Provide Price Incentives for Customers to Help You Lower Costs
In these days of global competition, the customer is more in charge than ever. That doesn't mean that you need to offer services that cost you a fortune: Better designed pricing can be a great help.
Let's consider an industrial example. A commodity manufacturer of building materials studied its customers in terms of how the mix of products they ordered affected profits.
The company had a unique manufacturing process that made it cheaper than competitors to produce higher volumes of identical...
Get Smart and Nurture More Prosperity Add Knowledge for Your Stakeholders
Add knowledge-development to help people directly, and you have a much more vibrant strategy. For example, immigrant communities in developed countries often pool excess funds to stake entrepreneurs to start small businesses, which often employ some of these same immigrants. Think of these pools of capital as being like fish ponds.
In the process, immigrants learn entrepreneurial and work skills that give them more ways to earn a living. The successes the borrowers and their workers enjoy...
Change Your Business Model to Help Turn a New Technology into a Vibrant Growing Market
Many business leaders and engineers see the potential for higher performance by solving problems with new technologies. At first, only technical achievements occur. Finally, practical benefits become available.
At that point, adventurous customers begin to toy with the results. Many have small applications.
But the bulk of potential customers are skeptical and want to see more proof.
Many promising technologies stall at this point. How can more progress be made? It usually takes a different...
A First Aid Kit for Fixing Your Broken Business Model Innovation Process
Almost every business has a first-aid kit to help injured people recover from accidents. It's only common sense.
Yet few of these businesses know how to treat a broken business (or strategy) model innovation process. With these questions, you'll have just the first aid you need to recover from broken processes. Then, you can return your business to health and prosperity.
These questions will help you discover better ways of improving and replacing your business strategy. By using these...
Outsourcing as a Core Part of Your Business Model
Who do you trust to help provide for your customers? Many companies only like to trust those who work on the company premises. While that approach increases the potential access to information, it may also deliver higher costs than being more trusting of outsiders.
Most studies of best practices show that companies operate in most areas at around the level of average, with some serious advantages and deficiencies in a few areas. Why not turn your challenges over to people to are...
Monitor Your Business Model Tests to Validate Assumptions and Learn about the Unexpected
Why stay with an old business model, when you could have a better one? This takes identifying an idea you want to try. Next, you need to validate that idea. You are now ready to test your best ideas. By running more than one test at a time, you speed the chance that you will verify a good idea.
You want to get into the market fast with your improved business model. Freeing up resources from tests that are failing can help you do that. How can you speed up the process of making those resources...
Avoid the Big Cost Cutting Mistake Hurting Sales
When is a cost reduction a cost increase? When the cost reduction drives too many customers away!
Whenever you read in the financial press about a company making a large cost reduction, try to remember whether or not the same firm has done this before in recent history. Chances are that the latest announcement is just the latest in a series of such cuts. If layoffs and facility shut-downs are such a good idea, why didn't the company make all of the changes sooner? The usual answer is...
Build on Initial Breakthroughs to Develop Lasting Success A Storage Company Case History
In its initial business model, Iron Mountain focused on providing safe, secure storage of electronic records inside a large cave. This was a requirement of many auditing firms for their accounting clients. With lots of space in the cave, it was natural that Iron Mountain would eventually offer paper storage. Discovering that many national firms wanted to work with one storage company for all their sites, Iron Mountain bought up operations everywhere. The breakthrough it sought, however, was to...
Test Your Business Model Focus to Gain the Greatest Customer Advantages
I want to pose a few questions that will help you ensure that you are continually improving your business model in the most profitable ways.
1. Where has your current business model made you the first to offer an important stakeholder benefit?
You will have to look back in time to locate this. In the case of American Woodmark, it was providing fast delivery for home centers. If you are not sure what you were the first to provide, ask your customers why they first selected your company....
Be More Skeptical About Cost Reduction Tests
Most business people use the same level of skepticism about everything they consider. Some are always optimistic that things will work out. Some are always pessimistic. Most people are somewhere in the middle. When a problem selecting the right choice is difficult enough, you will probably find that being very skeptical is the right route. How can you learn to be skeptical if that is not your usual way of thinking?
Although legal concepts can often conjure up the unpleasant connotations...