What would Darwin do?
Posted by Katherine Canipelli on Mon, Feb 16, 2009 @ 09:23 AM
"Owing to this struggle for life, any variation, however slight and from
whatever cause proceeding, if it be in any degree profitable to an
individual of any species, in its infinitely complex relations to other
organic beings and to external nature, will tend to the preservation of
that individual, and will generally be inherited by its offspring.... I
have called this principle, by which each slight variation, if useful,
is preserved, by the term of Natural Selection, in order to mark its
relation to man's power of selection." Charles Darwin
Origin of the Species, Chapter III
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Having just marked the 150th anniversary of publication of Darwin's Origin of the Species, I was struck by this line in John Mariotti's latest comments in his e-newsletter "The Enterprise":
"Innovation is the only true path to profitable growth."
Origin of Innovation
A former manufacturing industry executive and author of The Complexity Crisis (2008), John offers tough love for businesses struggling with the dismal economy. Companies, he says, are trapped by complexity: too many products, too many layers of management, too many markets. And complexity steals attention from what's really important: a laser focus on understanding markets and producing what customers value. As he points out, if you really analyze profitability by product and account, most of the economic value comes from the top quartile--while the bottom 25% is "almost all losers,
destroying value and consuming valuable resources."
To survive this recessionary challenge, John says, you must dump the bottom, refocus and innovate. Don't forget, he chides, "profitability is the goal, not just
sales for growth sake." In other words, Natural Selection, business style:
- do the math and dump your marginal sales
- reduce complexity and free up your time to innovate
- rethink what you offer and where the real value lurks--and consider new technology factors
- get help, if you need it!
Manage Your Own Selection
Whether you're a large enterprise or a small business, here are three things you can get started quickly to adapt to the new opportunities:
Analyze your profitability by account and by offering. If you haven't done this already, do it now. Get enough insight to take action. You can iterate later.
Know your value to your customers. Not your margin--dig into the economic value they derive, directly and indirectly. Expore it, quantify it, verify it and share it externally (sales presentations, case studies) and internally.
Build a simple segmentation model, a visual map of your ideal customer by offering. Pick segmentation variables that will help you assess competitive market opportunity: Is it real? Is it worth it? Can we win?