – 2030). The WJC machine population is considered to have leveled out at 400 as the company sales of machines just replaces those that are recycled every year (20);
• It is assumed that WJC and its competitors are exposed to the same external events and put corresponding funds into R&D. The R&D efforts in the model are therefore assumed to be spent on keeping up with competitors and maintaining the same market share. This also means that the competitors can be excluded from the model; and
• No inflation and no interest rates are included. This means that future gains and losses are given the same estimated values as the current ones.
8.1.3 General Model Layout The Stella computer model consists of four sub‐modules (figure 7) that each corresponds to a variable in figures 5 and 6: WJC Machines In Use (M1), WJC Life‐Cycle Contribution to Sustainability Problems (M2), Stakeholder Pressure (M3) and WJC and WJC & Cutter Profitability (M4). Several feedback loops have been cut and replaced by external input variables whose values are determined by the model user depending on the specific scenario assumptions.
Paper C
101
Figure 7. Stella Model for the study of sand profitability in the waterjet cutting system. The machines in use (M1) increases profits (M4), sand consumption and CO2
emissions (M2) and, indirectly, CO2 taxes (M3). Sand consumption (M2) and CO2 taxes (M3) both limit profits (M4). The model user inputs values to 7 variables (0‐6) to calculate 7 output variable values (7‐13).
M3 - Stakeholder PressureM4 - WJC & Cutter Profitability
~Sand Use perMachine & yr
WJC & CutterCostsper yr
~Tax rateper GWP
~
WJCMachines
In Use
Sand GWPper yr
CO2 Taxper yr
Sand Costper yr
Sand Useper yr
Income Taxper yr
WJCOp Costs
per yrWJC Costs
perMachine In Use & yr
~GWP
per ton Sand
~Costs for
RnD & Innovationper yr
~Cost
per ton Sand
M1 - WJC Machines In Use
M2 - Contribution to Sust Problems
0
1
6
5
4
2
3 13
12
11
9
7
8
10
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
102
8.1.4 Model Input Data All model scenarios started from (and sometimes modified) a set of ‘steady‐state’ input data for a typical waterjet producer (WJC) (table 3).
Table 3. Model Input Data for a ‘Steady‐State’ Market of Waterjet Machines (400 machines).
No. Variable Name Value Unit Source
(0) WJC Machines In Use 400 M Estimation based on financial reports (e.g.
Water‐Jet‐Sweden‐AB 2007)
(1) WJC Costs per Machine In Use & yr
0,170 MSEK/M/yr Financial reports (e.g. Water‐Jet‐Sweden‐AB 2007)
(2) Sand Use per Machine In Use & yr
27 ton sand/M/yr Experts at Waterjet Sweden (Jönsson 2008)
(3) Costs for RnD per yr 4,5 MSEK/yr Waterjet marketing reports (Öhrlings‐Pricewaterhouse‐
Coopers 2003)
(4) Cost per ton sand 0,005 MSEK/ton sand Experts at Waterjet Sweden (Jönsson 2008)
(5) GWP per ton sand 0,296 ton CO2 eq/ton sand
Life cycle inventory of waterjet cutting (table 2).
(6) Tax Rate per GWP 0,0002 MSEK/ton CO2 eq Emissions trading sites
8.1.5 Calculation Algorithm Based on the model input data, (0) to (6), from figure 7 and table 3, the model uses the following equations to calculate the values of the output variables, (7) to (13), from figure 7:
(7) WJC Op Costs/yr = (0) * (1)
(8) Income Tax/yr = 0,2 * (7)
(9) Sand Use/yr = (0) * (2)
(10) Sand GWP/yr = (9) * (5)
(11) Sand Cost/yr = (9) * (6)
(12) CO2 Tax/yr = (10) * (6)
(13) WJC & Cutter Costs/yr = (3) + (7) + (8) + (11) + (12)
Paper C
103
8.1.6 Model Development Process and Validation The computer model is the result of an iterative development process, where the number of variables and relationships have been gradually reduced to reach a suitable complexity level. The models were first calibrated through initialization in a “steady state" (simplified starting values were kept constant until the end of the runs at 2030). This created stable model versions that controlled experiments could be conducted on. After that, the same procedure was repeated with realistic starting values from 2007 for a waterjet machine production life‐cycle. Given that the number of machines is assumed to be constant throughout all scenarios, the 2007 data are consistently used as start values for all scenarios.
8.2 Scenario Descriptions For the purpose of this study, focusing on the development of a combined FSSD and SMS methodology, and applying it in a first survey on waterjet cutting, we have chosen to include only two scenarios – one baseline scenario where external factors and stakeholder responses are involved and one scenario where some strategic WJC interventions have been added.
8.2.1 Scenario 1. The ‘Baseline’ Case. No WJC interventions Sustainability problems are assumed to increase steadily and be increasingly internalized into the economic system. This is reflected in a hundredfold rise in the aggregated GWP tax rate from the year 2013 to 2030 (from 200 to 20000 SEK/ton CO2)3.
8.2.2 Scenario 2. The ‘Better’ Case. Proactive WJC Interventions. The GWP tax rate increases exactly as in scenario 1 but here the company introduces two interventions:
• From 2016 to 2020, a targeted project doubles the R&D spending and permanently reduces the sand use per machine and year from 27 to 20 tons; and
• From 2018 to 2020, the sand carbon footprint is significantly reduced (from 0,3 to 0,027 ton CO2/ton sand) by substituting the Australian sand for locally‐sourced alternatives. In order to ensure comparable quality, this unfortunately also means that the sand costs increases from 5000 to 7000 SEK/ton sand.
3 In early 2009 a ton of CO2 emissions was worth about 100 SEK on the emissions trading markets.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
104
8.3 Scenario Results In scenario 1 (figure 8), the increasing sustainability‐related stakeholder pressures (GWP tax rate) translates into almost doubled costs for waterjet producers and their cutting customers (from 110 to 177 MSEK/yr). In scenario 2 (figure 9), the initial efficiency intervention manages to dampen both the cost increases and the sustainability problems but it is not until the second intervention that they manage to break the trend and the total costs are reduced and level out close to the start level (111 MSEK/yr). At the same time the sustainability problems are significantly reduced as a result of the interventions. When the new abrasive solution is brought in the sand related carbon dioxide emissions are reduced from 3240 to 216 ton CO2 eq/yr and the sand consumption from 10800 to 8000 ton sand/yr. In other words, early dematerializations (e.g. the efficiency project) could pay for more costly later substitutions (e.g. the new abrasives project) and simultaneously significantly reduce sustainability problems. The optimal timing of these and other interventions are of course also influenced by uncertain external factors. What is for example the likely combined demand for cutting from a receding traditional industry and a growing sustainability‐focused manufacturing industry? This and other questions are likely subjects of further simulation studies.
