How Much Quality is Enough?

Quality

Often a firm is confronted with the key question of whether the quality of the firm’s products and services should be improved. For many readers, the question may even seem illogical – how could it not be beneficial for a firm to improve the quality of its products and services?

On closer analysis, however, the question has deep strategic implications because ultimately a firm’s market structure and competition influence its choice of quality. Incurring additional costs to provide a level of quality that is neither valued by consumers nor provides sufficient differentiation from the competition may be unwise in the long run.

In trying to determine an appropriate level of quality, there are several factors which relate to a firm’s underlying economics. First, we want to know what increase in demand for a product or service is likely to result if quality is improved. Secondly, we would want to know how the firm’s profitability might be impacted from the increase in demand. This is related to the incremental or marginal profit earned on each additional unit sold.

Answering the first question requires a firm to have knowledge of its demand curve and the degree to which improvements in quality would appeal to its marginal customers. It has been pointed out by Michael Spence[1] and others that, when considering an increase in quality, firms should ignore their “infra-marginal” customers – those customers loyal to the firm and who will continue to transact business with the firm, whether or not it makes improvements in quality. Rather, the firm should focus on its marginal customers – those buyers in the marketplace who have so far been indifferent to buying from the firm, and whose buying choice might be influenced by an improvement in quality. Two things can happen to a firm’s demand curve when quality is improved. Firstly, as explained above, the demand for the firm’s product and services can be increased. That is, the firm may be able to sell more of its product at a given price when it raises quality. Secondly, the firm’s demand becomes more price inelastic, reflected in a steeper slope of the demand curve. This occurs because the firm will tend to capture those marginal customers who value the improved quality, and who will be prepared to pay more for it, if necessary.

The change in price elasticity which can result from improved quality is very important and is often overlooked by firms. When improving quality, a firm may also want to consider the impact that quality improvement has on the willingness of buyers to substitute other products – the marginal rate of substitution. The marginal rate of substitution is the rate at which a consumer is ready to give up one good in exchange for another good while maintaining the same level of satisfaction. As a firm supplies greater quality, buyers will be less inclined to trade-off value in favour of poorer quality and less expensive alternatives available from competitors.

Modeling the impact upon demand that results from increased quality can yield valuable insights into the revenue gains that might result. Such an analysis should not be undertaken in isolation from the industry or competitive environment in which the firm resides. In our practice, we always extend such a demand-impact analysis with analyses of the firm’s industry structure and the nature of its competition, since these are the ultimate determinants of profitability.

We also extend this analysis by creating a value map (diagram below) which shows the placement of a firm’s key competitors with respect to product quality. The indifference curve shows the price-quality combinations which yield the same value surplus for buyers. Price-quality positions located below the indifference curve yield a higher value surplus than positions located above the curve.

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In the above value map, the price-quality positions of products (A, B, C and D) from four competitive firms are plotted. In addition, an indifference curve is also plotted showing the boundary at which buyers become indifferent to various combinations of price and quality, and hence show no preference for one product over another. In the map, the firm producing product A is likely to lose business as its product is offering buyers a low value surplus due to the low quality coupled with the high price. In contrast, the firm producing product D is likely to gain business as it is offering buyers a high value surplus due to the high quality coupled with the low price. The firms producing products B and C both lie on the curve of indifference and, as such, are offering buyers the same amount of value surplus. These firms have achieved value surplus parity, although they will still likely lose business to the firm producing product D as it is offering a higher value surplus.

The choice of quality levels should also be rationalized by considering the marginal profit earned on each additional unit sold which results from an increase in quality. Most firms are familiar with the basic economic impact that results from undertaking improvements which reduce scrap, rework and warranty claims. Simply put, as quality improves, the average cost of production per unit falls, reflecting the cost reductions that result from less scrap, better yields, and less warranty repairs and replacements.

Recommended Actions:

  1. Is your firm offering a higher or lower value surplus relative to the preferences of buyers and competitive offerings? If your firm is offering a lower value surplus, or even achieving value parity, you may be losing business to any rival offering a higher value surplus. Your firm’s relative value surplus may be an indicator that a change in the product/service quality level is warranted.
  1. When contemplating raising the quality level of your firm’s products and services, consider the impact that such an increase will have on your firm’s demand. Consider especially whether an increase in quality levels will increase the rate at which your firm attracts marginal customers.
  1. Increasing the quality level of a product or service may reduce the costs associated with scrap, rework and in-warranty repair. However, providing a higher quality level may also increase costs if new technologies or production methods are required. Recognize that quality is not always free!
  1. Due to points 2 and 3 above, determining an optimal quality level that maximizes profit is, essentially, a constrained optimization problem where the impacts on both costs and revenue must be considered together. Choosing quality levels based on either costs or revenue alone will not necessarily maximize profit.

