Doing More With Less
During tough times, it is not unusual for companies to issue broad mandates that all divisions cut a certain percentage of their budgets. But these mandates offer precious little guidance about how exactly divisions should achieve those cost savings. Should a company start using cheaper material? Strip out bells and whistles? Lower sales-force incentives? Reduce administrative headcount? Take a little from everything (so-called "peanut butter" cuts)?
This excerpt from The Silver Lining: An Innovation Playbook for Uncertain Times describes how determining the thresholds and tradeoffs of target customer segments and smartly re-featuring existing solutions can allow you to get the customer's job done in a way that meets your cost objectives.
If you follow a disruptive-innovation approach to re-featuring, you would first segment your market by the jobs customers are trying to get done. Then, determine the thresholds and tradeoffs different customer segments have along various performance dimensions. Finally, consider how you can get the customer's job done in a way that meets your cost objectives.
It is important to reiterate that this process isn't really about cost-cutting; it is about re-featuring. Understanding the thresholds and tradeoffs is critical to understanding the best ways to re-feature in order to get the customer's job done at the same time you are lowering your costs.