Paper C
105
Figure 8. Results from Scenario 1 ‐ the ‘Baseline’ Case. How increasing GWP tax rates influence sand and carbon efficiency, sustainability problems and costs.
0
5
10
15
20
25
30
ton Sand
/Machine
/yr
Sand Material Efficiency
Sand Use per Machine & yr
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
ton CO
2/ton Sand
GWP Efficiency
GWP per ton Sand
0
5000
10000
15000
20000
25000
Sustainability Problems
Sand GWP per yr(ton CO2 eq/yr)
Sand Use per yr(ton Sand/yr)
Tax rate per GWP(SEK/ton CO2 eq)
020406080
100120140160
MSEK/yr
CostsWJC & Cutter Costs per yr
WJC Op Costs per yr
Sand Cost per yr
Costs for RnD & Innovation per yr
Income Tax per yr
CO2 Tax per yr
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
106
Figure 9. Results from Scenario 2 ‐ the ‘Better’ Case. How WJC interventions could add to the influences on sand and carbon efficiency, sustainability problems and costs.
0
5
10
15
20
25
30
ton Sand
/Machine
/yr
Sand Material Efficiency
Sand Use per Machine & yr
0
0,05
0,1
0,15
0,2
0,25
0,3
0,35
ton CO
2/ton Sand
GWP Efficiency
GWP per ton Sand
0
5000
10000
15000
20000
25000
Sustainability Problems
Sand GWP per yr (ton CO2 eq/yr)
Sand Use per yr (ton Sand/yr)
Tax rate (SEK/ton CO2 eq)
020406080
100120140160
MSEK/yr
CostsWJC & Cutter Costs per yr
WJC Op Costs per yr
Sand Cost per yr
Costs for RnD & Innovation per yr
Income Tax per yr
CO2 Tax per yr
Paper C
107
9. Overall Case Study Recommendations The aggregated results from the traditional ABCD assessment and the supporting conceptual and numerical SMS led to the following list of prioritized action steps:
Medium Term Steps (2‐5 yrs):
• Use efficiency gains to pay for eco‐labeled electricity and recycled raw materials; and
• Divert a portion of the company profits to build up innovation competence through cooperation with other actors like business incubators and academia to explore new ways of making business in the waterjet cutting industry on a sustainability driven market.
When Resource Constraints and/or very harsh Climate Policies hit (5‐15 yrs):
• Move away from virgin sand to locally sourced abrasives (e.g. crushed rock) and/or do a similar sustainability analyses as in this study on alternative abrasives;
• Invent a separation system in the machine so sand and water can be reused internally or recycled;
• Design for recyclability and use less damaging raw materials; and
• Move towards selling cutting services rather than just machines. This could include advanced operators’ manuals and training on efficiency and sustainability, a special deal on eco‐labeled electricity, spare parts and software and hardware upgrades, and a complete maintenance, waste management and recycling solution.
The waterjet industry could get more leverage in marketing and sustainability improvement by becoming aware of system‐wide benefits from proactive actions and should use this when approaching stakeholders to work together towards sustainability and profitability.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
108
10. Discussion 10.1 Theoretical Considerations On the one hand, Systems Modeling and Simulation (SMS) are often attempted for analyses and planning in sustainable development. Outside the realm of a robust principled definition of sustainability, and generic and logical guidelines to approach such principles, there is a risk that even experienced modelers may miss essential aspects, or make priorities that do not take the scope of sustainability, nor the strategic step‐by‐step elements, into full account. The Framework for Strategic Sustainable Development (FSSD) then provides a way to complement the methodology. The framework for strategic sustainable development (FSSD), on the other hand, has previously been shown to be theoretically robust and directly applicable for real‐life planning at both senior management and product development levels, also in relatively complex matters. However, sometimes experience of the FSSD and collective knowledge do not suffice alone to identify all aspects and their relationships clearly. A demand for expanded analyses, including numerical modeling and simulation, evolves. SMS offers a solution.
This article is a theoretical study that searches for how to complement the FSSD with SMS. We have identified some conditions for how three overarching SMS fields—Systems Analysis and Dynamics (SA and SD), Agent Based (AB) and Discrete Event (DE)—could complement the FSSD planning process (ABCD). SMS tools can be applied as needed throughout the ABCD process to study tradeoffs and interrelationships between listed items in order to create more robust and refined analyses of the problem at hand, as well as of the possible solutions and investment paths. In this way, only those scenarios that are likely to ultimately end up within the overall frame of a future sustainable society are considered.
10.2 Practical Considerations We have tested the proposed integration in a concrete waterjet cutting sustainability planning case. The case study shows that the combined theoretical strengths of FSSD and SMS can be demonstrated also in practice. The conceptual modeling facilitated a more consistent success description that added new items to the lists of relevant problems and solutions. In the process, we have developed an approach to select result indicators based on the sustainability principles of the FSSD. The indicator input data for the simulations was also gathered through a life‐cycle inventory study, thereby identifying a way to bring such static snap‐shot system descriptions into a dynamic systems modeling and simulation exercise. The numerical computer scenarios zoomed in on an identified key sustainability ‘hot‐spot’: how to
Paper C
109
efficiently manage the sand component of the cutting process. It was found that the sustainability impacts of this have been underestimated to date since not all relevant parts of the cutting life‐cycle have been systematically studied. In line with the experiences in the field of innovation (Thomke 2003), the sustainability impacts were found to decrease most quickly and affordably if the company first focuses on improved efficiency and only thereafter goes for more innovative changes in their operations. They should move towards locally‐sourced abrasives, rather than the current sand solution that depends on ecosystem‐problematic sourcing as well as carbon‐heavy transports from Australia throughout the world. The company experts stated that, by taking part in the modeling and simulation process, they got new perspectives on their own system and how alternative decisions could influence system behavior over time (Jönsson 2008). They also expressed an interest to take part in the further development of the resulting generic waterjet cutting simulation model.
