Journal of Cleaner Production 11 (2003) 851–857www.elsevier.com/locate/jclepro

A strategic design approach to develop sustainable product servicesystems: examples taken from the ‘environmentally friendly

innovation’ Italian prize

E. Manzini, C. Vezzoli∗

Centro Interdepartimentale di Ricerca, Innovazione per la Sostenibilita, Politecnico di Milano University, Ambientale, CIR.IS—INDACO, viaDurando 38/A, 20158 Milan, Italy

Received 7 January 2002; accepted 27 October 2002

Abstract

The product service systems’ (PSS) sustainability potential is described in the framework of the new types of stakeholder relationshipsand/or partnerships, producing new convergence of economic interests, and a potential concomitant systemic resources optimization.

In this perspective, it is argued that the design competencies should move towards those of the ‘strategic design’, thus introducingthe concept of ‘strategic design for sustainability’: the design of an innovation strategy, shifting the business focus from designing(and selling) physical products only, to designing (and selling) a system of products and services which are jointly capable offulfilling specific client demands, while re-orienting current unsustainable trends in production and consumption practices.

Some examples of PSS are presented and discussed using the PSS categories ‘services providing added value to the product lifecycle’, ‘services providing final results to customers’, and ‘services providing enabling platforms for customers’. The cases derivefrom an analysis of the ‘environmental friendly innovation’ yearly endowed prize submissions. The Politecnico di Milano Universitytogether with the Bocconi University and Legambiente (an environmental NGO) promotes the initiative in Italy. 2003 Elsevier Science Ltd. All rights reserved.

Keywords: Design for environmental sustainability; Strategic design; System innovation; Life cycle design; Product-service system

1. Introduction

A product service system (PSS) can be defined1 as ‘aninnovation strategy, shifting the business focus fromdesigning (and selling) physical products only, to designing(and selling) a system of products and services which arejointly capable of fulfilling specific client demands’.

A major element of a PSS is that a client (both busi-ness and final user) demand is met by sellingsatisfactioninstead of providing a product. This innovation is basedon a new interpretation of the concept ofproduct [4].Moving from the product as the physical result of anindustrial process of production, to a new one in whichthe product of a firm is an integrated whole of mutually

∗ Corresponding author. Tel.:+39-02-2399-5983; fax:+39-02-2399-7203.

E-mail address: carlo.vezzoli@polimi.it (C. Vezzoli).1 In literature various similar definitions have been given: [1–3].

This definition is taken from Ref.[4].

0959-6526/03/$ - see front matter 2003 Elsevier Science Ltd. All rights reserved.doi:10.1016/S0959-6526(02)00153-1

dependent products and services that focus on meetinga client demand.

The underlining assumption is that client does notreally demand the products or services, per se, but whatthese products and services enable a user to achieve. Ifthe satisfaction is evident, then customers would see aPSS as a preferable choice.

For many authors[2,3,5], a key interest of PSS is thepotentialities that this approach presents by producingsynergies among profit, competitiveness, and environ-mental benefits.

It is generally agreed as well, that PSS, as a consciousbusiness strategy, does not lead necessarily to sus-tainable solutions. In fact, some PSS changes could evengenerate unwanted side effects, usually referred asrebound effects.2

2 PSS could change consumer behavior. For example a consumermay spend saved time or money in an unsustainable way such as buy-ing more goods or engaging in more environmentally damaging

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When a PSS assists re-orient current unsustainabletrends in production and in consumption practices it isusually referred to as a Sustainable or Eco-efficient PSS.From this point of view, it is generally recognized thatmore cases need to be studied to better identify thesepotentials, as well as the constraints. To underline theneed of new practical evidences this paper initiallydescribes some Italian examples of Eco-efficient PSS.This is followed by proposal of a general working frame-work to describe the sustainable or eco-efficient poten-tials of PSS. Finally, from this framework are derivedthe implications for what concerns the research in thedesign discipline.

2. PSS examples from environmental friendlyinnovation Italian prize

The following eco-efficient PSS examples are dataderiving from an analysis of the submissions to theenvironmental friendly innovation endowed prize. It isinteresting to note that the initiative is promoted by thePolitecnico di Milano University3 together with the priv-ate Bocconi University4 and Legambiente, a major Ital-ian environmental NGO. The initiative is promotedyearly in Italy and mainly targeted to business. The prizeconsists of the use, for one year, of prize logo.5

The main evaluation criteria are the following:

� reduction of green house gasses,� use of renewable resources,� resources efficiency and the contextual reduction of

environmental and social impact,� the systemic level of the innovation.

