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.
What Makes an Innovation System Complete?
Innovation is more than creativity, it requires 7 steps and each step must satisfy 7 criteria. This video introduces the steps and criteria. In future posts I’ll explore some of the steps and criteria.
For a free 19 page report detailing the criteria contact me and ask for, “What Makes an Innovation System Complete”.
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Crystal ball says, "In 6 months you'll be laid off." What do you do?
In the Detroit area the economy has been brutal. A bunch of people have been laid off. Many would have loved 6 months of warning but the truth is almost everyone that’s been laid off had much more than 6 months warning and they didn’t do anything. That’s not to say they were lazy or stupid. Most of these people didn’t know what the warning signs were. And the rest didn’t know what to do so they did nothing and simply watched their financial future go off a cliff. Now they are unemployed, many have experienced bankruptcy and we aren’t even suppose to be in a recession.
It doesn’t have to be that way. There are a few very simple to spot signs and even better there is something you can do if you see the warning signs.
- Higher price per unit
- Fewer units sold
- Fewer opportunities for advancement
Is your per unit pay increasing? If you get paid by the hour or even an annual salary is it going up? This is a very bad sign. Huh? Getting paid more is bad? No, getting paid more is great. Getting paid more per unit is bad. It’s the first step towards the cliff. If you can for a moment, look at it from the customer’s view point. You go to the store and the price of bread goes up. For a while that might be OK. And if the quality of bread gets better then you don’t mind at all. But if the price keeps going up and up you start to think, “hey can I get bread somewhere else without paying as much?”
The most dangerous part of an increasing price per unit situation is when you are making the money, you don’t see the problem coming. You might sell fewer units, in this case that means get more time off, cool. You are making more per hour so your income stays the same or even goes up. You don’t see any problem. And there might not be a problem, but sooner or later someone will move in and do your job for less money than you are doing it. Remember, you used to do your job for less money.
Again, you might not care right away that someone else will do your job for less money. And maybe you are doing a different job or you are more productive so you feel its not an accurate comparison. You still are at risk. You probably did what anyone would do when they made more money. You spent more money. I remember when I was in college. Every week I would take out $20 from my checking account and it would last me all week or more. Now I take out $300 and that doesn’t count the house payments, car insurance, cell phone bill, cable bill, etc. I used to live very happily on $24,000 a year and now I need $80,000 to just pay the bills. How about you? Have your expenses increased? How much do you need now?
So when you are way up at the top of the price per unit scale you discover you can’t go any higher. And there are a bunch of guys below you moving up the ladder right behind you. There isn’t any place to move up and you can’t turn around. And that is when you see the cliff and the pink slip.
What is the solution?
There are two solutions. Both require innovation. But you must first understand that in order to successfully innovate you must provide more value to someone and preferably to more people. Again, picture yourself at the store. If your favorite store consistently lowered their prices you would be very happy. You would tell your friends. If your favorite store lowered their prices and increased quality and service you would never leave. You would probably refuse to shop anywhere else and insist your friends do the same.
That is exactly what you need to do in your life. Provide more, better, with less hassle or cost.
That can’t be done with more time. It only happens with some serious innovation. Aren’t you glad I also teach how to achieve serious innovation?
So the first approach is to recognize early that your on the march up to the top of the price per unit cliff and change directions. What if you can already see the edge coming? What can you do? Easy, choose a different path.
There are lots of customers in the world, 6 billion at last count, with more each day. As each need is met customers look for a new “more, better, for less”. Find one that matches your abilities and start making your new customers happy. In business speak this is creating a new or expanding an existing market. How can you do that?
Use Predictive Innovation.
- Identify the ideal product or service
- Choose one unmet need
- Plug that need into the solution grid to generate at least 15 solutions
- Rank the solutions by value
- Generate the opportunity map
- Follow the opportunity map to satisfy each need in order of value.
Here is a clue if you didn’t already realize it. The same rules apply to businesses. And if you are in charge of a business on the path heading towards the cliff you can prevent that fatal leap. Remember if you don’t stop the business from heading over the cliff its more than one person getting laid off. All the families of the workers depend on you to make a good decision.
Now is the time to learn how to innovate. It isn’t magic and doesn’t require some special creative talent. It just takes learning and applying an effective system, Predictive Innovation can help.
Action Items
- Look for the warning signs in your job, business, and industry.
- Think of at least one part of your product or service which is less than ideal.
- List three ways to improve that one feature that is less than ideal (you don’t need to know how to achieve it, just the basic approach)
Predictive Innovation Training
Predictive Innovation: Core Skills Book
RoundSquareTriangle.com