By Seb Saboune
18 Nov 2021
Post outline
Firstly, let's start by acknowledging the fact that moving to a producer owned model can be challenging. For most hardware businesses, it will demand changes in operations, bringing in capabilities you didn't have before and in most cases, the addition of a software element to your service. And all of these changes will need working capital, both for the transition and to fund the first products to be made and sold in this way.
But as we've mentioned previously these challenges are worth overcoming as the benefits of doing so are numerous. We believe the best way to start, is to break it down and be diligent with the process. Below we have tips on how you can make the switch, examples of how other companies conquered each step and how Twist can help.
The first thing to do is get a clear view of your current business, operations and impact you are having on the environment. The best way to do that is to collect data like the bill of materials, cost of goods sold, any contracts associated with the product, parts and consumables data in one place. This will give you an idea of the health of your data, what data is missing and what steps you can take before moving into the a new model.
Signify, a large manufacturer of lightning for professional use began their journey to move to a circular service and become carbon neutral in 2015.
Harry VerHaar, Head of Global Public and Government Affairs at Signify says "You can only make changes if you know what it is you need to change. We intensively analyzed our operational energy use and made a comprehensive plan to improve our operational footprint.”
It can be daunting moving entire operations to a new model. So once you have a better understanding of what the data is telling you, the best thing to do is to start small.
If you have multiple products, start with one or two products and create an initial experiment to trial a producer owned model. If you are in multiple markets, you could also limit the experiment to one market to run the experiment in. This is a great way to get some more data on your hardware-as-a-service to make more decisions when in that transition period.
There are quite a few examples of audio companies moving into a subscription service via an experiment of some form. Nura, the headphones manufacturer, created a subscription model for one of their products, offering the Nura Buds for just $5 a month. Having deemed this experiment a success the company has begun moving multiple products under the Nura NOW umbrella.
Image courtesy Nuraphone.com
Another experiment that is underway at the time of writing this is Sonos Flex. Sonos is offering its products on subscription, but this is only available in the Netherlands at the moment.
Besides selecting the product and market, have a defined owner to project manage the experiment. Ideally this is someone with some experience in building and maintaining the product. While they will still need a lot of support to turn the process into a subscription service, their knowledge of the product will be very useful in making this happen.