The last criterion is noteworthy in this context, because

behavior. Society as a whole is a set of complex, inter-related systemsthat are not clearly understood. As a result, something may happenthat turns potential environmentally friendly solutions into increasesin global consumption of environmental resources on the practicallevel. For example, outsourcing could lead to worker abuse (especiallywhen moved to developing countries) and non-owning could bring tocareless (less ecological) behaviors, and the existence of moreadvanced telecommunication services could increase the mobility ofpeople to use more resource consuming modes of transportation likeairplanes. Nevertheless, PSS development, seen as a whole, presentsgreat potential for profit, and environmental and social benefits. Theyestablish the condition necessary, though in itself not solely sufficientto directly leap to less resource intensive (more dematerialized) sys-tems of social and economical standards.

3 Carlo Vezzoli is the coordinator of the initiative for the Pol-itecnico di Milano University.

4 Bocconi University of Milan entered in the promoting board fromthe second edition.

5 For more information consult the web site:http://www.legambiente.org/osservatori/impresa/PremioInn2002/cd/index.htm.

it is in line with the argument of the paper. In fact, whatpointed out from that criteria basically means the capa-bility to move out of the business-as-usual and to pro-mote PSS involving other stakeholders (other producersor service providers, but even institutions, NGOs andclients) along the life cycle value chain or along otherlife cycles of products and services.

More than a hundred were the yearly submissions,coming from various industrial sectors. Here below aredescribed four of them selected because of their PSSbusiness orientation: the Diddi & Gori textile flooringservice, the Allegrini service added to detergent supply,the Kluber services added to lubricant supply, and theAMG solar heat selling service.

3. The Diddi & Gori textile flooring service

Diddi & Gori S.p.A. is an Italian company in the foot-wear and textile flooring sector. The production of syn-thetic fibers and chemical products relies on oil refiningwith obvious consequences for the environment.

Digodream is the PSS Diddi & Gori is offering as thefinal result of having installed a textile flooring that canbe used by retailers during trade fairs and exhibitions,with no ongoing concern for the product.

The unique feature of Digodream is to be sold as anentire service, from supply and installation, to theremoval. It has become a whole system of service givento the client, who is no longer owner of the product(flooring), but rather buys its utility. From this perspec-tive, the clients obtain just the function they need andpay only for product use. Earlier, similar products werebought, used for a short period of time and then had tobe removed and disposed. Digodream, after being used,is collected by Diddi & Gori, who recovers it to makefiber again. The textile materials have been designed tobe easily recyclable for the production of new flooring.

Diddi & Gori reduces the cost for raw material acqui-sition. The overall cost is lower than disposable flooring,so there is room for better service quality or reducedcosts for the clients. The clients receive added valueand/or economic benefits, because they do not have thecost of disposal of the traditional product. Digodreamprovides a complete service, that includes the processand the costs of disposal. Furthermore, because of theprolonged relationship with the client, such a PSS maygenerate longer term client relationships, new marketniches and greater brand loyalty.

In the case of Digodream, there is a remarkable savingof raw materials and waste disposal. The PSS makes theextension of the life of textile flooring materials aprofitable activity. The company has an interest in facili-tating and improving the quantity and quality of thematerial to be recycled. In fact, as Diddi & Gori remainsthe owner of the product over its life cycle, there is a

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further economic interest to enhance the material’s lifetime.This new way of thinking about productivity motivatesDiddi & Gori to reduce waste and resources consumption.

4. The Kluber services added to lubricant supply

Kluber6 is one of the world’s leading lubricant sup-pliers. Specialty lubricants from Kluber are used all overthe world, for machines and components in variousbranches of industry.

Kluber has moved from selling just lubricants to pro-viding service as well. S.A.T.E. is the name of this ser-vice aimed at analyzing the effectiveness of the aerosoltreatment plants and of sewage treatment. For this pur-pose Kluber has designed a movable chemical labora-tory, a van, that is able to verify directly on client’sindustrial machines the performances of lubricants usedand their environmental impact. It controls as wellnoises, vibrations, smokes, and many other industrialundesired effects. The additional service that Klubergives, suggests potential for clients’ plants improvementin terms of efficiency and environmental protection, andguarantees functionality and durability.

