Treasures From the ETR Archives: Incremental Degradation
March 22, 2007
One of my goals when writing for ETR is to help my readers reach all their professional and personal goals. To help celebrate ETR's upcoming Issue #2000, I'm reprinting some of the most useful business and life lessons I've written about so far. To read each full article, click the link embedded in the text.
"You can eventually ruin your business by making many very small downgrades in the quality of the product or service you offer.
"These downgrades are usually implemented to cut costs. You might, for example, switch to a cheaper grade of paper stock for your business letters. Or reduce the number of screws you use per stud from six to five.
"These small reductions may go unnoticed by your customers and have no measurable impact on sales. And since they result in savings, they will produce short-term benefits to your bottom line.
"But in the long run, the theory goes, the accumulation of these incremental degradations results in something that is noticed. Suddenly (and inexplicably), sales slump and profits tumble."
* * * * *
"I discovered that AP has an internal mail sorter who doesn't sort the mail properly - and this causes the mail-delivery people time and aggravation. I found out that the problem has been going on for a long time and that his manager has been made aware of it but has not corrected it. (Apparently, she sent out a general e-mail on the subject and considered the problem solved.)
"I also discovered that when the receptionist of one building is out on an errand, she asks the people in customer service to back her up. But the people in customer service can’t hear the doorbell ring. So if you ring the doorbell when the receptionist is gone, you are likely to stand there for a very long time.
"These kinds of problems won't stop your business, but they will take the life out of it drop by drop. Unless you have a way to detect all the little problems, they will gradually, but certainly, get worse. And by the time you discover what has been going on, it may be too late."
* * * * *
"Consider the two most basic options companies have when they seek to grow their businesses: They can try to increase their market shares by sustaining innovations - by continually improving a product everyone is using - or they can use disruptive innovations to create a new market or take over the low end of an existing market.
"Sustaining innovations (a microprocessor that enables personal computers to operate faster, for example, or a laptop battery that lasts longer) are perhaps the easiest to produce because their need is apparent (just ask the users) and the technology to accomplish them comes usually from existing research. Improving your product and service incrementally will keep it fresh in the minds of your customers and thus sustain back-end and continued sales, but such innovations are unlikely to give you a quantum leap forward."
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"If you don't keep up with the changes your market is going through, you will gradually lose your share of it. If you maintain a consistency in what you do, the decline will be so gradual that you will likely attribute it to a weakening of the market. And that's the problem with the 'Don't fix it' philosophy: If you keep doing everything like you used to, your business will slowly but surely deteriorate. And you'll never understand how and why it is falling apart."
posted by M. Masterson @ 8:25 AM,
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