Wednesday, 9 April 2014

Cost or Quality will not make your Organisation successful?

You may find organisations struggling to make profit, despite their been having best quality producst in a different category. 

Reasons - failure on their part to respond to customer need and ever changing world, complacency to shrug off need to change themselves and the worst, looking for reasons to justify not to change. One of causal relationship in these companies is their ‘inward’ looking approach.

Cost and quality are hygienic factors in business today. No company can survive if it does flirt with quality or cost. At the same time none of these two provide, any base for differentiation and therefore no reason to charge premium. Companies which do not have ‘anything’ in their product or services to charge premium can only make ‘Survival Profit’ for short run. Lucky companies can slower down their speed to death as they luckily got a distinct product category. But question comes how long?

New world has given a more serious threat as they lowered down their cost of production by exploiting Economies of Scale but at the same time maintained high degree of quality standards.

Man does not stop at challenges. Rather, challenges help him in being more creative

Organisations have to build a ‘Culture of Receptivity to new Ideas’ i.e. Culture of Creativity thereby any and every idea being tossed to it formally and informally is put to test before being rejected having no substance. Mind it, ‘ideas are not incubated in labs but in a positive atmosphere of Receptivity to new Ideas'. All studies show, organisations fail when they start avoiding new thinking on one or other pretext.

Organisations therefore, have to look for ‘External Exposure’ to create differentiation in their products or services to look for premium.  We all know, source of profit is value being derived from a product or service by the customer or consumer. It thus, means any activity which can define further the value enhancement in the entire value chain can help organisations in achieving differentiation in their products or services.  Differentiation leads to Premium. Organisations have to look at both ends of its spectrum to enhance the value of its products or services. At one end, they should look for integrating very closely with their supply chain partners, improving their manufacturing processes and at the other end they should optimize customer value across the whole chain, not just their part of it and should also harness technical capabilities of their supply chain partners.

At the end, organisations should create an ecosystem of its own to build either product or service superiority. Mere focus on cost will not guarantee profitability in changing world and down play with quality will wipe the organisation overnight.

So, what stops organisations to be successful, it is only organisations. Do you belong to such an organisation? Change it.

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