In this case, the added value perceived by clientsderives from the service, which frees them from the costsand the problems associated in monitoring and analyzingthe equipment.

Achieving better efficiency from lubricants, there aremany economic benefits both on production processesand on improving the life of machines. Basically, areduction of the costs for the plants is achieved.

Compared to a traditional offer, the company breaksaway from the business-as-usual attitude. Kluber’s inter-ests not only rely on the amount of lubricant sold butalso on the service, reducing the overall quantity oflubricant consumed per unit of service and the pollutingemissions. Other benefits arise from the improved moni-toring of the performances of various machines, so thataccidental pollution can be avoided. Finally, operatorsare better safeguarded.

5. The Allegrini service added to detergent supply

Allegrini S.p.A. is an Italian producer of detergentsand cosmetics. Allegrini’s detergents are phosphorus-free and contain vegetal surfactants, renewable andobtained from palm and coconut oil, potatoes, corn, rice,vegetal glycerine.

In 1998, Allegrini7 suggested a new way of supplyingdetergents for house-keeping: Casa Quick. It is a PSS

6 This case is described as well in Ref. [4].7 This case is also described in Ref. [4].

based on home-delivery distribution of detergents. CasaQuick products are taken in mobile vans, that move fromhouse to house, following periodical tours. Each familymay draw the detergents needed from the mobile van,in the quantity and quality preferred, using proper con-tainers and paying just for the given quantity. CasaQuick consumers receive a kit of plastic flacons easy tocarry from houses to mobile van, that can be filled upeven if not completely empty.

Such system includes the product (the detergent) plusa service (home delivery), with a lower level of client par-ticipation: there is no need for the client to go to shops,but, in a way, it is the ‘shop’ itself that goes to the client.

Economical benefits are significant either for the pro-ducer or for the consumer: minimizing overall packingcosts determines a decrease in the cost of detergents perused quantity. In fact, extending flacons life helps inpostponing the cost of new product manufacture. Fur-thermore, the disposal costs are reduced as well; costsgenerally paid by the collectivity.

A clear added value for the consumers is the increasein comfort, since the products arrive directly to homeand waste disposal efforts are reduced. As a result acompetitiveness advantage is given to Allegrini in termsof diversification of the service provided. New marketniches are opened to the company.

The environmental benefits are obtained by the optim-ization of the distribution processes, in terms of bothpackaging and transportation. Since yesterday, the pro-duction process implied the use of disposable flacons.The packaging reuse (use extension) in Allegrini systemreduces raw material consumption and minimizes theirproduction processes, because there is no more need toproduce new flacons to carry the detergent when needed.For the same reason, packaging landfill is reduced. Fur-thermore, other problems related to the waste treatmentsare avoided: when recycled, a traditional packagingcauses problems to the process because of the detergentresiduals contamination; moreover, any improper dis-posal of packaging with possible dispersion of the insideresidual detergent is minimized.

Concerning transportation, the use of Casa Quickmobile vans could result in the fuel and pollutionreduction, per unit of detergent transported from super-markets to client’s home. In fact, Allegrini transportsdetergent for several clients at the same time (same van)and it is economically interested in optimizing transpor-tation paths, since this is directly linked to a reductionof fuel costs.

6. The AMG solar heat selling service

AMG was born in 1906 as a municipal enterprise, pro-viding the city of Palermo with gas and lighting and itis now engaged not only in its institutional duties but

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also in innovation and development linked with environ-mental issues. In fact, it distributes methane, it adminis-trates public illumination and the traffic-lights systemand it is actively promoting the use of renewable sourceof energy and the realization of experimental energy andenvironment projects.

The ‘solar heat service’ 8 is one of the big tasks whichAMG has looked at. Such service consists of ‘selling’heat as a finished product. Hot water is produced by anew equipment that combines solar energy and methane,with economic and energy savings. AMG has alreadytested this service in a Tennis Club in Palermo city(Italy), providing hot water for the dressing rooms. Theinnovation of this PSS is that AMG will not invoice themethane consumed to get hot water, but it is hot wateritself that is sold as an entire service. AMG sells heatand calculates the thermal kilowatts consumed by its cli-ents; for instance, one liter of hot water will cost 0.03euro. In this case, the consumer pays for receiving a ser-vice, comprehensive of the final result, from the instal-lation to the thermal-energy meters and to the transpor-tation of methane to the boilers. It also granted themaintenance of the equipment.

