Dare to be Edgy for Profitable Growth
Companies looking over the competitive landscape and moving away from the arena where their rivals squabble find profitable growth. Reinventing thus a business with bold and visionary thinking comes with huge risks as well as rewards. On the other hand, some companies have a tendency to over-rely on their core business. It can lead them to a blind spot where they miss growth opportunities. Sometimes for success, we need cautious and incremental changes. In other words, an in-between strategy that is neither a disruptive innovation nor a radical transformation.
Alan Lewis and Dan MacKone articulates such a mindset through their “Edge Strategy”. The book by the same name is based on a three-year research of innovation strategies of 585 international brands. It advocates three ways in which businesses can profit by looking for opportunities that lie hiding in plain sight. It involves rethinking the edges of your company that has proven to deliver 15% higher returns.
Accessorize your product
Understanding what your core business is essential for profitable growth. Equally important is discerning what features would augment the product. Alter the elements of a core offering that would appeal to the target market. Stretching the merchandise may appeal to the target market that can lead to revolutionary results. One way is to offer value-added services to your product by way of add-ons and upgrades. Another is to include service options with the core product being offered. Also, price it correctly so that people would be willing to pay for it.
JetBlue was on the brink of collapse a few years ago due to operational failure. They toyed with the idea of mergers, alliances and code shares that are practiced by some international carriers. A thorough analysis helped them realize that their market consisted of value-added travellers. They decided to apply the product edge strategy. The company managed to revive its business and stay in the market. They reduced the fare of the core product drastically and introduced paid accessories and add-ons such as extra legroom options and additional charge for a preferred seat. Passengers were willing to pay for that extra convenience and comfort for a pleasurable air travel. It generated more than $75 million in incremental profit. All because JetBlue accessorized their core product with bells and whistles.
Smoothen the customer journey
Time to time it is imperative for company officials to walk in the customers’ shoes. Their missions differ at every step of their decision-making journey. Look out for these pain points throughout the journey the customer takes in the process right from the awareness of the product until the purchase and even post-purchase. Try to support this trip by alleviating the pain points in an innovative way. Information-sharing and educating them on how to relieve pain is an excellent way to walk them through the voyage.
Greengrocer is a case in point. Over time they have realized that customers are not only looking to buy green vegetables but they also want them washed, cleaned, chopped and even ready to be prepared. The beauty of it is that customers are willing to pay the marginal price in exchange for the convenience it offers. Whole Foods went a few steps further by offering shoppers different food stations such as pizza ovens, salad bars, and home-prepared meals and even appealing seating arrangements that they claim now on an average generates one-fifth of their total revenue. And shoppers never seemed to complain when the mundane weekly grocery purchasing turns to lifestyle family experience. Thus Whole Foods have smoothened the customer’s journey every step of the way in an impressive and innovative manner for profitable growth.
Leverage enterprise resources
Make an inventory of all the business assets. Find new ways to unlock value through putting to use the company’s under-utilized assets or untapped resources so as to create a new revenue stream that would generate more income. Industry pioneers routinely sell their valuable expertise to the outside firms while still staying in business. By exploiting such possessions and using them in different contexts, companies have diversified and have amassed vast sources of revenue.
Amazon rents out its web services, its technological infrastructure, to third parties since the company realized that it would add value to other businesses. By doing so, Amazon built added a sustainable cloud computing business to its core product and enhanced its profitable growth. The competencies it had at its disposal was valuable enough for which they could command a good price. A critical assessment of their asset inventory enabled Amazon to recognize the potential of one of its untapped opportunity, and they capitalized on it. When company resources are being put to use in different context wealth is created and not destroyed. It does not have to be at the expense of disruptive innovation or blue ocean strategy but in tandem with them. And it adds to the bottom line of the company by way of generating additional revenue.
Leverage the periphery
The authors of “Edge Strategy” reckon that pursuing any one or all of the above strategies can lead to a myriad of opportunities for extra sources of income from which companies can choose depending on the profitable growth potential and feasibility of implementation. Think harder about the periphery or the “edges” of existing businesses.
The strategy is not new. However, very too often when thinking about company growth business executives are obsessed about pursuing industry disruption or inventing the wheels that come at a huge cost. Instead, look under your noses, and you will find several opportunities to earn extra income by making incremental changes to the existing businesses. Or they stay too focused on their core offering that they miss out on the changing trends thus rendering their products obsolete and redundant. Adopting an Edge Strategy® not only unearths inherent capabilities to create wealth but can also be rapidly implemented because it is a low-hanging fruit.
Photo: Greg Rakozy