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Can become first with new business model

Published: 21 November 2016

On the 23rd of November ten years of research and trend analysis in the field of performance-based business models will be summed up.
The research at Luleå University of Technology is unique and Swedish companies see a potential to become the first to own the market with more sustainable ways of doing business.

Within the Faste Laboratory at Luleå University of Technology the researchers have produced results that show how performance-based business models can contribute to resource efficiency. It is all about deliver function and availability contract instead of selling hardware.

– So far there is no company that delivers an option and Swedish companies can therefore become the first to own the market. We have shown significant improvements in sustainability when companies keep the responsibility of the product and supply the function instead. If many industries do business with this type of innovation it can have a global impact, says Magnus Karlberg, head of the Faste Laboratory.

The industry sees potential to develop

Volvo Construction Equipment is one of the industrial partners that has been involved from the start in the Faste Laboratory. Their customers are already demanding contracts based on availability rather than hardware.

– We risk losing the deal if we cannot offer that. Availability contracts also means that we need to customize solutions based on the customer needs and expectations more than when we sell hardware. We see a potential in the development because we can build a better understanding of the customer's application, says Rikard Mäki, director and responsible for technology planning and public funding at Volvo CE.

Lena Svendsen, secretary at the Ministry of Enterprise and Innovation, recognizes that it is becoming more important for companies to consider sustainability, circularity and resource efficiency. The government's goal is to be leading in this development and become one of the first fossil-free welfare states in the world. In addition to dealing with the global objectives of Agenda 2030 and Sweden's industrialization strategy, the government has recently launched a procurement strategy.

– We need to make greater use of performance contracts in the public sector. Local governments are major customers and they have an important role in how the strategy will be implemented, she says.