Author:
Stewart Anderson
Partner at ALCG
stewart@andersonlyall.com
www.andersonlyall.com

[1] A.M. Spence, Monopoly, Quality and Regulation, Bell Journal of Economics, Autumn 1975

The Silent Election of Leadership

By Angelo Lyall
As published in Quality Digest Magazine

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Understandably, many organizations struggle with leadership, often puzzling over why their management techniques don’t seem to induce contribution and collaboration from their associates. The practice of management is separate and distinct from that of leadership, and so both practices require unique approaches and perspectives. While the practice of management can create some visually identifiable order, and has merit for the purposes of supervision and performance monitoring, it lacks the genuine finesse and interpersonal skills required by a leader. To drive contribution and collaboration, a leader must earn their associates’ trust, and be silently elected as an influential force.

As noted, a leader is not always the manager. The title of manager doesn’t imply the privilege of being the leader, so if a manager wishes to also lead those he supervises, he must exemplify that which can be trusted. Trust is an emotional commodity. Like money, trust is exchanged between people based upon the emotions that those involved in situations feel toward all other individuals involved in the same situations. The trust of your associates take root when they recognize that that you handle situations fairly and care about those involved, taking the time to respect and understand both perspectives of a conflict and the people that promote them. A person gives their trust based on an emotional and intuitive approval or disapproval of how they and those around them are treated. There are five fundamental steps to follow in any situation as a leader.



1. Respect. Do not be biased, but do not be detached from the situation. A leader is attached to both sides of a conflict, and all perspectives of a topic equally. A leader is attached because he or she genuinely cares. To be detached and objective may solve immediate issues but does not gain the trust of those involved and will not result in your election as a leader.

2. Listen. Because he or she cares about both sides, the leader genuinely listens to all perspectives and ideas, asks appropriate questions, and does not force their own ideas unwillingly onto others.

3. Understand. By listening and asking questions, the leader attempts to appreciate all perspectives and to gain clear understanding of each case.

4. Empathize. With clear understanding of all perspectives, the leader takes a moment to reflect on and to communicate what she understands each party’s feelings to be regarding the situation. This step shows all parties that the leader is attached to the situation, but not biased. If the people involved in a situation feel that the person mediating has taken the time to respect them, listen to them, really understand their feelings, and empathizes with their concerns, trust is given to the mediator to handle the situation in a way that will not hurt or offend the individuals involved.

5. Collaborate. With this trust, the leader doesn’t take it upon herself to solve a problem and decide what perspective or idea is the correct one; instead the leader uses her understanding of all perspectives and shares her understanding with all parties involved, providing comparisons and contrasts, allowing for all parties to collaboratively solve problems or make decisions.

This approach must be used consistently, as trust is given in small increments, and a leader is only elected as the result of a positive trend, not a single situation. With the trust of his or her peers, and having been silently elected as leader, a person in this position has begun to, and can continue to, promote collaboration within an organization. This leads to increased contribution, since lack of contribution is often a result of either resentment or distrust. When associates do not feel vulnerable or unneeded, they become part of a powerful, forward-moving force that drives a business to improve and succeed.

 As is the case with money, trust can be thought of as currency, not only because it is earned and exchanged, but because it can be saved and spent. Once a person has been silently elected as a leader, he can accumulate the trust of those who have elected him. When a sufficient amount of trust has accumulated in the leader’s account, the leader has the ability to make a split-second decision and have his followers act without hesitation, even if they are unclear about the decision, its motives, or the outcome. When a leader makes a quick decision and calls his or her associates to follow in a decision without time for questions or explanation, the leader is spending trust. This type of action cannot be done routinely, or the trust will diminish. Without trust, or with a trend of abusing trust, a leader will be silently demoted. Management may be practiced without trust, however leadership cannot.

To be a leader, one must gain influence among her associates. Influence is not the same as authority or control. Somebody that has control over people has it because of position or title. Indeed, a person with control may have the ability to make others do what they wish, however without having earned trust or being silently elected, those who are made to follow a decision will resent the person in control, and will be reluctant to collaborate or contribute to any extent beyond what is obligated by contract or otherwise. People do not choose who has control or authority over them, but they do choose and allow the person to influence them.

