Hilti Fleet Management (A) and (B), Teaching Note

These notes are meant to accompany Hilti Fleet Management (A): Turning a Successful Business Model on Its Head (717-427) and Hilti Fleet Management (B): Towards a New Business Model (717-465). This case explores the introduction of fleet management in the construction industry by the premium power tools manufacturer Hilti in 2000. Following its customers' needs, Hilti moved from selling power tools to leasing them as a service. The introduction of the new business model contributed significantly to the success of Hilti, since it sustainably differentiated the company from its competitors. For instance, the adoption of fleet management resulted in customer loyalty levels five times higher than under the dominant business model Hilti formerly employed, and over-proportioned profit contribution at Hilti. Hilti's Chief Technology Officer described the importance of the innovation as follows: "Hilti developed many very innovative and successful products over the years, but they paled in comparison with the fleet management business model, which was the most important innovation in Hilti's history." All told, Hilti, which had about 22,000 employees and made about 4.5 billion Swiss Francs (or $4.589 billion USD) in sales in 2015, managed 1.5 million tools under fleet management contracts in 40 countries, resulting in a contract value of more than 1.2 billion Swiss Francs (approximately $1.4 billion USD). Case A describes the strategic decision-making process regarding the introduction of fleet management in its early planning stages. Case B tackles the implementation and scaling process of fleet management over the years. Finally, the case explores current challenges facing the BMI.