Finding Gold in the Closet at the Detroit Economic Club
Today when I attended the presentation by Gary Shapiro to the Detroit Economic Club I uncovered opportunities that were being overlooked. Mr. Shapiro, president of the Consumer Electronic Association, encouraged Detroit to embrace free trade agreements and use innovation to meet the challenges of increasing competition. He was absolutely correct, however as so many others beating that drum, he failed to explain how to innovate. Many of the attendees left feeling even more pressure.
Oddly enough, everyone of the people I spoke to were using the same failing approach to competition and every single one was overlooking huge profits from using resources they already own. Profits from things they currently considered expenses.
Two companies I spoke with were trying to improve efficiency in hopes of lowering prices. The first was a tool and die company that was implementing 6 Sigma to find ways to improve process efficiencies. This is a good thing. I was one of the founders of using statistical process control (SPC) in the USA back in the 1980s. If the company was typical they could expect 10-30% improvements. This would make many managers very happy. But they were actually wasting their time and energy. They had 4 very expensive machines sitting idle. They were probably losing $400,000 per year in missed revenue. More importantly if they just made $1 more from those machines it would be INFINITE improvement in efficiency. They are currently getting zero efficiency. The machines are collecting dust and wasting space. Any money they make from those machines is infinite increase in efficiency.
The other company was in the insurance industry. The gentleman I spoke with was complaining that they were undercutting their highest value to customers, expert advice, by implementing automated systems to reduce costs. We both agreed that was a losing proposition. We also agreed their were ways to use technology that did not harm the personal touch that customer’s value. As I spoke with him I realized they were completely overlooking a service that was more valuable to customers, was not being offered by anyone else and they were already performing to achieve other tasks. This high value competitive advantage had an infinite profit margin because it was something they were already doing. More sales with zero cost. I even told this gentleman about the service his company could offer. My back of the napkin estimates are this new market could be worth $50 million.
Finally, I spoke with people from a company that was a leader in their field. They heard Mr. Shapiro talk about open standards and were concerned that would eliminate their competitive advantage. We spoke for a while and they seemed very interested in Predictive Innovation. That might be one of the reasons they are the leader in their field. I hope to talk to them because I realized they to had gold in their closet. Part of the work they already do could be marketed to existing customers to solve a very pressing high value need. They could create a new revenue stream in a new market with zero competition. Best of all they would be increasing their customers profits so their new service would be seen as an investment instead of an expense. And of course it was something they already spent money doing. Millions of dollars for free.
I believe every business has gold in their closets. The first 3 steps in the OutCompete Predictive Innovation Method specifically deal with finding alternatives. A one day Guided Predictive Innovation session can find dozens of golden opportunities you have hidden in your closet.
Action Items
- Describe the biggest threat to your business.
- List what you are currently doing to improve your competitiveness and the expected value.
- List the value of completely eliminating the biggest threat.
- Compare the two values. Which is bigger? What you are doing or completely eliminating the threat?
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Predictive Innovation: Core Skills Book
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