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July 1994 Vol. 3 Issue 6

From High Volume to High Value

By trial and error, by fits and starts, often under great stress, and usually without much awareness of what they are doing or why, the firms that are surviving and succeeding are shifting from high volume to high value.

These businesses are profitable both because customers are willing to pay a premium for goods or services that exactly meet their needs and because these high value businesses cannot easily be duplicated by high volume competitors around the world.

Look closely at these high value businesses and you see three different but related skills that drive them forward.

Problem Solvers
Pulling things together in unique ways. Unlike the researchers and designers whose prototypes emerged fully formed from the laboratory or drafting table ready for high volume production, these people are involved in a continuos search for new applications, combinations, and refinements capable of solving all sorts of emerging problems.

Problem Identifiers
Skills required to help customers understand their needs and how those needs can best be met by customized products. The key is to identify new problems and possibilities to which the customized product might be applicable. The identification of opportunity.

Strategic Broker
"The most valuable of all". Skills needed to link problem solvers with problem identifiers. People in such roles must understand enough about specific technologies and markets to see the potential for new products, raise whatever money is necessary to launch the project, and assemble the right problem solvers and identifiers to carry it out. Such people are continuously engaged in managing ideas.

Profits derive not from scale and volume but from "continuos" discovery of new linkages between solutions and needs.

The New Web Enterprise
The high value enterprise has no need to control vast resources, discipline armies of production workers, or impose predictable routines.

There is no need to work under one roof or for one company. Here, all that matters is rapid problem identifying and problem solving. Everything else can be obtained when needed.

These organizations need to be small, if a group is large it cannot engage in rapid and informal learning.

Speed and agility are so important to the high value enterprise that it cannot be weighed down with large overhead costs. It must be able to switch direction quickly, pursue problems when they arise, discover new linkages between problems and solutions wherever they may lie.

With risks and returns broadly shared, and overhead kept to a minimum, the enterprise web can experiment. Experimentation was dangerous in the OLD high volume enterprise because failures meant the entire organization had to change direction - retool, retrain, redirect sales and marketing - a huge cost. But experimentation is the life blood of the high value enterprise.

Credit: The Work of Nations, Robert Reich, Vintage Books Random House, New York, 1991.

Written by Howard J. Leonhardt



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