This article seeks to answer the question of how value proposition is created using a human- centred approach in the context of deservitization, in general, and service dilution, in particular. The article aims to describe the journey of a company which undertook service dilution and used human- centred design to create a new product- oriented value proposition. The study adopted a research through design approach in conjunction with a single case study of an engineering and manufacturing services provider that recently initiated a service dilution process. Within the framework of university- business collaboration, a design project was developed. The main insights of the study pertain to the role of human- centred design as a way of learning and surpassing the pure exploitation of existing capabilities during the service dilution process. Learning by design is also seen as a potential alternative learning process that fuels exploration during the service dilution process.