The devil you know!
Friday, July 27, 2007/
The hardest sell is of a new product to a new customer. A better sell is an existing product to an existing customer – with a little leverage.
The devil you know!
Conventional wisdom often has a habit of getting ahead of itself and becomes so firmly entrenched in thinking that it is accepted without question. One example of this is the maxim “innovate to grow”.
An academic from the Innsbruck School of Management, Christian Stadler, with colleagues and a number of researchers, undertook a project that was designed to identify the secrets of sustainable success. The results have been published in the July/August 2007 edition of the Harvard Business Review.
This research indicated that one of the principle factors involved in achieving superior success was the ability of a company to exploit its existing resources to their potential rather than to seek to achieve growth by more radical initiatives such as exploring new and more radical products through innovation.
This of course does not eliminate innovation as a serious tool for growth but the research tends to indicate that innovation is more successful in the long term if directed to exploiting existing products, processes and assets rather than by spending a lot of time and money in developing new “break through” ideas.
When you come to think of it, it makes sense. I have always liked a cup of Bonox on a winter’s evening after a run. I had never thought of it before, but I noticed recently that Bonox is now also being used as a beef stock, which extends its application enormously.
Mobile phones can now be used as cameras and a wide variety of other relatively useless activities such as games. It was no great leap of faith for Apple to use its current technology to extend the iPod and computer technology into phones with mobile-goodness-knows-what. Apple’s market segment opened enormously, simply by leveraging existing assets.
The Australian taxi industry has gradually developed from a less-than-favourable means of transport to something more acceptable and has grown enormously in the past few years, despite dramatic increases in costs. It has used existing technology such as GPS, caller identification; safety guidelines; quality control in relation to the standards of the cabs themselves, and improved driving training and presentation.
The pizza industry has exploded by the use of existing technology such as motor vehicles to deliver to the door rather than to wait for customers.
The bread industry has developed from “white or brown” to the manifold choices available today simply by exploiting the assets that already existed for bread making.
There is the old saying that the hardest sell is that of a new product to a new customer. The easiest sell is an existing product to an existing customer. Closing of the gap is much more effectively and safely achieved by leveraging existing assets rather than taking a leap into the cold unknown waters of aggressive innovation.
The author of the article in the Harvard Business Review (mentioned earlier) made a number of other discoveries of factors that were fundamental to sustainable and superior success.
One was that great companies go through radical change only at very select moments, and then they do so cautiously. As my old physics master used to say: “Hurry slowly, master.”
Patiently leveraging current assets rather than jumping on the band wagon of “innovation” for the sake of innovating is more likely to result in ongoing sustainable success. So it is always wise to look at your current assets and what they are doing to see if there is some simple way of leveraging them to sell more to existing customers or to open up markets for new customers.
Lou Coutts left law and became a successful entrepreneur. He has qualifications in Advanced Management from Stanford; turnarounds and strategic alliances from Colombia; International Marketing from the University of California and Changing Strategic Direction from the Kellogg Graduate School of Management in Chicago. For some years he was a visiting lecturer to the International Extension program at the University of California at Riverside.
For more Growth Doctor blogs, click here.
The art of business drinking: How to make deals, networks and friends Ian Whitworth Scene Change co-founder
Bridging the gap: Why regular customer surveys are key to good business Sonia Majkic 3 Phase Marketing co-founder
Six reasons every workplace should have a resident dog Michael Tiyce Tiyce & Lawyers principal
How we created an engaging online course with a 91% completion rate Emma Green Your CEO Mentor co-founder
Five things to consider before you launch a family business Monique Bolland Nuzest co-founder
Why Australian businesses are the new owned media moguls Jonathan Hopkins Marketing