10.3 Further Work The authors’ working area, as well as the examples in this text, primarily point toward using the new approach for systems modeling and simulation within sustainability constraints in the area of product‐service development and innovation. Nevertheless, the new approach is intended to be generic enough to be applicable in a variety of planning endeavors. We expect future research along those lines to provide new and more precise conclusions as regards efficient pathways towards sustainability in a number of different industrial settings, as well as to help us improve the emerging integrated planning methodology.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
110
11. References Bonabeau, E. and C. Meyer. 2001. Swarm Intelligence: A Whole New Way to
Think About Business. Harvard Business Review 79(5): 106. Borshev, A. and A. Filippov. 2004. From Systems Dynamics and Discrete Event
to Practical Agent Based Modeling: Reasons, Techniques, Tools. In The 22nd International Conference of the Systems Dynamics Society. Oxford, England: The Systems Dynamics Society.
Broman, G., J. Holmberg, and K.‐H. Robèrt. 2000. Simplicity Without Reduction: Thinking Upstream Towards the Sustainable Society. Interfaces 30(3): 13‐25.
Byggeth, S. H. and E. Hochschorner. 2006. Handling Trade‐offs in Ecodesign Tools for Sustainable Product Development and Procurement. Journal of Cleaner Production 14(15‐16): 1420‐1430.
Campbell, C. J. 2005. Oil Crisis. Brentwood, UK: Multi‐Science Publishing Co. Ltd. Cassandras, C. G. 2005. Discrete‐Event Systems. In Handbook of Networked and
Embedded Control Systems, edited by D. Hristu‐Varsakelis and W. S. Levine. Boston, USA: Birkhäuser Boston.
Everard, M., M. Monaghan, and D. Ray. 2000. 2020 Vision Series No2: PVC and Sustainability: The Natural Step UK/UK Environment Agency.
Forrester, J. W. 1961. Industrial Dynamics. Cambridge, Massachussetts, USA: Productivity Press.
Garcia, R. 2005. Uses of agent‐based modeling in innovation/new product development research. Journal of Product Innovation Management 22(5): 380‐398.
Holmberg, J. and K.‐H. Robèrt. 2000. Backcasting ‐ a Framework for Strategic Planning. International Journal of Sustainable Development and World Ecology 7(4): 291‐308.
Holmberg, J., U. Lundqvist, K.‐H. Robèrt, and M. Wackernagel. 1999. The Ecological Footprint from a Systems Perspective of Sustainability. International Journal of Sustainable Development and World Ecology 6(1): 17‐33.
Intergovernmental Panel on Climate Change (IPCC). 2007. Fourth Assessment Report. Climate Change 2007: Synthesis Report.
International Organization for Standardization (ISO). 2006. Environmental management ‐ Life cycle assessment ‐ Requirements and guidelines. ISO 14044. Geneva, Switzerland:
Paper C
111
James, S. and T. Lahti. 2004. The Natural Step for Communities: How Cities and Towns Can Change to Sustainable Practices. Gabriola Island, British Columbia, Canada: New Society Publishers.
Jönsson, A. 2008. Personal Communication with the Research Director of the Swedish Waterjet Lab during a Waterjet Sustainability Assessment Meeting. Ronneby, Sweden, October 2008.
Jönsson, A. 2009. Personal Communication with the Research Director of the Swedish Waterjet Lab. Ronneby, Sweden, May 2008.
Korhonen, J. 2004. Industrial Ecology in the Strategic Sustainable Development Model: Strategic Applications of Industrial Ecology. Journal of Cleaner Production 12(8‐10): 809‐823.
Leadbitter, J. 2002. PVC and Sustainability. Progress in Polymer Science 27(10): 2197‐2226.
Macal, C. M. and M. J. North. 2005. Tutorial on agent‐based modeling and simulation. Paper presented at 37th Winter Simulation Conference, Orlando, Florida, USA.
MacDonald, J. P. 2005. Strategic Sustainable Development Using the ISO 14001 Standard. Journal of Cleaner Production 13(6): 631‐644.
Meadows, D. H. 1999. Leverage Points. Places to Intervene in a System. Hartland, Vermont, USA: The Sustainability Institute.
Meadows, D. H., J. Randers, and D. l. Meadows. 2004. Limits to Growth: The 30‐Year Update. White River Junction, USA: Chelsea Green Publishing Company.
Millennium Ecosystem Assessment (MEA). 2005. Ecosystems and Human Well‐being: Our Human Planet: Summary for Decision‐makers (Millennium Ecosystem Assessment). Chicago, IL, USA: Island Press.
Mintzberg, H., J. Lampel, and B. Ahlstrand. 1998. Strategy Safari: A Guided Tour Through the Wilds of Strategic Management. New York, USA: Free Press.
Montgomery, C. A. and M. E. Porter, eds. 1991. Strategy: Seeking and Securing Competitive Advantage. Boston, Massachussets, USA: Harvard Business School Press.
Nattrass, B. 1999. The Natural Step: Corporate Learning and Innovation for Sustainability. Doctoral Thesis. The California Institute of Integral Studies, San Francisco, California, USA.
Ny, H., S. Hallstedt, K.‐H. Robèrt, and G. Broman. 2008. Introducing Templates for Sustainable Product Development through a Case Study of Televisions at Matsushita Electric Group. Journal of Industrial Ecology 12(4): 600‐623.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
112
Ny, H., J. P. MacDonald, G. Broman, R. Yamamoto, and K.‐H. Robèrt. 2006. Sustainability Constraints as System Boundaries: An Approach to Making Life‐cycle Management Strategic. Journal of Industrial Ecology 10(1).
Rees, W. E. and M. Wackernagel. 1994. Ecological Footprints and Appropriated Carrying Capacity: Measuring the Natural Capital Requirement of the Human Economy. In Investing in Natural Capital: The Ecological Economics Approach to Sustainability, edited by A. M. Jansson, et al. Washington (DC), USA: Island Press.
Resort Municipality of Whistler (RMOW). 2007. Whistler 2020: Moving toward a Sustainable Future (2nd edition). Whistler, Canada: RMOW.
Robèrt, K.‐H. 1997. ICA/Electrolux ‐ A case report from 1992. Paper presented at 40th CIES Annual Executive Congress, 5‐7 June, Boston, MA.
Robèrt, K.‐H. 2000. Tools and Concepts for Sustainable Development, How do They Relate to a General Framework for Sustainable Development, and to Each Other? Journal of Cleaner Production 8(3): 243‐254.
Robèrt, K.‐H. 2002. The Natural Step story ‐ Seeding a Quiet Revolution. Gabriola Island, British Columbia, Canada: New Society Publishers.
Robèrt, K.‐H., J. Holmberg, and E. U. v. Weizsacker. 2000. Factor X for Subtle Policy‐Making. Greener Management International (31): 25‐38.
