I was once driving along with an executive who loved to bring out new products. He was very proud of their brand names, their contents, and their authenticity. I asked him how he thought about profitability. He said that he didn't. He just measured how much more volume he sold.
He was shocked to learn that the profitability of his new products in the last year had varied from 1 percent...
Many for-profit manufacturers and service providers concentrate only on influencing their own prices and costs. In the process they ignore or are insensitive to what customers and end users pay to use these offerings. While this narrow viewpoint may be profitable, much more profit is missed because demand is dampened due to soaring costs incurred by customer and end users.
For example, my...
Have you ever needed to pick up your laundry but had no time to do so? It can get pretty frustrating wearing dirty clothes while you wait for a chance to pick up the clean ones.
One dry cleaner in our area provided a great solution by putting in a self-service kiosk where you could drop off or pick up your laundry 24 hours a day. It's quite impressive and saves lots of embarrassment.
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I once visited a food distribution warehouse for a charity. I was astonished at the food items they were offering that week. How could anyone make a meal out of those offerings?
When I asked about the thought process, the crew leader said that no one thought about that. Well, someone should have.
Profit-seeking companies often make major mistakes when they decide to add the wrong...
Many business leaders believe that they should just keep doing what's always worked. In some areas of business, such as providing good service, that can make sense. But often too much consistency holds a business back from earning its full potential. To capture more of that potential, businesses should continually upgrade their business models (who, what, when, why, where, how, and how much of...
A small business leader asked me how he could improve his profits. The business had been established for 50 years and provided more than 4,000 items. The warehouses were bulging with obsolete inventory. What should he do?
I did a profit analysis by item and customer and determined that the company was losing money on 99 percent of the items and 99 percent of the customers.
Drop those...
What does a typical cost reduction look like? Rather than assembling a full product, you may ship it in pieces for the customer to assemble. This means a smaller container and less shipping and assembly cost for you.
But consider the poor customers: They have to now assemble your offering and may not have the skills or tools to do it effectively. You may raise their costs by a lot more...
When every mistake can cost millions, everyone wants to be perfect. Unfortunately, many people have little idea of how to gain that performance even when the goal's importance is clear.
Some business leaders prefer punishment: That means making it as painful as you can stand to make a mistake. But that approach will gain compliance rather than inspired effort. That may be good enough if you...
A teacher was upset because very few students in his country could receive the vocational education in electrical work, plumbing, and auto mechanics that would help improve the nation's effectiveness in producing goods and services. While most would stop there, the teacher decided to do something about it.
He decided to design breakthrough methods that would expand the number of students...
In considering how to expand your business model's delivery of offerings and benefits, you should be guided by what will be easily understandable and desirable by your stakeholders (those who are affected by what you offer) . . . and where the adjustments will provide more effectiveness for nonprofit organizations.
Business model innovation is something that many organizations struggle...
