It's Not Luck - Eliyahu M. Goldratt [100]
“To some extent,” Joe grudgingly agrees.
“I also believe,” Stacey continues, “that we can maintain their system for a fraction of the maintenance cost that they spend.”
“That’s for sure,” Phil speaks up. “They don’t know how to maintain our equipment. Sometimes what they call maintenance, I call sabotage.”
“Which means that we can maintain their system for a fraction of what it costs them. Joe, we can give them a good price. A very good price.”
“We’ll have to do the calculation.” Joe is still skeptical.
“We don’t have to do any calculation to know the answer. Look, Joe, we have a tremendous amount of spare capacity,” Stacey reminds him of the obvious. “If you think that with this offer we can take the new market, any reasonable price will guarantee us a lot of profit. Don’t you see?”
“If it’s good, the competitors will immediately copy us. What’s the use?” He digs in his heels.
“We can make sure that will not happen,” Phil says. “If we can have all spare parts within a few hours, we will be able to guarantee extremely high reliability. Let’s offer to pay penalties for every breakdown that lasts longer than . . . say twenty-four hours.”
“Penalties? Why penalties?” Joe is immediately on guard.
“Because that way we’ll ensure that our competitors will not immediately follow,” Stacey says.
“And if they try, they’ll break their heads,” Phil completes the picture.
Joe doesn’t answer. Many are grinning. Only now I start to realize to what extent they don’t like him. Frankly, neither do I.
Stacey turns to the group and suggests, “Shall we examine, seriously, to what extent this offer will be attractive to the prospects?”
They start to argue about it. More and more people are drawn into the debate.
Before long Stacey takes a blank transparency and writes at the bottom, “We offer pressure steam where, when and as much as needed.” Slowly, the Future Reality Tree starts to emerge. Every time that they succeed in overcoming another reservation, a few more entities are added to the tree.
After two stormy hours, three pages are already finalized. They are over the hump. No one is now against the solution, they are polishing it. Making sure that it’s okay.
Their Future Reality Tree clearly shows how big and diverse the benefits are going to be. The benefits to them and to the clients. It’s impressive.
The details in their case are very involved, but the concept can be explained in a simple way. The offer that they are examining now, relative to the way they always did business, is like the difference between buying a car and leasing a car. You know that tax reasons make leasing quite popular. But that is just a tiny part of the story in their case.
To realize the real magnitude of it, imagine that currently you don’t have to just buy the car but also a fully manned garage to maintain it, an inventory of spare parts, and a gas station.
What they offer is to give you the car that you want, and to charge according to the miles you drive, as you drive them. The price is very fair. In total, considering the expense of maintenance people and carrying costs, it’s cheap.
Now imagine that you must have a car but you are measured on return-on-investment. The difference between the two offers is night and day.
Knowing how corporate thinks about these things, I’m quite convinced that if Pressure-Steam presents it well, they’re bound to win almost every new installation. Considering the fact that they have a lot of spare capacity, they’re bound to make a hefty profit. How much? I’ll have to wait for a week or two until I get their detailed plan.
They are about to break for lunch when Phil says, “Why offer it only to new installations? Why don’t we offer it to our competitors existing clients? With this offer we can eat them for lunch, and they can’t do a thing about it.”
This remark starts the madhouse. Everybody is talking. There are many negative branches they’ll have to hammer out. Many.
I