Robèrt, K.‐H., H. E. Daly, P. A. Hawken, and J. Holmberg. 1997. A compass for sustainable development. International Journal of Sustainable Development and World Ecology 4: 79‐92.
Robèrt, K.‐H., B. Schmidt‐Bleek, J. Aloisi de Larderel, G. Basile, J. L. Jansen, R. Kuehr, P. Price Thomas, M. Suzuki, P. Hawken, and M. Wackernagel. 2002. Strategic Sustainable Development ‐ Selection, Design and Synergies of Applied Tools. Journal of Cleaner Production 10(3): 197‐214.
Schmidt‐Bleek, F. 1997. MIPS and factor 10 for a sustainable and profitable economy. Wuppertal, Germany: Wuppertal Institute.
Scholl, H. J. and S. E. Phelan. 2004. Using integrated top‐down and bottom‐up dynamic modeling for triangulation and interdisciplinary theory integration: The Case of Long‐term Firm Performance and Survival. Paper presented at 22nd International System Dynamics Conference (ISDC), Oxford, UK.
Senge, P. M. 1990. The Fifth Discipline: The Art and Practice of the Learning Organization. New York, USA: Doubleday/Currency.
Paper C
113
Steffen, W., A. Sanderson, J. Jäger, P. D. Tyson, B. Moore III, P. A. Matson, K. Richardson, F. Oldfield, H.‐J. Schellnhuber, B. L. Turner II, and R. J. Wasson, eds. 2004. Global Change and the Earth System: A Planet Under Pressure, IGBP Book Series. Heidelberg, Germany: Springer‐Verlag.
Sterman, J. D. 2000. Business Dynamics. Systems Thinking and Modeling for a Complex World. Boston, USA: Irwin McGraw‐Hill.
Stern, N. 2006. Stern Review on the Economics of Climate Change. London, UK: HM Treasury.
Thomke, S. H. 2003. Experimentation Matters: Unlocking the Potential of New Technologies for Innovation. Boston, USA: Harvard Business School Press.
Water Jet Sweden AB. 2007. Sign‐Up Invitation for Stocks in Water Jet Sweden AB (in Swedish). Ronneby, Sweden: Water Jet Sweden AB.
Water Jet Sweden AB. 2008. Annual Report 2007 (in Swedish). Ronneby, Sweden: Water Jet Sweden AB.
Öhrlings Pricewaterhouse Coopers. 2003. The Market Position of the Waterjet Technique (in Swedish). Karlskrona, Sweden: Öhrlings Pricewaterhouse Coopers.
Öjmertz, C. 2006. A Guide to Waterjet Cutting. Mölnlycke, Sweden: Water Jet Sweden AB.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
114
Paper D
115
Paper D
Benefits of a Product-Service System Approach for Long-life Products:
The Case of Light Tubes
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
116
Paper D is published as:
Thompson, A. W., H. Ny, P. Lindahl, G. Broman and M. Severinsson (2010). Benefits of a Product Service System Approach for Long‐life Products: The Case of Light Tubes. 2nd CIRP International Conference on Industrial Product‐Service System (IPS2). The International Academy for Product Engineering (CIRP). Linköping, Sweden.
Paper D
117
Benefits of a Product Service System Approach for
Long-life Products: The Case of Light Tubes
A. W. Thompson1 H. Ny1 P. Lindahl1 G. Broman1 Mikael Severinsson2
Abstract Products designed for long‐life often have significant potential for better sustainability performance than standard products due to less material and energy usage for a given service provided, which usually also results in a lower total cost. These benefits are not always obvious or appealing to customers, who often focus on price. Long‐life products are therefore at an inherent disadvantage: due to lower volume of sales that results from the products’ longer‐life, the margins (price) often need to be higher. In this paper, we demonstrate that when the revenue base is shifted to be the service of light (instead of the sales of light tubes), there is an opportunity for a “win‐win‐win” for the light user, the long‐life light provider and society. Through a product‐service system approach, resulting in a well‐communicated total offer, the full array of benefits becomes clearer to the customer, including that they avoid the high initial cost.
Keywords: Sustainability performance, long‐life products, product‐service system, value chain, modeling
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
118
1. Introduction This study has come about through a partnership between researchers at BTH and Aura Light International AB (Aura) which produces long‐life fluorescent light‐tubes with a life‐length that is three times longer than the industry average. Like many firms, Aura Light is increasingly aware of the opportunities and risks being presented by an increasingly sustainability‐driven market [1‐2]. The Sustainability Assessments research team at BTH has specific competence with strategic sustainable development (SSD) [3‐4] and application of SSD in the context of product development [5‐6]. Due to the long‐life nature of Aura's product, there are challenges when competing with producers of "standard" life‐length light‐tubes, i.e. Aura has 1/4 as many opportunities to generate revenue from the sales of a physical product as its competitors. From a sustainability perspective, the long‐life product is obviously worth exploring since it reduces material flows by approximately one‐fourth.
The concept of product‐service systems (PSS) has been defined as a system joining products and services in order to meet customer needs. It emphasizes a shift in the focus from selling physical product to selling the function provided by this combination of products and services. Definitions of PSS typically include reference to increased competitiveness of PSS providers. Some definitions do not explicitly include reference to reduced environmental impacts e.g. [7‐8]. However, PSS definitions frequently also include reference to reduced negative environmental impacts, e.g. [9‐11].
Tukker has articulated two concrete questions that he suggests are often overlooked when analyzing PSS: First, “which factors determine whether a PSS business model is the best way to create value added?” and second, “which factors determine whether a PSS business model per se generates less material flows and emissions than the competing product oriented models, and thus provides incentives for sustainable behavior?" [12]. These two questions (creating added value and reduced material flows and emissions) make a PSS approach for Aura Light an interesting consideration.
This paper explores the concept of product‐service systems as a potential way of overcoming this contradiction between reduced number of revenue‐generating opportunities, desire for increased revenue, and demand for less negative sustainability impacts. Through the example, this paper will demonstrate the potential for a company with an existing long‐life product (a physical product designed for a significantly longer average useful life than a “regular” product) to consider if it can have a competitive PSS‐offer.
Paper D
119
2. Methods Two approaches to selling the service of light are compared: the first a producer of standard‐life light‐tubes, and the second a producer of long‐life light‐tubes. For each approach, the economics of the approach are considered from the perspective of the user and the primary provider. The socio‐ecological sustainability implications (i.e. broader society) are also considered. Thus, this paper considers four scenarios from three different perspectives.