The diversification of the product–service provided isone of the focal points which AMG is working for. Infact, besides its institutional tasks, AMG wants toimprove its strategic position by giving an added valueto consumers, as well as the use of clean energy. In thisperspective, the economical benefit is linked to theenvironmental one; in fact, one of the main objectivesof the Solar Thermal Systems Campaign is to enrich andto innovate the energy services offered, considering thelocal solar radiation as an economical resource. Conse-quently, involving other actors in this system and awak-ening public opinion may create interesting partnerships.In this way AMG can achieve considerable goals in theEuropean context and find economic opportunities interms of market differentiation.

This new product–service mix is sold as a completeservice, with a great benefit for the environment sincethe combination of methane and solar energy used toproduce hot water supplies 70% of what is required. Inthis approach the company is motivated to innovate inorder to minimize the energy consumed in use. Paymentis by unit of service and not per unit of consumedresources. The less the methane consumed (the higherthe use of solar energy and the system efficiency) thehigher the income is for AMG. In the case of AMG, theemissions of 100 tons of carbon dioxide per year areexpected to decrease.

8 This case is also described by Vezzoli and Manzini [4].

7. Considerations on the PSS examples

The presented cases have some common elements aswell as some specific characteristics.

7.1. PSS common elements

Those PSS—as described in other literature—areshort-term strategies for sustainability: because they relyon existing technologies and socio-cultural context, theycan be relatively light to introduce.

Furthermore, each of them required a notable entrepr-eneurial capacity and a particular propensity to departfrom consolidated patterns, so as to get away from thestagnation of business-as-usual. Each has generated anew product–service, clearly emphasizing a latent socialdemand and answering to it with a previously unseencombination of existing technologies—hard and soft.

We could observe that the character of the innovationthey ask for, is a radical innovation whose radicalitydoes not lie on the ground of techniques (process orproduct), but in the way different technologies, more orless already existing and on the market, have been sys-temized.

Finally those cases imply complex relationshipsamong the different social actors involved in the system.This means a closer relationship with customers.

7.2. PSS specific characteristics

Specific characteristics of the examples could be use-fully described using the following classification:9

� services providing value added to product life cycle;� services providing final results to customer;� services providing enabling platforms to customer.

It is important to note that a customer (a client) can beanother company as well as a final user.

The Allegrini service and the Kluber services, bothpresent the characteristics of services providing valueadded to product life cycle. In the first case the serviceis added to the detergent supply, in the second to thelubricant supply.

The former one is a Business-To-Consumer and thelatter a Business-To-Business. The service providingadded value to product life cycle, among the threeapproaches is the one with the lowest level of innovation,the consumer more or less retains full ownership of theproduct. The client operates the product with decision-making power over the utility and profits of its use.

In general terms applying this approach, a company

9 The classification is taken from Ref. [4]. Other similar classi-fications have been presented in Refs. [1–3].

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Fig. 1. Stakeholders in a products and services life cycle mix: discrete�life cycle� satisfaction-system resources optimization.17

promotes/sells additional services to guarantee efficientfunctionality and durability of a product which is ownedby the consumer. Finally, when the contract period isover, the producer may take back the product, decidingabout the possible sale or disposal treatment.

The AMG solar heat selling service and the Diddi &Gori textile flooring service could be classified as ser-vices providing final results to customer. The former oneis a Business-To-Consumer and the latter a Business-To-Business.

They offer a customized mix of services (as a substi-tute for the purchasing and use of single products), pro-viding a specific final result with a lower level of clientparticipation. The mix of services does not require theclient to assume (full) responsibility for the acquisitionof the product involved. So the producer maintains theownership of the products and is paid by the client justfor providing the agreed upon results. The benefit to theclient being that he/she is freed from the problems andcosts involved in the acquisition, use, maintenance ofequipment and products.

Although existing in Italy,10 no cases were found inthe submission as services providing enabling platformsto customer.11

10 For example several car sharing services are now emerging inItalian cities and Merloni, a domestic appliance producer, offers a‘PayxUse’ for washing machines.