In essence, only a leader can inspire willing contribution from associates. This applies to parenting, supervision, or any other management role. A leader makes a decision only after having gone through the five fundamental steps in any scenario; a leader makes a decision because he or she has been silently elected to do so by peers; a leader’s decision reflects the best interests of those involved in a situation, not to serve as a personal agenda.

One must earn influence among those around him in order to create enthusiasm in others to participate as a team and drive a business forward. The fact that a leader influences her associates is only because she was first recognized as someone who could be trusted and then silently elected as an influential force. These qualities have shown themselves separate and distinct from management. A manager may not always be a leader, but a leader has the trust and influence required to manage if given the proper management training. It is wise for any organization to promote the five fundamental steps of leadership when working through any situation.

Recommended Actions
1. Make the distinction between authority and influence.
2. Understand that influence is gained through trust, and that trust is an emotional currency.
3. Consider the best interests of others, through their eyes, and make decisions that show those people that your decisions consider their best interests.
4. Be engaged with others and in tune with their interests, concerns, hobbies, etc.
5. Make others feel important by showing them genuine appreciation and giving them credit where it is due. Don’t be too quick to criticize.


Author:

Angelo Lyall
Principal Partner at ALCG

angelo@andersonlyall.com
www.andersonlyall.com

10 Common Pricing Mistakes

10 Common Pricing Mistakes

Many firms suffer, often unknowingly, from poor pricing. Pricing, in many cases, is often an afterthought and many firms are content to maintain price parity with the competition. Failure to price correctly often means a firm is either over- or under-pricing and failing to maximize profit. This article looks at some of the common, and not-so-common, pricing errors that companies make.

Mistake #1: Pricing like a monopolist.
A monopolist is the sole source of supply for a product or service within an industry. Because they are the only source of supply, a monopolist has tremendous market power – meaning they have the ability to set the price for their product or service, as well as having the power to change the price and quality of their product/service at will. The monopolist’s market power is derived from the lack of competition and the ability to deter entry of potential rivals into the marketplace.

Firms which operate in other market structures – which is to say, the majority of firms – lack the monopolist’s market power and ability set prices. Thus, most firms are, to varying degrees, price-takers. Unlike the monopolist, whose only decision is what price to charge, firms in other market structures will have varying power to set prices.

Mistake #2:  Failing to practice both the strategy and tactics of pricing.
Strategic pricing aims to establish a general price position within the marketplace and how a product or service should be priced relative to the marketplace. Pricing tactics, on the other hand, are more about the prices your firm will offer in the short-term and how these prices will be set and adjusted. Firms need to practice both the strategy and tactics of pricing.

Mistake #3: Pricing like the competition
Basing your pricing on the competition’s can be dangerous because rivals may have radically different cost structures. Competitors may pay less for factor inputs, employ different technologies, or be able to leverage economies of scale. While knowing competitor’s price structures is important, it is value that should drive pricing, not what the competition charges.

Mistake #4: Price-driven selling
Discounting prices unnecessarily erodes margins and minimizes the value differences between firms. Firms which are always discounting prices to close sales homogenize themselves to the competition’s value proposition and lose sight of unique value which could command a higher price.

Mistake #5: Waiting too long to raise prices
Increased demand or the rising cost of factor inputs may put a firm in the position of having to decide whether or not to raise prices. Some firms avoid increases because they fear customers will react negatively. In many cases, a better strategy is to make regular, small price increases than to hit customers with one large increase. For example, a 10 percent price increase is likely to draw more negative attention than two 5 percent increases.

Mistake #6: Discounting prices without tradeoffs
Many firms come under pressure from customers to discount prices. Discounting without securing a compensating tradeoff can send the message to the customer that a firm’s initial prices were too high, and that all future business is open to price negotiation. A better approach is to agree to a lower price, but secure a compensating tradeoff, such as slightly longer delivery terms.

Mistake #7: Not knowing the price elasticity of demand
Few firms know the price sensitivity of their customers. A question I always ask client firms is, what would happen if you raised all your prices by 1 percent? Few can answer this question. Not only must a firm know its demand curve, it must also know its price elasticity of demand and by able to predict how the quantity demanded will vary if the price is changed.