Four scenarios:
• Standard‐life light tube sold as a physical product • Standard‐life light tube sold as a PSS offer • Long‐life light tube sold as a physical product • Long‐life light tube sold as a PSS offer Three perspectives:
• Customer (economic ‐ cost of light) • Producer (economic ‐ profit) • Society (socio‐ecological sustainability) The prices and costs here are provided for illustrative purposes and are not actual figures from a company. The researchers were “kept in the dark” in order to not compromise sensitive information, and thus these figures come from a survey of the lighting industry. The following assumptions are made for this analysis:
• Long‐life light‐tubes lasts 4x longer than standard‐life light‐tubes (12 yrs vs. 3 yrs at 4000 h/yr)
• Sales price is 4x higher for long‐life light‐tubes (10 € vs. 2,50 €) • Cost to replace a light‐tube (e.g. labor, disposal fee, and downtime) is 5€ • Light fixtures are pre‐existing (so not included here) • Both light‐tubes use them same amount of electricity • Both light‐tubes provide the same amount of light • Electricity cost is 0,10 €/kWh • Annual discount rate of 3% • No "rebound effect" will occur because of a shift from product to PSS offer
2.1 Customer (economic) perspective To answer Tukker's first question from the customer’s perspective, a simple life‐cycle cost model considers the economic aspects of the four scenarios from the customer (light‐user) perspective. Here the cost to the customer for light‐tubes (as either a purchased product or a PSS) and replacement of the light
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
120
tubes are considered for providing 4000 hours of light per year for a period of 12 years. A discount rate is included due to the long time period considered. Pricing alternatives are not optimized in any way; the prices used are only to demonstrate the way in which long‐life products are able to capture and re‐direct value to the producer and user.
Two criteria are considered for the customer: cost in the first year, and total cost for light over 12 years. Twelve years is used because it is the lifetime of one long‐life light tube.
A price for the annual service of using a light‐tube is set to 1 €. This rate was obtained by setting the net present value of the revenue generated by a long‐life light‐tube that is provided as a PSS‐offer for 12 years equal to the net present value of the revenue generated by selling one light‐tube that has an expected life of 12 years.
2.2 Producer’s (economic) perspective For a PSS‐offer to be possible, it must also be profitable for the offer provider in addition to being attractive to the customer. In this case, the long‐life light tube producer is trying to lower total cost to the customer while capturing for itself enough of the value realized through that cost savings to be competitive with the producers of standard‐life light‐tubes. This is represented by exploring if the customer savings is significant enough to compensate for the reduced number of light‐tubes the customer must use to meet its need for light. All of the costs incurred by the customer are mapped, the costs that can be reduced by the long‐life offer are noted, and a decision is made regarding whether or not the PSS‐approach is profitable. Note that company data is not able to be published, so illustrations are used to demonstrate the concept.
2.3 Society’s (sustainability) perspective As a prelude to answering Tukker's second question regarding reduced material use and emissions, an approach is taken that incorporates a strategic sustainability perspective in order to not only quantify material and emission reductions, but also to be sure that the scenario is not causing other sustainability issues. This is done by using an approach called “backcasting from sustainability principles” that states there are four basic principles that will be met by a society that is sustainable [3; 13; 14‐15]. These basic principles state that in a sustainable society, nature is not subject to systematically increasing:
1. concentrations of substances extracted from the earth’s crust; 2. concentrations of substances produced by society; 3. degradation by physical means, and
Paper D
121
4. in that society, people are not subject to conditions that systematically undermine their capacity to meet their needs.
Since these are principles for sustainability of global human society, we assume that companies, products, or PSS that comply with these conditions (and thus do not contribute to society’s sustainability problems) will have a competitive advantage compared to those that do not meet these principles.
For the sustainability assessment, a strategic life cycle management (SLCM) approach is used to consider how the scenarios comply with basic principles for global socio‐ecological sustainability during each of the life cycle stages [15]. This approach is used in order to first take a strategic overview of the sustainability implications before attempting to provide a quantitative response to Tukker's second question regarding energy and material flows; this allows a full sustainability perspective so that as some challenges are addressed (e.g. material and energy reduction), other sustainability challenges are not created unintentionally. The SLCM approach is implemented by using a strategic life cycle matrix to identify any differences between the offers being considered.
The columns in the matrix refer to those basic principles for a sustainable society. The rows in the matrix refer to life cycle stages of the product or PSS. This allows for the identification of any current or future sustainability challenges related to the life cycle of the product. See the matrix in Figure 1.
Principle 1
Principle 2
Principle 3
Principle 4
Materials
List of aspects of the offer that are not in compliance for each life cycle stage and sustainability principle
Production
Packaging & distribution
Use
End of Life
Figure 1: Strategic Life Cycle Management Matrix.
One matrix is completed for each product or PSS being considered, and if differences are identified, then a more in‐depth assessment can be conducted to consider the trade‐offs. This step is in realization that “sustainable behavior” is not only about reducing material flows and emissions, and that by focusing
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
122
only on these two items there is a significant risk of sub‐optimization of sustainability performance.
After obtaining a strategic overview from the matrix, there is an opportunity to go into more detail to allow for the quantification of relative environmental impacts. Life Cycle Assessment (LCA) [16] is a tool suited for such a quantitative analysis, and has been referred to as a complementary tool in PSS development in other places [17]. The LCA software tool Simapro, utilizing EcoInvent [18] data, along with some assumptions with regard to transportation and energy, is used to obtain some order‐of‐magnitude estimates regarding environmental impacts due to reduced material use from the long‐life product over the product’s life cycle. While this is not an ISO 14040‐certifiable LCA (that process requires a much more rigorous process for goal setting and scoping, data collection and verification, and impact assessment), this can be performed in a few hours to obtain an approximation of the improvement across the product's life cycle.
3. Results 3.1 Results of Economic Assessment The boundaries of this study with regard to the value chain focus foremost on the producer of the light‐tube and the light user. Because it requires four standard‐life light tubes and the associated activities throughout their life cycles to match the useful life of one long‐life light tube, the costs throughout the value chain recur four times for the standard‐life light tube for every one time in the long‐life light tube’s life cycle. This is illustrated in Figure 2.
Paper D
123
Figure 2: Activities where costs are incurred over the light tube life cycle when providing 48 000 hours of light with standard‐life light‐tubes (a) compared to 1 long‐life light tube (b). Bold boxes show costs incurred in (a) only.
3.1.1 Light Customer Perspective Economic considerations for the light user are presented in Table 1. Regarding initial cost, the long‐life light tube sold as a product has a significantly higher cost than the other scenarios: 15 € (10 € for the light‐tube in addition to the 5 € cost of tube installation) compared to either 7.50 € or 6 €.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
124
Table 1: Customer costs of light‐tubes and light in € over 12 years (48 000 hours of light).
