Transition to functional service economy: The case of household appliances in Belgium, Canada and the Philippines

The objective of this thesis is to analyse a concept called the functional service economy (FSE) and how it could be implemented in the household appliance sector particularly in Belgium, Canada and the Philippines. The functional service economy is studied as a business model innovation for sustainability. After examining various sources, the definition of Stahel was chosen for this thesis: « The Functional Service Economy, which optimises the use or function of goods and services, focuses on the management of existing wealth in the form of goods, knowledge and natural capital ». Following the definition and the principles of the FSE, several related concepts are exposed. Some are very similar such as the product service system, particularly the use-oriented PSS and result-oriented PSS. The notions of eco-conception, eco-socio-conception and eco-efficiency are considered as tools used to implement the FSE. Then, the circular economy shares characteristics with the FSE while remaining a different model. We also note that the functional and cooperation economy takes the concept further than the FSE by insisting on the use of immaterial resources, the integration of three pillars of the sustainable development and the stakeholders’ involvement. Subsequently, the limits and recommendations for the implementation of the model are given. To conclude the theoretical part, the leverages and obstacles are summarised and the main key success factors are explained. These refer to the inclusion of stakeholders involved in the value chain, a progressive implementation of the model, the development of immaterial resources, cooperation and partnerships, the establishment of feedback loops for continuous improvement and a clear marketing message to enhance the acceptance of the offer. The practical part aims at answering the following question: « Are the consumers interested in changing their consumption habits towards a functional service economical model in the household appliance sector? ». To answer this research problem, key insights are developed and five experts are interviewed to ultimately create a viable offer following this model, exemplified with a washing machine. Then, once the offer is improved after having taken into account the experts’ advice, consumers’ opinions are analysed. For this, a qualitative analysis is conducted by interviewing 60 respondents from three countries, with the aim of answer the following question: « Are there any obstacles or leverages toward the implementation of this new model that are more present in certain cultures rather than others?». Indeed, it seems that the majority of the customers interviewed in Belgium, Canada and the Philippines were interested in this type of offer for washing machines, even if they valued different features depending on their culture. Finally, the key success factor established in the theoretical part can be applied to the specific case of a washing machine with an emphasis on: a good certification of an energy efficiency appliance or eco products, incentives to enhance the consumers’ participation in the feedback loop and a marketing message accentuating the added value of the services and their price justification. Nevertheless, this thesis has its limitations such as the choice of its sustainable perspective. Further research could be conducted, for instance, to extend the scope of our analysis to other sectors.