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Case Study

Electrolux: Subscribing to growth

By Howard H. Yu and Ivy Buche

19 pages

November 2020

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Reference: IMD-7-2151

Electrolux AB is the world’s fifth-largest maker of consumer appliances. In November 2018, Electrolux launched the trial of a subscription-based business model in Sweden for the Pure i9 – a high-end robotic vacuum cleaner. Within nine months, Daniel Wentz, VP Software Products, who had spearheaded the initiative, started seeing traction in the market. Daniel was convinced that there was a much bigger opportunity for Electrolux to create value with the new hardware-as-a-service concept for small appliances. But key questions remained: How to shift the organization from a hardware-first product-push comfort zone to software-first service-pull model? How could Electrolux create more value with the hardware-as-a-service model? How to scale up the subscription-based business model? What options might be considered? What kind of investment and leadership commitment would it take to succeed?

Learning Objective

Shifting a traditional product business to subscription-based model: opportunities and challenges.
Assessing capabilities required to drive hardware-as-a-service business.
Transforming the organizational DNA of a B2B company to become a consumer obsessed D2C enterprise.
Understanding the evolving role of data.
Risk of killing a promising idea due to lack of focus, prioritization and organizational inertia.

Keywords

Business Model, Subscription, Direct to Consumer, Business Model Innovation, Customer Centricity, Services, Hardware, Change Process, Driving Strategic Innovation, New Business Model

Settings

World/global, Sweden
Electrolux, Consumer Goods, Home Appliances
2018 - 2019

Type

Field Research

Available Languages

English

Related material

Teaching note, Video

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