Customer Perspective: Costs
Standard life Long life
Year Product PSS Product PSS
2010 7,50 6,00 15,00 6,00
2011 0,00 1,00 0,00 1,00
2012 0,00 1,00 0,00 1,00
2013 7,50 6,00 0,00 1,00
2014 0,00 1,00 0,00 1,00
2015 0,00 1,00 0,00 1,00
2016 7,50 6,00 0,00 1,00
2017 0,00 1,00 0,00 1,00
2018 0,00 1,00 0,00 1,00
2019 7,50 6,00 0,00 1,00
2020 0,00 1,00 0,00 1,00
2021 0,00 1,00 0,00 1,00
Total 30 32 15 17
Net Present Value 24,39 25,64 14,42 14,19
Users of light have lower costs by using the long‐life tubes, either by purchasing them outright or by accessing the light tubes through a PSS‐offer. In this example, the 15 € difference between the total for standard‐life and the total for long‐life is simply the three installations (5 € each) that are not required with the long‐life option. This difference remains significant when the net present value is considered, so here it seems that either of the long‐life scenarios would be preferred by the customer.
Considering both the initial cost and the full costs over 12 years, the long‐life light tube offered as a PSS appears most attractive to the customer.
3.1.2 Light Producer Perspective The long‐life light‐tube producer’s challenge is to do two things at the same time: first, to lower costs to the customer in order to make the long‐life offer
Paper D
125
attractive, and second to increase the revenue that the customer is paying for the light‐tubes (again remembering that the long‐life producer is selling one‐fourth as many tubes as a standard‐life light‐tube producer). Actual numbers from the company are confidential, but this concept is illustrated in Figure 3. Electricity costs are also included in the diagram in order to show the total life cycle costs of the customer (i.e. electricity is greater than 90% of the customer’s cost).
Figure 3a: Total customer costs for light during 12 year with a standard‐life light tube sold as a product.
Figure 3b: Total customer costs for light during 12 year with a long‐life light tube sold as a PSS.
For the light consumer and the light‐tube producer, there is an opportunity for the long‐life light‐tube to be mutually beneficial because it captures value that is otherwise distributed throughout other actors in the value chain. In this example, the captured value includes:
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
126
1. Savings by cost reduction due to changing tubes 1/4 as often (savings include e.g. the expense of manual labor and disruption to operations), and
2. Increased efficiency of light provided per material/energy input (1/4 as much material required and 1/4 as much energy for production, transport, etc. excluding the use phase)
3.2 Results of Sustainability Assessment 3.2.1 Strategic Life Cycle Management Matrix Due its focus on a qualitative overview to identify all potential sustainability concerns, the SLCM approach provides no distinction between the standard‐life and long‐life light tubes. This is because the life‐cycles of both light‐tubes contain the same sustainability concerns from a strategic overview perspective. See an example of a partially completed SLCM matrix for light tubes in Table 2.
Based on this conclusion, one can then say that probably the scenario that has less energy and material flows is the “more sustainable” alternative. With the long‐life product reducing the raw materials, manufacturing, maintenance (e.g. light‐tube replacement) and end‐of‐life phases of the light‐tube’s life cycle by three‐quarters, it clearly has environmental benefits over the standard‐life light‐tube (assuming that energy use for illumination is the same for both light‐tubes).
3.2.2 Quantification of Environmental Impacts Estimates are made using EcoInvent data in the life cycle assessment software tool Simapro. To make some quick estimates, these values were assumed:
• 150 kg‐km of transport for light‐tube components • 100 kg‐km transport of light‐tube to customer • 2400 kWh of electricity from the Swedish grid • IPCC GWP 100a as the impact assessment method
This resulted in electricity during the use phase being about 94% of the environmental impact.
Then the electricity source was changed to the US grid, which resulted in the impacts due to electricity use being on the order of 99%. This assessment is sufficient for us to say that the global warming potential (using IPCC GWP 100‐year) of using the long‐life tubes with “dirty” electricity is about 3% less than standard tubes, and on the order of 17% less on a “clean” grid. In this scenario, the GWP is reduced on the order of 10%, even though material use is reduced by a factor of 4.
Paper D
127
Table 2: Example of an SLCM Matrix for light‐tubes.
SP1 SP2 SP3 SP4
Materials MercuryCopper Lead
Solvents in marking ink
Land change due to mining
Worker safety
Production Lead Flame retardants
Cleaning chemicals
Packaging Distribution
Use of fossil‐based plastics
Land use for transport
Use Use of fossil energy
Ballast noise
End of Life Land change used for landfill
4. Summary of results The authors choose not to go into further detail with the LCA because this is not a trade‐off situation: the long‐life light tubes win from the producer’s economic perspective, the consumer’s economic perspective, and a broader societal perspective (from fewer negative sustainability implications) and there is no need to more exactly quantify the extent to which a long‐life light tube is “less bad” than a standard‐life light tube. Furthermore, on a sustainability‐driven market where costs related to material and energy flows are expected to increase, the benefits from minimizing those flows are only expected to increase.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
128
Figure 4: Approximate environmental impacts per life cycle stage of a long‐life light‐tube showing relative high impact during use phase.
Figure 5: Environmental impact comparison between one long‐life light tube (a) and three standard‐life light‐tubes (b). Vertical bars represent the life cycle stages in Figure 4. Top bar (a) shows the long‐life product, with 1/4 of impacts from stages other than use, compared to bottom bar (b) that shows standard‐life product. Impacts from use phase are the same for both.
If, in line with current practice, revenue comes from the sales of light‐tubes, then the long‐life producer earns more profit than standard‐life producer and the customer has a lower total‐life cost, but the customer balks at the high initial cost. It is only when the long‐life product is used as the basis for selling
Paper D
129
light that the long‐life producer really wins: the long‐life producer has a higher profit and the customer has both a lower total life cost and an initial price similar to what is offered by the standard‐life product. The trade‐off is that the producer must then front the capital costs for production.
Table 3: Summary of assessments.
