Pattern description

A part of the value creation is transferred to the customer in exchange for a lower price of the service or product. This is particularly suited for process steps that add relatively little perceived value for the customer, but incur high costs. Customers benefit from efficiency and time savings, while putting in their own effort. This can also increase efficiency, since in some cases, the customer can execute a valueadding step more quickly and in a more target-oriented manner than the company.

Inventive problems

Application examples

The Swedish furniture company IKEA is a manufacturer of ready-to-assemble furniture, appliances and home accessories. IKEA customers are integrated into the value creation process by purchasing self-assembly products (beds, chairs, tables, etc.) and bringing them home themselves. IKEA displays its products on a sales floor for customers to browse and consider for purchase, after which the customers are required to collect them from the warehouse on a lower floor in compact (‘flat pack’) packaging for self-assembly. The company saves immensely on distribution and production costs and increases revenue by providing products at very competitive prices with this form of Self-service. Inventory costs are also much lower than those of traditional furniture manufacturers since IKEA’s flat-packed items require considerably less warehouse space. Today, IKEA’s business model has attained cult status, but when it was first introduced over 70 years ago it revolutionised the furniture industry.

One of the most famous examples for the Self-service business model is the fast food restaurant McDonald’s, which bases a major part of its business on this concept and ranks among the world’s largest franchises. McDonald’s offers standardised menus of hamburgers, cheeseburgers, chicken, French fries, breakfasts, soft drinks and deserts in its restaurants in 119 countries around the world in the form of franchises, or run by the corporation itself. In most restaurants, customers order their meals from staff at a counter, receive the food immediately and proceed to a table. There is no waiting staff serving customers. Other Selfservice options available at some of the restaurants include drive-through and walkthrough facilities. McDonald’s focuses on its key service to provide competitively priced fast food, reducing costs on waiting staff and other overheads, thus increasing customer throughput and profit.

References

The Business Model Navigator: 55 Models That Will Revolutionise Your Business