The characteristics of Functional Product Innovation are:
- Total life-cycle commitment: The functional provider of the total offer retains ownership of the physical artefact throughout the total life-cycle.
- Extended enterprise: Collaboration between value-chain partners ensures that the total offer is composed of elements making up the Functional Product. Within the extended enterprise, knowledge-sharing activities take place, as well as the shared risks, shared responsibilities, and shared profits of the functions provided. The combining and recombining of resources is feasible within the extended enterprise and is enabled by computational tools.
- Ecological and economical sustainability: Instead of transacting goods and focusing on the profit of aftermarket activities, the long term commitment to provide functions throughout the physical artefact’s life-cycle makes minimising of aftermarket activities and remanufacturing interesting and economically viable.
- Added value: This characteristic is two-fold. Firstly, value in the form of additional knowledge, additional resources, risk sharing, etc. is achieved between the collaborative value-chain partners. This value is perceived as a win-win situation within the extended enterprise. Secondly, customer perceived value is achieved through the total offer, e.g. released resources like time, cost, etc. through the functional providers assuming responsibility for the functions of the physical artefacts.
Figure: environmental, social and economic advantages of functional products (click to enlarge).