Standard Life Long Life
Product PSS Product PSS
Consumer
(Initial cost)
Prefer: lower initial cost
Prefer: lower initial cost
Prefer: lower initial cost
Consumer (total cost for 48 000 hours of light)
Prefer: lower total cost
Prefer: lower total cost
Producer
Prefer: because customer prefers
Society
(full sustain‐ability)
no differences identified
Society
(reduced materials and emissions)
Prefer: lower material and energy flows
Prefer: lower material and energy flows
5. Discussion This paper uses many of the same logical arguments in favor of a PSS approach that have been offered by early movers in this field. The contribution here comes from shifting the starting point of those arguments, particularly emphasizing that products designed for long‐life gain competitive advantage through a PSS offer by capturing value that is otherwise distributed elsewhere in the value chain. Rather than having a regular product evolve into a PSS and then work toward longer‐life, we start with a long‐life product that gains competitive advantage by selling the function it provides: a different path to the same result.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
130
5.1 Economics of Long-Life Products and PSS Long‐life products have the potential to capture value that can be shared between producers and consumers. However, consumers may hesitate at paying the price of the long‐life tube that allows a long‐life manufacturer to be competitive – remember that long‐life producers have only a fourth as many products to sell, and thus must earn higher margins per light‐tube to generate similar net incomes. Thus a PSS‐approach based on offering the service of light is one possible approach for the long‐life light‐tube manufacturer. The example given here is only a limited PSS offer, and there is substantial more opportunity for a long‐life light‐tube provide to transition more toward the service‐end of a PSS offer. This paper limits itself to a slight shift toward a PSS offer to make its point. The authors acknowledge that multitude of additional opportunities to shift even farther toward the service end of the PSS spectrum.
What needs to happen from a PSS‐development perspective, then, are two things. First, to lower the cost to the customer, and second, to increase the revenue to the primary producer; so, the smaller the difference between these two (i.e. “primary producer revenue” – “user cost”), the more opportunity there is for the primary producer to make an offer that is attractive to the user. This is simply saying that PSS‐developers need to look at broader life cycle costs of a PSS‐offer, and not only the production costs within its own operation. Currently this idea that a long‐life light‐tube reduces life cycle costs is emphasized by Aura in its sales approach. Yet Aura still sells its light‐tubes in a traditional way. This opens the opportunity to package both existing light‐tube hardware and additional services into an offer to light users.
5.2 Assessing Sustainability The methods used to assess the sustainability of concepts in this paper complement Tukker's implication that reduced energy and material flows leads toward more sustainable behavior. Tukker’s assumption is generally correct with one significant caveat: that the materials and energy sources have the same types of sustainability impacts. If, for example, the long‐life product in our comparison contained substances that are not included in the standard‐life product in order to give it the long‐life property, then a more thorough assessment of the implications of the different materials would need to be conducted. This is certainly the case when comparing other lighting technologies ranging from the soon‐to‐be‐banned incandescent bulb to LEDs, with the range of rare metals they often require. An SLCM matrix for these alternative lighting technologies demonstrates significantly different results.
However, the two physical products (standard‐life and long‐life light tubes) compared in this example do not differ in any significant way with regard to the
Paper D
131
materials throughout the life cycle of the product. The same materials are used in each tube, only in different quantities. If instead, the comparison was between long‐life fluorescent tubes, incandescent bulbs and LEDs, then the SLCM approach would have identified as a significant difference that fluorescent tubes use mercury, or that LEDs use other rare metals. Traditional approaches to only quantify the differences in material and energy flows may miss this point, or may unintentionally focus on energy reduction without awareness of sustainability trade‐offs of doing so. The authors do not suggest that such a decision is a bad decision – rather only that it should indeed be a decision, and not an unintended consequence.
5.3 Value Chain Cooperation A point to clarify is the difference between providing alternative financing methods (i.e. the long‐life manufacturer providing financing options to eliminate the light consumer’s balking at high initial cost) and having a PSS offer. The former does not provide an opportunity for the light‐tube producer to capture the value that comes from eliminating the cost of replacing the light‐tubes; it rather passes all of that value directly to the light user. By not only considering, but rather outright claiming for itself that value – and being willing to share that value with the customer – the long‐life producer has the opportunity to be competitive with standard‐life light‐tube producers.
It is important to note that other value chain actors – particularly material suppliers for the light‐tube production and service‐providers who change the light‐tubes– are likely to lose value when the long‐life light‐tubes are used due to the reduced number of light‐tubes that are used. While it is outside the scope of this paper to consider the impacts of this, the authors suggest that there could be an opportunity to engage those extended value chain partners in discussions of opportunities for new innovations in the value chain to better adapt the value chain to a PSS offer so that value chain partners are not left behind or otherwise preventing the transition to a PSS offer.
5.4 Full System Perspective The long‐life aspect of the light‐tube reduces the need for changing light‐tubes, and this consideration follows Mont’s [19] suggestion that a PSS needs to take a full system perspective. Precisely by taking this full‐system perspective, the long‐life product identifies opportunities in the value chain to add value to the customer, and thus addresses Tukker’s first point about determining the value creation of the PSS business model. Tukker’s second point regarding reduced material flows is clearly addressed through the nature of the long‐life product – and importantly – is addressed in this particular case without significant concern of a rebound effect.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
132
Continuing to take a full system perspective, we must also acknowledge that the majority of both cost and environmental impact are due to electricity use. Throughout this paper we have not taken into consideration what either the producer or user might do to reduce costs/impacts related to electricity use, but rather have only assumed that electricity use for either standard‐life or long‐life light‐tubes are the same. As part of a PSS‐offer, certainly there could be opportunities for a “provider of the service of light” to incorporate ways to reduce lighting needs and further share the cost savings between the provider and user.
Other concerns related to long‐life products should not be overlooked in the practical consideration of sustainability issues. One such consideration is technology change: with a usable life of up to 12 years, it is quite likely that lighting technology will advance during that time and become more energy efficient. With the vast majority of energy use (and thus arguably the majority of negative sustainability impacts) coming from the use phase, it is possible that “locking into” a technology with such a long life would result in increased energy use. A further shift toward the service end of the PSS approach would also further shift this burden from the user to the producer – whether good or bad, this is something to be aware of.
6. Conclusion This paper extends the same logical arguments in favor of a PSS approach that have been offered by early movers in this field by shifting the starting point of those arguments. Here the emphasis is that products designed for long‐life gain competitive advantage through a PSS offer by capturing value that is otherwise distributed elsewhere in the value chain. Rather than having a regular product evolve into a PSS and then working toward longer‐life, it is possible to start with a long‐life product that gains competitive advantage by selling function: this is a different path to the same result.
Specifically, this paper shows how value can be captured through cost‐savings and then re‐distributed directly to the consumer or the producer. Estimates of life cycle costs are made, including acknowledgement of the need to consider discount factors in economic analysis of products designed for long‐life. This economic assessment addresses the life cycle costs of the acquiring the function of light from the user’s perspective, and addresses in simple terms the economic viability of a PSS‐offer from the light‐tube producer’s perspective.
