Upgradable Product-Service Systems: Implications for Business Model Components

Abstract

Upgradable products are comparatively more robust against uncertainties stemming from future technological innovations and market movements. They have the potential to satisfy evolving consumers’ preferences by integrating functional and performance enrichments during different consecutive life cycle stages. In academia, there is a growing interest in upgradability as a product life cycle extension strategy, especially given the growing importance of a product’s middle of life stage. However, due to novelty, complexity, and associated risks, upgradable products require a change in the general value proposition structure of standard products. Consequently, manufacturers need to rethink consumer relationships, key partners, channels, revenue streams, etc. (i.e., business model) in order to align with the new value proposition structure. This can be addressed by developing upgradable products as Product Service Systems (PSS) and then provisioning them with a business model that is designed specifically for upgradable PSS. To provide a first step towards a comprehensive business model framework, this paper analyzes the specificities of upgradable PSS and their implication on the components of the well-established Business Model Canvas based on a literature review.