Mistake #8: Employing the wrong pricing model
Cost-plus (or markup) pricing remains the pricing model most often used by firms. However, this does not mean that it is the best model or the model that is most appropriate for your firm. Because markup pricing sets a uniform price for all customers, firms may either over-or under-price relative to customers’ willingness to pay. Depending upon your business, its markets, and its products and services, pricing models other than markup pricing may be more appropriate.

Mistake #9: Competing on price
Competing on price is a dangerous game. Undercutting rivals on price and hoping to pick up additional volume can provoke undesirable competitive responses which can depress everyone’s profitability. Similarly, firms that charge premium prices which are not supported with sufficiently differentiated value may create a price umbrella which allows lower-cost rivals to roll up market share. Price must always flow from strategy and not be determined arbitrarily or by imitating the pricing policies of rivals.

Mistake #10: Failing to price discriminate
Not all customers are created equal in terms of their willingness to pay. Failing to exploit differences in the willingness to pay among customer groups can result in lost revenues and profit.

Recommended actions

  • Which pricing mistakes is your firm making? Failure to address and correct pricing mistakes can result in lost revenue and profit.
  • Think about pricing as a decision-making process that allows you to set and adjust prices in order to maximize your firm’s profitability. Do you have the needed information inputs with which to make sound pricing decisions? If not, your pricing decisions are likely to be sub-optimal.


Author:
Stewart Anderson
Partner at ALCG
stewart@andersonlyall.com
www.andersonlyall.com

4 Reasons why your Firm Should Create Video Content

We all interact with videos online every day, whether they be news, commercials, or general topics of interest.   This being the case, it’s surprising how many firms are not taking advantage of video creation as a business tool.  Perhaps it’s just that in the chaos of our day, most of us don’t stop to think about it.  Or it could be that it’s not common practice in your industry.  In either case, it’s time that you gave videos some serious consideration.

Need a good reason?  We’ll give you four:

1. Brand Familiarization & Promotion
These videos are intended to introduce people to your brand, and equally importantly, to what your brand stands for.  Audiences often take more away from an introduction to a brand when they’re immersed in the sounds, movements, colours, and message that it embodies, rather than simply seeing a logo and reading webpage content.

2. Product & Service Showcasing
Creating videos to showcase your products and services is a great way to standardize your presentation to the marketplace.  In addition, these can act as “video brochures”, and be utilized in your sales effort to allow potential customers to see and understand the product or service in use, creating buyer confidence.

3. Education/Instruction
If your business plays the role of educator in your industry, or at least to your customers, videos are a great way to offer value and become the instructor of choice.  Many people consider themselves to be visual learners.  This means that they’ll learn more effectively from a video and be more likely to seek instruction from video sources than from reading pages of text.

4. Internal Support
a) Training videos: allow your business to ensure that everybody receives the same instruction about policies and processes in their workplace.  It also sets a professional tone for new employees coming into the firm, reinforcing a high standard of conduct and influencing the firm’s culture.
b) Other specialized videos can be used to make positive impressions during plant tours, supplier visits, or any other scenario where your firm plays host.

Ultimately, what’s important is that videos create reach and generate engagement.   Videos can be used internally, embedded on your corporate website, linked to social media postings, and utilized in customer communications.   All of these enrich the customer experience, allow you to dictate the articulation of your brand in various useful scenarios, and add value.  We’ve given you four good reasons for your business to start using videos to add value for you, your customers, and your collaborators.  The only question left now is, why not use them?

Recommended Actions:
With your team, reflect on the four video functions presented in this article.  For each type, answer the following:
1) What videos would our business benefit from having?
2) What videos would our customers benefit from us having?
3) What videos would our staff benefit from having?
4) In what order should we have these videos created?

Source a provider to produce your videos.  Ensure that the provider that you select is committed to conveying your brand ideologies through your video’s tone, colours, etc.  They should also be equipped to assist you in writing content and designing concepts for your videos.

Last but not least, don’t allow unfamiliarity to paralyze you into not taking advantage of this glaring opportunity.  You’ll learn quickly that the process is much easier than you anticipated.  Enjoy, and good luck!

Author:
Angelo Lyall
Principal Partner at ALCG
angelo@andersonlyall.com
www.andersonlyall.com

The Pitfalls of Cost-Plus Pricing

For many firms, pricing is a challenging subject. This is because pricing is not just a matter of deciding how much to sell a product or service for, but is, in fact, a complex series of decisions. To determine pricing, a firm must resolve complex issues such as customer willingness and ability to pay, competitive pricing, product costs, and discounts or reductions that may need to be made available to certain customers or customer groups.

