Subject category:
Strategy and General Management
Published by:
International Institute for Management Development (IMD)
Version: 24.07.2013
Length: 14 pages
Data source: Field research
Abstract
This case study illustrates how a product manufacturer moved into the solution space by redefining its business model and by overcoming typical obstacles and drawbacks on the journey. Hilti is a world-leading manufacturer of power tools and fastening and protection systems, mainly for the construction industry. Back in 2001, the Hilti Swiss Market Organization team launched a new concept. Instead of selling power tools to its customers, the Fleet Management (FM) offering would allow customers to use a defined set of tools (ie a tool fleet) for a fixed period of three to five years for a fixed monthly rate. Not only would FM deliver many benefits to Hilti’s customers, it would also allow Hilti to cooperate even more closely with its customers and raise the barrier for the competition while ensuring a consistent revenue stream. Although FM builds upon a sequence of tool-related service innovations, such as the introduction of Warranty Certificates in 1992, three-year full service for breakers in 1996, and a six-month repair guarantee in 1997, its nature and impact were much more revolutionary in the power-tool industry. Market development, increasing customer need for productivity and risk reduction, as well as the capability of a supplier to deliver a strong value proposition started a fairly unique success story that is - even after more than 10 years - a state-of-the-art example of business model innovation.
Location:
Size:
2012 revenue of CHF4.2 billion, 21,000 employees worldwide
Other setting(s):
2001-2012
Italian language
Subject category:
Strategy and General Management
Published by:
International Institute for Management Development (IMD)
Version: 15.07.2019
Length: 15 pages
Data source: Field research
About
Abstract
This case study illustrates how a product manufacturer moved into the solution space by redefining its business model and by overcoming typical obstacles and drawbacks on the journey. Hilti is a world-leading manufacturer of power tools and fastening and protection systems, mainly for the construction industry. Back in 2001, the Hilti Swiss Market Organization team launched a new concept. Instead of selling power tools to its customers, the Fleet Management (FM) offering would allow customers to use a defined set of tools (ie a tool fleet) for a fixed period of three to five years for a fixed monthly rate. Not only would FM deliver many benefits to Hilti’s customers, it would also allow Hilti to cooperate even more closely with its customers and raise the barrier for the competition while ensuring a consistent revenue stream. Although FM builds upon a sequence of tool-related service innovations, such as the introduction of Warranty Certificates in 1992, three-year full service for breakers in 1996, and a six-month repair guarantee in 1997, its nature and impact were much more revolutionary in the power-tool industry. Market development, increasing customer need for productivity and risk reduction, as well as the capability of a supplier to deliver a strong value proposition started a fairly unique success story that is - even after more than 10 years - a state-of-the-art example of business model innovation.
Settings
Location:
Size:
2012 revenue of CHF4.2 billion, 21,000 employees worldwide
Other setting(s):
2001-2012
Related
Subject category:
Strategy and General Management
Published by:
International Institute for Management Development (IMD)
Version: 15.07.2019
Length: 15 pages
Data source: Field research