George Mason UniversitySchool of Business

When Value Is in the Service, Not the Ownership

Written by Adrienne Benson on .

Ioannis Bellos

It’s a cliché, but the car has shaped American history and culture since its invention. Even the American landscape evolved around the rise of the private car—train lines were abandoned as railroad tracks were pulled up in favor of highways; gas stations and motels sprang up in otherwise desolate places; and cities scrambled to design systems for getting millions of cars in and out efficiently. We could ask which came first, the car or the cultural identity related to the freedom cars provide, but, once again, the relationship Americans have with cars is changing. We still want to get from point A to point B with the speed, efficiency, and privacy cars offer, but the urge to own them privately is waning.

Ioannis Bellos, associate professor of information systems and operations management, began researching service design as a PhD student at Georgia Tech. When talking about his research, he quotes advertising icon Leo McGinneva who famously said, “People don’t want quarter-inch bits, they want quarter-inch holes.” That is, the customer wants what the product can do, not necessarily the product itself. Bellos was drawn to researching businesses that don’t link customer value to product ownership. Car sharing, offered through services like Car2Go, Getaround, and Zip Car, is a perfect example. “In the context of mobility, getting from point A to point B is what matters, not owning the vehicle,” says Bellos.

American car manufacturers are scrambling to reinvent themselves in many ways, from developing electric cars to driverless ones, but Bellos points out an interesting effect of car sharing: The car manufacturers are in on it and are trying to figure out the best way of not selling cars. He notes that many car-sharing companies are actually owned by manufacturers.

“Car makers, especially high-end ones, saw an opportunity for market expansion,” Bellos says. “They can reach out to more customers by providing a way to use the cars without owning them.” Car sharing offers ease of transport with the privacy of a personal car but without the headache of upkeep—giving the customer that quarter-inch hole while bypassing owning the drill altogether.