Many firms use a cost-plus pricing model. The simplicity of cost-plus pricing makes it easy to use and probably accounts for its continuing widespread use. However, just because cost-plus pricing is the most straightforward pricing model to use does not necessarily mean it is the right one to use for all businesses.

Under cost-plus pricing, a firm determines the cost of each product and adds a percentage markup onto the cost to determine the selling price. The markup is usually calculated to cover variable costs, plus some allocation of fixed costs and, in some cases, a return on capital.

The first drawback of cost-plus pricing is that it makes the assumption that all competitors in an industry have similar cost structures. Often this is not the case. When cost structures among competing firms differ, the prevalent use of a cost-plus pricing model within an industry can lead to a wide divergence in industry prices.

The second, and more serious, drawback of cost-plus pricing is that it is not focused on the market. Because it only considers the costs associated with a product or service, cost-plus pricing fails entirely to consider what customers might actually be willing to pay for the product or service being offered. Thus, under a cost-plus pricing approach, a firm may lose sales volume and revenue by calculating prices that are either too high or too low with respect to customers’ willingness to pay.

Related to this point is the fact that cost-plus pricing does not readily support price differentiation where a firm may try to exploit differences in the willingness to pay across customer groups by charging different prices. The ability to practice price discrimination across different customer groups is a fundamental concept of revenue optimization.

Alternatives to cost-plus pricing include value-based pricing, market-based pricing, managed markdown pricing, and customized pricing. The choice of a specific model is often dictated by the nature of firm’s business, its markets and customers, and the products and services being offered. No pricing model is perfect and hybrid models which use some of the best elements from different models can be constructed.

We’ll have more to say about revenue optimization and different pricing models in more detail in future blogs. In the meantime, if your firm is using cost-plus pricing, be aware of its pitfalls!

Recommended actions

  1. What is your firm’s pricing model? If it is cost-plus pricing, review how your firm’s cost structure might compare to competitors in your industry. If your firm’s cost structure is higher, with cost-plus pricing you may be holding a price umbrella over your rivals.
  2. How well do you know customers’ willingness to pay? If you are using cost-plus pricing you may be losing sales by calculating prices that are too high relative to customers’ willingness to pay. Alternatively, you may be “leaving money on the table” in each sale if your prices are lower than what customers are willing to pay.
  3. Does your current pricing model allow you to charge different prices across different customer groups? If not, you will be unable to optimize your firm’s revenue by practicing price discrimination. If there are differences between customer groups that can be exploited through price discrimination, consider employing a different pricing model.

Author:
Stewart Anderson
Partner at ALCG
stewart@andersonlyall.com
www.andersonlyall.com

Three Ways your Corporate Website is Missing The Mark

Most fundamentally, a website is a platform for communication.  The question we must ask is, what is the desired outcome of a corporate website?  The simple answer is that a corporate website’s purpose is to earn the confidence of your target audience.   Gone are the days when a website could simply serve as a billboard of products and services.  Websites today must work to create confidence in your brand, your expertise, and the performance of your products and services in use.  Without gaining the confidence of your target demographic, a website cannot be expected to generate sales, leads, loyalty, referrals, or even a healthy level of traffic.  This article will place a spotlight on Nike’s website, focusing on how it promotes soccer cleats, as a case study to illustrate how to gain the confidence of your target audience.

To start, follow this link to the Nike website: http://www.nike.com/ca/en_ca/c/football

Communicate Performance Through the Customer’s Eyes
Nike realizes that while their customers will certainly have size, colour and price expectations, their target audience is comprised of athletes, focused on performance in a specific sport.  For this reason, Nike asks customers to “Find Your Boot. “ and to “Select the boot that matches the way you play.”  From there, the customer navigates through a very manageable and well-presented selection of soccer cleats, each accompanied by a graphical rating of the boot’s performance according to various criteria that are important to the athlete during play.  As a result, the target audience is able to find products that explicitly address their specific needs, rather than being confused, half informed, and having to guess about the intended performance and purpose of each product variety.  Most importantly, the visitor feels clear and confident about Nike’s understanding of performance, from the perspective of the customer.

