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Gaining a New Right (To Repair)
Consumers and advocacy groups that want companies to make sustainable, long-lasting products have scored a major victory. And experts say the firms themselves may benefit too.
Agricultural-machinery giant Deere & Co., which reports earnings this week, agreed to a deal that gives farmers the right to repair their own equipment or, alternately, take it to the repair shop of their choosing. The agreement is a significant milestone for supporters of the “right to repair” movement, which argues (in part) that companies enrich themselves at the expense of consumers, both by designing products to be replaced every few years and by forcing customers to use company-owned or authorized vendors for repairs.
Deere’s move is bound to create ripples across the technology, telecommunications, medical device, and consumer electronics and appliances industries, among others, says Justin Ripley, a senior client partner in the Global Industrial practice at Korn Ferry. Consumers and environmental groups have long argued that making the repair of certain items unnecessarily difficult or expensive—particularly electronics, smartphones, and laptops—forces users to replace them instead, a process known as “planned obsolescence.” “The backlash against the authorized-service model is only going to grow,” says Ripley. States like California, Colorado, and New York, among many others, have introduced right-to-repair legislation, while the EU has pushed for self-repair as part of an environmental initiative known as the circular economy.
Ripley says the right-to-repair movement could transform the aftermarket for services, parts, upgrades, and other fixes. Several factors, including supply-chain disruption, labor shortages, and inflation, are contributing to a mindset shift. Increasing the number of independent dealers helps reduce downtime and potentially lowers prices for customers. From an environmental- and social-responsibility standpoint, it’s beneficial to support small businesses and extend the life cycle of products.
Working more collaboratively with customers to improve the efficiency and sustainability of products can enhance brand reputation and grow revenue for traditional industrial manufacturing companies, says Paul Patt, a Korn Ferry senior client partner. As machinery and equipment rely increasingly on software platforms, he says, transmitting data to fix issues, conduct maintenance and upgrades, and monitor usage represents a new revenue stream. “They can sell the data on a recurring basis,” says Patt. For example, providing data and technology to help farmers more precisely apply fertilizer or weed killer can improve crop output while also limiting excess usage, which is good for the environment.
But making that transition has risks, says Patt, such as whether it’s possible to use existing sales channels to sell more complex services. “Will customers be willing to pay for the data, and if so, how much?” he asks. “Are companies equipped to service all the new technology?” Creating, marketing, and running new services means firms will have to attract talent with the necessary skills.
As machines and equipment get more complicated, Ripley says, there is an opportunity—despite the risks—to open the market beyond owned and authorized dealers. It’s a private-market solution that preempts government intervention. And offering customers more choice is never a bad thing. Ripley says the service structure is evolving to offer a suite of tools such as “predictive maintenance, subscription programs, and digital add-ons” directly to customers and independent dealers. “There is money to be made, if products are packaged and marketed right,” he says.
For more information, contact Korn Ferry’s Agribusiness practice.