11 In this application, a company offers the access to products, tools,opportunities or capabilities (platforms) that enable clients to get theresults they want. The client obtains the wanted utility, but does notown any product and pays only for using the product when he or shehas the rights over the utility of its functioning. Depending on thecontract agreement, the user could have the rights to hold the product/sfor a given period of time (several continuous uses) or just for oneuse. The known commercial ways of providing such a service are topromote the leasing, pooling or sharing of certain goods for a specificuse. This approach leads to a more intensive and optimized use ofproducts. In developed countries this is a new strategy applied to tra-

8. PSS as systemic eco-efficiency solutionthroughout a stakeholder reconfiguration

Here a general framework model with which the eco-efficient potentiality could be described is proposed.

This model highlights as the main innovation thestakeholder reconfiguration, aiming a system innovationon a life cycle/s bases. Secondly, this interpretationmodel has been thought to bridge the PSS emerging con-cept with the existing and consolidated concept of lifecycle thinking (Integrated Product Policy). Finally, theproposed model may address the identification of newdisciplinary research areas (and new professionalcompetencies). These competencies will be detailed—inthe last section—for what concern the research in thedesign discipline.

Let us adopt, as mentioned, a life cycle perspective.In a traditional market the range of stakeholders (the rawmaterials and energy suppliers, the producers, theretailers, the consumers/customers and the end-of-lifemanagers), who take part in the whole process connectedto product and service selling, tends to optimize theirown ‘segment’ of the process, i.e. their phase of thecycle (see the inner arrows of Fig. 1). Typical stake-holders will operate as discrete entities. In other terms,in the traditional model there is no necessary coincidencebetween economic value for individual stakeholders andoverall systemic resource optimization.12

ditionally individually owned goods that are in limited use for shortperiods of time. The best-known applications of this are tool rentals,laundry services or car sharing.

17 Taken from Ref. [4].12 For example, a producer may be financially motivated to develop

a product which uses the minimum amount of raw materials and sup-plies in the production processes (see the inner arrows of Fig. 1) buthas little incentive (unless influenced by environmental legislation orconsumer demand) to incorporate environmental features which will

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In contrast, the PSS approach, which takes as its start-ing point the goal of achieving an integrated solutionto meet client demands, moves away from phase-basedservicing and discrete resource optimization, to systemresource optimization which is satisfaction based.

This could happen at two levels. We can shift fromdiscrete phase-based optimization (from the innerarrows of Fig. 1), to product life cycle function-basedoptimization (to the intermediate arrows of the figure),and to satisfaction/solution wide-system based optimiz-ation (to the outer arrow of the figure).

The resulting PSS can produce synergies in profit,competitiveness and environmental benefits, because ofthe opportunities which arise from broadening the sys-tem to be optimized. In other words, the potential eco-efficiency of a PSS relies on system optimization (inresource use and emissions) because of the stakeholders’convergence of interests.

So the adoption of a PSS business model is interestingbecause it implies new types of stakeholder relationshipsand/or partnerships, new convergence of economic inter-ests, and a concomitant systemic resources optimization.When the full system uses fewer resources, it has a loweroverall cost and the gains can be, in different ways,shared among the various stakeholders.

In general terms, the more the notion of whole systemoptimization is broadened (beyond a single product lifecycle to an interconnected series of product and servicelife cycles), the greater are the potential for eco-efficiency gains.

The stakeholders’ panorama is more complex, but offersgreater potential for eco-efficiency system innovations.

9. Strategic design for sustainable PSS innovation

Adopting the framework introduced in the former sec-tion (to describe eco-efficient PSS potentials), the inno-vation has to be seen as a short-term strategic processwhich has resulted in new forms of organization andinnovative forms of co-production of value. In otherterms, the uniqueness of the innovation does not lie inthe area of technology (process or product), but in theway these more or less existing technologies can be sys-temized. A systemization, which relies upon the differentstakeholders involved in the value production system,in the innovative partnerships among producer/suppliers,public bodies or volunteer association and the customers(whether other businesses or final consumers).