Demonstrate Expertise
The Nike website communicates expertise by showcasing:
a)    Nike’s “Innovation Lab” – a portion of the website where potential customers can learn about and become conditioned to value Nike’s latest technologies and offerings.
b)   “The Nike Academy” – a full-time, pro-level training academy run by Nike.  This demonstrates Nike’s expertise and commitment, and provides the firm with a continuous and valuable feedback mechanism.
Each of these works to signal the marketplace that Nike has the requisite expertise to design products with an accurate view of critical performance criteria in mind.  The target audience is left feeling confident about Nike’s current and future level of expertise.

Align the Brand with a Target Audience
Nike creates brand confidence both through aesthetic appeal, and tone.  Bold colours, fonts, and statements all align with the firm’s assertive and admirable stance about performance.  This brand message is meant to represent the customer’s own feelings about performance in their sport, and therefore produce a sense that Nike “gets it”.  By realizing this connection, Nike is able to gain the target audience’s confidence in the brand, and entices them to desire association with it.

Far beyond a digital billboard, Nike has effectively designed a website that earns the confidence of its target audience.  This confidence is earned on three primary fronts; Brand, expertise, and product performance in use.

Recommended Actions:
With your team, review your corporate website.  Ask yourselves whether your site:
1)   Does your site articulate product and service benefits from the customer’s point of view?
2)   Does your site demonstrate a high level of relevant expertise and commitment?
3)   Is your site the go-to source for any specific learning or information updates that your target audience seeks?
4)   Does your site promote a brand image that resonates with customer and their existing belief systems?  Does it challenge any widely held beliefs?

In addition:
1)   Is the website aesthetically pleasing, welcoming and provocative for your visitors?  Do the colours, fonts, and tone match your desired brand image?
2)   Does navigation function properly?  Is it intuitive for the visitor?
3)   Is your website updated frequently?  Do visitors have a reason to come back periodically, or is the site “dead”?


Author:
Angelo Lyall
Principal Partner at ALCG
angelo@andersonlyall.com
www.andersonlyall.com

Customizing Products and Services

One way for a firm to differentiate itself from rivals is, of course, to tailor or customize its product and services to the needs of individual customers. This is quite a different paradigm than offering “one size fits all”.

The “one size fits all” approach finds its classic expression in mass production. Mass production arose to exploit economies of scale, where products could be produced in large quantities to serve the needs of large market segments – segments comprised of thousands or even millions of consumers, based on a loose set of commonalities.

Now, however, with the advent of new technologies such as 3D printing, it is possible for a firm to still enjoy the advantages of larger scale production while providing products and services that are much more closely matched to the tastes, needs and preferences of individual customers. This approach is often called mass customization.

Mass customization acknowledges that consumers increasingly value products and services tailored to their individual needs. We are rapidly moving away from the large, loosely configured, market segments of the past towards a state where every consumer, regardless of demographic or economic similarities, belongs to their own unique segment – a segment of one.

Tailoring and customizing products requires a different mindset than mass production. For one thing, new technologies may need to be employed. In addition, processes must not only be stable, but also dynamic and flexible, bringing together the needed technologies and skills to produce the tailoring required by the customer.

To achieve this, firms that wish to offer customized products and services should think in terms of a network for their organization design. A network allows information and material flows to travel down different paths, depending upon the customization being performed, and permits an organization to bring various resources and technologies together in a dynamic way, rather than being constrained by “functional silos”.

Product and service customization will continue to become more and more important as a critical aspect of doing business. To achieve high levels of customization without incurring unnecessarily high costs requires giving much thought to coupling new technologies with appropriate organization and process design.

Recommended Actions

  1. Assess the degree to which your firm could benefit from customizing its product or service offerings. Are you losing business because your products and services are insufficiently customized to the needs and preferences of customers? Are there market opportunities you could exploit through more highly customized product or service offerings? Are your competitors moving to offer more customized products and services? If the answer to these questions is “yes”, perhaps you need to think about enabling higher levels of customization in your offerings.
  2. Evaluate the degree to which your organization use technology that permits customization of its offerings. If your organization is constrained by outdated technology that does not support customization of its offerings, it may be time to think about making investments and improvements in this area.
  3. Review how well your current organization and process design supports customization. Can your organization quickly bring the resources and capabilities together to provide customized product and service offerings to customers? If not, you may need to adopt a dynamic, network-based design that supports the provision of customized offerings.

Author:
Stewart Anderson
Partner at ALCG
stewart@andersonlyall.com
www.andersonlyall.com