New perspectives can keep you focused on the most highly productive areas of cost reduction.
These questions are designed to extend your thinking in more creative ways to reduce costs in constructive ways.
How can our business model be changed to both increase revenues and cut costs much faster than our competitors?
By starting with a focus on expanding revenues, you are much less likely to fall into the trap of working on volume-reducing business model alternatives.
How can we find ways for suppliers to pay us?
This is a more aggressive variation on getting resources for free. If the connection to your organization is valuable enough, people will pay you to have an association. For instance, cookbook authors are expected to buy a large number of books before a publisher will take them on. That's because there is an oversupply of both cookbooks and those who wish to write them. Whether or not you think of any opportunities, considering this question should open your mind to places where free or lower-cost resources can be made available to your company.
How can more people work on finding cost-based business model improvements for us?
Innovation in this area is in part a numbers game. Take equally good questions to answer, and the organization that has more people thinking about them should come up with more and better alternatives. Obviously, if everyone is only working on this question, basic business doesn't get done. Having a reputation for wanting these ideas and recognizing and rewarding those who produce them are great places to start.
How can the search for cost-based business model improvements be separated in peoples' minds from the unappealing and ineffective cost reductions you have done in the past?
You will not get much attention, enthusiasm, or creativity if people feel like the activity is simply designed to lead to another layoff or painful restructuring. What encouragements can you afford to make and be sure to keep that can make everyone feel more secure? For example, are you in a position to promise that there will be no layoffs for the next year?
Where can you find expertise to reduce costs in areas where you know little?
A good example is creating a stock-price multiple premium that can be used to fund compensation, new assets, and cost-reducing acquisitions. Chances are that neither your company nor your company's investment banker has enough expertise in this area. Where can you find help? Begin by talking to executives in other companies who have been successful in this way. Ask them how they developed their expertise, and how they would advise someone who is new to do so now.
What cost-reduction business models would most effectively reinforce the personal values of those who work in your company?
Cost reduction is often pursued in a way that causes people to feel like they are selling out their values. If you can turn that around, you should unleash lots of creativity as people begin to find a congruence between new cost-reduction-based business models and their own lives.
How can your company make it easier to find new business model advantages based on cost reductions?
Many people report that creating team-based experiences in working on these concepts and questions can help people feel more comfortable with and more experienced in this kind of thinking. By combining different perspectives, knowledge and skills in a single team, you enhance the scope of what can be appreciated and effectively considered. Visiting companies that are more experienced in this arena can also help. While there spend enough time to understand how what they do is different from what your company does to find better cost-based business models.
How can cost reductions greatly expand your company's ability to provide more benefits that customers and end users desire?
Copyright 2008 Donald W. Mitchell, All Rights Reserved
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