If we consider now the design discipline, introducingPSS is the fruit of a (mostly unconscious) strategicdesign. In fact, with the term strategic design it is

reduce energy consumption, in use, or to extend the product or materiallife (e.g. by component re-use or recycling).

intended a design activity aiming at an integrated systemof products, services and communication, based on newforms of organization, based on the roles reconfigurationof different companies, clients and other stakeholders; adesign developing a strategy linking long term goalswith existing trends and based on new systems of valuesand new market opportunities.

In this context, the expression strategic design for sus-tainability stands for the capability to create new stake-holder configurations and develop an integrated systemof products, services and communication that is coherentwith the medium-long term perspective of sustainability,being, at the same time, economically feasible and soci-ally appreciable today.

This means to open up new design activity areas anddevelop new methods and tools. New design activitiessuch as scenario building,13 service idea, and servicedesign14 to be integrated with proper guidelines for sus-tainability 15 and related assessing criteria.16

13 “Methodologies aimed at supporting decision making exploringpanoramas of possibilities and focusing promising solutions, throughthe development of shared visions among a platform of stakeholders.It is useful for complex situations, with high number of variables andactors involved, because it guides the first phase of design activitywithin the framework of a large and coherent innovation system” ,from [6]

14 “The service idea could be compared with the concept phase ina product design process. The main aim should be, starting from theanalysis of the existing situation (sector, enterprise, stakeholders, etc)and potential evolutions (strategy, scenarios, etc), to develop new ideasof PSS; the amount of information and the way ofcommunication/visualization of the service idea should be the basisfor: the evaluation of technical and economical feasibility; the evalu-ation of sustainability issues; the involvement of existing or potentialstakeholders…The service design should be seen as a circular processmade up of two main overlapping areas: one focused on the design ofthe PSS interaction (mainly based on design approach and skills) andone focused on the design of PSS process and organizational aspects(mainly based on management and technical competencies and skills).Considering the point of view of users as the starting point of thedesign process, PSS interface design should be seen as the beginningsource of input for the process design and continuous feasibility evalu-ation, and as the input for the stakeholders internal development pro-cess. Starting from the service idea, PSS design is a further develop-ment of the PSS interface in terms of user paths anddescription/requirements of related interface elements (environment,staff, tools, information), that will be the basis for PSS implemen-tation.” , from [7]

15 “Set of guidelines, indicators, integrated tools, workshops andmethods, usable for scenario and service design to orient decision mak-ing towards more sustainable solutions. They orient in terms of systeminnovation, eco-efficency (stakeholders synergetic potentials), and ofdematerialized interaction patterns. The basic principle of Design forSustainability is that it is concerned with products and services, i.e.systems, as described above” , from [8]

16 Some researches are moving into this direction, e.g. MEPSS.Methodologies for Product–Service system. A toolkit for Industry, orHiCS, Highly Customerized Solutions, both of the EU Growth, 5thframework program.

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10. Conclusions

Examples, as those presented, exist and can be usedas models to learn from and others are just beginning.Other PSS applications will have to be developed andapplied for the first time. It is possible to foresee a gener-ation of service-oriented solutions, based on company-led innovations shifting a company’s focus from pro-ducts to solutions for client satisfaction.

In this context the main challenge for sustainable busi-ness development is to develop business ideas linkingsustainability with some existing dynamics of change(the new emerging economic and cultural framework).

In the same context it is important to address someefforts in the design research (as in other disciplines)towards what we have called a Strategic design for sus-tainability.

Acknowledgements

The study is a collaboration between the authors basedon work done at Interdepartmental Research Centre inInnovation for environmental Sustainability (CIR.IS),the Politecnico di Milano University. It is derived from:Manzini E., Vezzoli C., Product Service Systems as astrategic design approach to sustainability. Examplestaken from the ‘Sustainable Innovation’ Italin prize, con-ference proceedings ‘Towards sustainable ProductDesign’ , Amsterdam, 2001 and Vezzoli C., Manzini E.,Product–Service Systems and Sustainability. Opport-unities for sustainable solutions. United NationsEnvironment Programme, Division of Technology

Industry and Economics, Production and ConsumptionBranch, ISBN: 92-807-2206-9, Milano, 2002.

Sections ‘ Introduction’ , ‘PSS common elements’ ,‘Strategic design for Sustainable PSS innovation’ andthe ‘Conclusions’ were written by Ezio Manzini. Theother sections were written by Carlo Vezzoli.

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