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Customer Manufacturing Group
In This Issue
Business Models
Undesirable niches
Adaptable processes
Sales prevention
It's always about process
More Information 



 

 


A Fast Changing World

change

"The concept is interesting and well-formed, but in order to earn better than a 'C,' the idea must be feasible." (So said Fred Smith's Yale University professor of the concept he proposed which became FedEx.)

 

"Heavier than air flying machines are impossible," said Lord Kelvin in 1895.

 

Ken Olson, founder and president of the defunct Digital Equipment Corporation stated in 1977 that "There is no reason anyone would want a computer in their home."

 

 

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Customer Manufacturing Update
December 2011

Dear Mitchell,

 

Here is your December Customer Manufacturing Update. Since its the holiday season, we did not produce a new white paper this month. However, since its also the new year and we continue to live in a fast changing world, we suggest you read or re-read Is Your Business Model Right for Tomorrow's Market? 

A couple of famous quotes to remind you how things change and make our assumptions of limited value:

"I think there is a world market for maybe five computers"
Thomas Watson
Chairman, IBM 1943

"The telephone has too many shortcomings to be seriously considered as a means of communication. The device is inherently of no value to us."
Western Union internal memo 1876

"Undesirable" Niches Can Hold Gold

  

After Ralph's beloved German Shepherd died he and his wife adopted a displaced pit bull from hurricane Katrina.  Both breeds are tragically on the verboten lCommerce Insuranceist of many thoughtless insurers.  But their carrier, Commerce, saw that their less astute competitors were handing them an opportunity on a platter.   Their creative solution: they allow any breed so long as it has passed the AKC's Canine Good Citizen program, for no extra premium.

 

Another insurance company that famously found a way to profit in an undesirable niche is Progressive. Back when they were smaller (on their way to be BIG), they did innovative things like insuring people with drunk driving citations ... that had families. Or motorcycle riders ... over the age of 35. Both niches paid a higher premium, and less to Progressive, who figured out these would be profitable. Just as Commerce has figured out that dogs of any breed who pass the Canine Good Citizenship program are a good risk.

 

Might a little creative thinking in your firm also open up market segments you now regard as undesirable?

Adaptable Processes

 

While looking on YouTube recently for clips of Cheri Knight, a friend of Ralph's who was a well-regarded musician in a former career,  he came across the clips of a new singer, Selena Gomez. 

 

Listening to one of her songs he realized that he'd heard this song many times before over the last couple decades ... the same chord changes, very similar melodies, and the same sing-songy voice rendering them.  In fact, Ms. Gomez is simply the latest pretty young woman with a good voice to record this and similar songs.

 

Being in the practice area that we are, his initial thoughts were that while the "product" is the same (pretty young woman, catchy voice, good singer, lotsa records ... or whatever ... sold), the process that produced it has had to change over time. 

 

The process that produced the pop stars of the 50s, 70s, 90s was different from the process that today has to revolve around social media (a new one every month, it seems), downloadable songs, and faux viral campaigns (a.k.a. paid tweeters and the like). 

 

This is a point that we make repeatedly: all processes have to be adaptable and to change, because the world changes.  The process may have conservative, status quo-biased change mechanisms, or it may have mechanisms that actively seek out change to itself, even sub-optimal ones. 

 

But every process must be adaptable (that is, have a change mechanism, or feedback loops) if it is to survive.  It is the job of the process designer to design the processes for their enterprises with the appropriate change mechanisms. 

 

That all processes properly contain the seeds of their own change, is a fact still not fully recognized by the resisters to process-based management. Without them, you'd wind up trying to sell Selena Gomez on the Ed Sullivan show and wonder why her LPs weren't moving.

The Sales Prevention Department .. Again

 
 sales-down

Many companies have one or more sales prevention departments. This month we have two more examples.

 

While not a big shopper (by certain standards), Mitch's wife is loyal to Macy's and Ann Taylor Loft and carries their store brand credit cards. Apparently her Macy's card expired last August but nobody noticed it and she was able to continue to use the card regularly until last week when a clerk noticed it had expired. (Why they had not issued her a new card is unknown.)

 

She called Macy's credit department to get a new card issued. They apologized for the error in not sending her a new card, and promised one would be in her hands in 10-15 days. She suggested that would prevent her from doing her Christmas shopping at Macy's since she would not have her card in time. The agent politely told her he was "sorry about that." So will Macy's, but some other store(s) will be happy that Macy's doesn't care.

 

We offer public workshops several times per year on process improvement and marketing planning for small teams from several companies. These workshops are always held in a hotel, usually either a Hilton or a Marriott as we prefer these two brands. We held a workshop on marketing plans in the Dallas, TX area. The workshop was held at a Courtyard by Marriott property only because the Hilton Garden Inn was sold out. Why not at the Courtyard by choice you might ask?

 

The sales prevention department made it so difficult to buy from them that had the Hilton not been sold out, we would have booked at the Hilton before we ever got a proper response from the Marriott. You see Marriott forces you to work through a regional sales office before you can talk to the local property. This is true everywhere for Marriott, which is frustrating because the regional office cannot answer the questions we need to ask before we can decide. And in the case of Dallas it took them so long to respond that, had the Hilton not been sold out, we would have been booked at the Hilton before they even responded.

 

Is your sales process set up to facilitate the customer's buying process or to be efficient for you?

It's About the Process You Use
 

It doesn't matter whether you are making and selling ball bearings or iPhone apps (that is, what your business looks like on the outside), the beauty of your business is in its processes (or what it looks like from the inside).  By "beauty" we mean: effectiveness, profitability, and long-term viability.

 

There used to be a phenomenon known as the "wheel of retailing".  If you aren't familiar with the term, here's its definition from Answers.com: a retail marketing process whereby original low-price discounters upgrade their services and gradually increase prices. As they evolve into full-line department stores, a competitive opportunity develops for new low-price discounters to develop, and the process continues with the next generation.

 

We suspect that it is less of a phenomenon today than it used to be since people now realize that a dollar made by Wal-Mart is worth the same as a dollar made by Neiman-Marcus.  But to the extent that it continues to exist, it will leave corporate corpses in its wake just as it always has.

 

The reason is simple: the processes that worked so beautifully for the low end of the market will not work for the high end.

 

The lesson: even if you aren't in retailing, think long and hard about changing your business model (for reasons other than necessity) or moving into new markets.  The beautiful profits that you enjoy now, the smoothness of the processes you have running, will come to a screeching halt ... at least for a while ... as you learn what the right processes are to install in your new business.  If the firm can make the change at all without a new management team.

 

If your business model is not right for the new market, you are likely to need new processes as well.


A very happy holiday season to you, your family, your friends and your co-workers from all of us at Customer Manufacturing Group.

We appreciate your feedback to help improve these

Updates. If there are others you feel would benefit from this issue, use the Forward email link just below on the left.

 

Sincerely,

 

MGSig

Mitchell Gooze

Customer Manufacturing Group, Inc.

www.customermfg.com

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