The long‐life manufacturer creates value by producing long‐life products that reduce the need to replace light‐tubes, and the challenge is to capture that value because it is not contained within the value offer with their current business model. The value the long‐life manufacturer creates essentially lies in
Paper D
133
the hands of their customers who, of course, appreciate the value created since it reduces their lighting costs. However, those light consumers are not necessarily willing to share this value (savings from not needing to change light tubes) by paying a premium to the long‐life producer. Therefore the producer must find opportunities to capture that value, and a PSS‐approach provides such an opportunity.
7. References Azar, C., J. Holmberg and K. Lindgren (1996). "Methodological and Ideological
Options. Socio‐ecological indicators for sustainability." Ecological Economics 18: 89‐112.
Baines, T. S., H. W. Lightfoot, S. Evans, A. Neely, R. Greenough, J. Peppard, R. Roy, E. Shehab, A. Braganza, A. Tiwari, J. R. Alcock, J. P. Angus, M. Bastl, A. Cousens, P. Irving, M. Johnson, J. Kingston, H. Lockett, V. Martinez and P. Michele (2007). "State‐of‐the‐art in product‐service systems." Proceedings of the Institution of Mechanical Engineers; Part B; Journal of Engineering Manufacture 221(10): 1543.
Berns, M., A. Townend, Z. Khayat, B. Balagopal, M. Reeves and M. Hopkins (2009). "The Business of Sustainability: What It Means to Managers Now." MIT Sloan Management Review 51(1): 20‐26.
Broman, G., J. Holmberg and K.‐H. Robèrt (2000). "Simplicity Without Reduction: Thinking Upstream Towards the Sustainable Society." Interfaces 30(3): 13‐25.
Goedkoop, M., C. van Halen, H. te Tiele and P. Rommens (1999). Product Service Systems: Ecological and Economic Basics. Report for Dutch Ministries of Environment (VROM) and Economic Affairs (EZ).
Hallstedt, S. (2008). "A Foundation for Sustainable Product Development." Doctoral Dissertation. Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden.
Holmberg, J. and K.‐H. Robèrt (2000). "Backcasting from non‐overlapping sustainability principles‐‐a framework for strategic planning." International Journal of Sustainable Development and World Ecology (7): 291‐308.
Manzini, E. and C. Vezzoli (2003). "A Strategic Design Approach to Develop Sustainable Product Service Systems: Examples taken from the `environmentally friendly innovation' Italian prize." Journal of Cleaner Production 11(8): 851‐857.
Mont, O. (2004). "Product‐Service Systems: Panacea or Myth?" Doctoral Dissertation. International Institute for Industrial Environmental Economics (IIIEE), Lund University, Lund, Sweden.
Thompson, A.W. Towards Sustainability‐driven Innovation through Product‐Service Systems
134
Ny, H. (2009). "Strategic Life‐cycle Modeling and Simulation for Sustainable Product Innovation." Doctoral Dissertation. Department of Mechanical Engineering, Blekinge Institute of Technology, Karlskrona, Sweden.
Robèrt, K.‐H., B. Schmidt‐Bleek, J. Aloisi de Larderel, G. Basile, J. L. Jansen, R. Kuehr, P. Price Thomas, M. Suzuki, P. Hawken and M. Wackernagel (2002). "Strategic Sustainable Development ‐ Selection, Design and Synergies of Applied Tools." Journal of Cleaner Production 10(3): 197‐214.
Tukker, A. (2004). "Eight Types of Product‐service Systems: Eight ways to sustainability? Experiences from SusProNet." Business Strategy and the Environment 13(4): 246.
Willard, B. (2002). The Sustainability Advantage: Seven business case benefits of a triple bottom line, New Society Publishers.
Wong, M. (2004). "Implementation of innovative product service‐systems in the consumer goods industry." Doctoral Dissertation. Cambridge University, Cambridge, UK.
Anthony W
. Thom
pson2010:08
Increasing awareness of anthropogenic im-pacts on the planet has lead to efforts to re-duce negative environmental impacts in product development for several decades. Benefits to companies who focus on sustainability initiatives have been put forth more recently, leading to many efforts to incorporate sustainability consi-derations in their product innovation processes.
The majority of current sustainability consi-derations in industry constrain design space by emphasizing reduced material and energy flows across the product’s life cycle. However, there is also an opportunity to use awareness of sus-tainability to bring attention to new facets of design space and to drive innovation. Specifically there is an opportunity for product-service sys-tems (PSS) to be a vehicle through which sustai-nability-driven innovation occurs.
A framework for strategic sustainable deve-lopment (FSSD) provides the basis for under-standing sustainability in this work, and provides clarity with regard to how to think about sus-tainable products and service innovations. The “backcasting” approach included in this frame-work also provides insight into how incremental and radical approaches could be aligned within the product innovation working environment.
This thesis explores how sustainability con-siderations can be better integrated into exis-ting product innovation working environments
in order to drive innovation processes within firms, with a specific emphasis on opportunities that occur as sustainability knowledge leads to innovation through a product-service system approach. It endeavors to contribute to both theory development within the emerging sus-tainable PSS design research area, and also to advance the state of practice within industry by connecting dots between the state of theory and the state of practice.
Society’s opportunity to become more sus-tainable and industry’s desire for innovation in order to lead to or increase profitability are often in conflict. However, this thesis argues that knowledge of global social and ecological sustainability can be used to drive innovation processes, and that there are win-win oppor-tunities that can often be achieved through a PSS approach. There is some, but not sufficient, support for the inclusion of sustainability con-siderations in the product innovation process, and even fewer tools to support the use of sustainability to drive innovation. In response, an approach to providing support that brings together the FSSD and various approaches to systems modeling and simulation is presented. Opportunities to use sustainability-friendly att-ributes of existing products through a PSS-ap-proach are also presented.
ABSTRACT
ISSN 1650-2140
ISBN: 978-91-7295-188-4 2010:08
Blekinge Institute of TechnologyLicentiate Dissertation Series No. 2010:08
School of Engineering
TowARdS SuSTAinABiliTy-dRiven innovATion ThRough PRoduCT-SeRviCe SySTemS
Anthony W. Thompson
To
wA
Rd
S S
uS
TA
inA
Bil
iTy-d
Riv
en
in
no
vA
Tio
n T
hR
ou
gh
PR
od
uC
T-Se
Rv
iCe
Sy
ST
em
S