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It's Not Luck - Eliyahu M. Goldratt [62]

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based on product cost. Which as I know, leads to the impression that a product should have one fair price.

Based on the tree, the obvious injection is to be able to command a multitude of prices. Which means, to take actions that will segment an existing, seemingly uniform, market.

Yes. This direction is clear from the Current Reality Tree. But if the cloud is useful, it should provide me with more alternatives. I don’t think that figuring out the generic way of how to segment a seemingly uniform market will be a short or easy task. Besides, this type of work requires a pencil and paper.

Before I turn toward home to do it, I should examine other arrows in the cloud. Maybe they will provide me with easier alternatives. I glance over at the next arrow. It’s the conflict arrow. According to Jonah, if you can break it, it usually provides the most powerful solutions. If there ever was a time I needed a powerful solution, it’s now.

“Make decisions and act upon the clients’ perception of value” is mutually exclusive to “Make decisions and act upon the suppliers’ perception of value.” This is plain common sense. What’s the assumption? That the two perceptions are different? It’s too obvious.

“It’s obvious after constructing the Current Reality Tree,” I dryly say to myself.

So what can I do with it? After a while I realize that the assumption is more restrictive. Suppose the client’s perception is very high, much higher than the supplier’s perception. In that case managers would not face any dilemma.

If they’re not greedy, that is.

The assumption is something like, “The client’s perception of value of the product is significantly less than that of the supplier.” Only then are the managers facing the dilemma.

With one eye on the road I scribble it down.

What can we do to change this assumption? Do I have an injection, any idea how to change it, I ask myself?

Yes, I do, but it’s too simple. “It’s not something concrete,” I mumble.

So I’ll have to go through the process of converting it into something concrete and practical. What’s the big deal? I know this process, I have time, what I need is a direction. And this one looks very simple. So simple that it cannot be wrong. Too simple.

For a few miles there are signs announcing the next rest area. Where is it?

I roll into it and stop.

“Take actions that sufficiently increase the perception of value the market has for the company’s products,” I write down.

This is what I call simple with a capital S. But it is a direction. And if Jonah’s methods do work, it should lead to a solution.

According to the guidelines, I now have to choose the strategic objectives. It’s not a big deal, they’re just the opposite of the undesirable effects. This shouldn’t be too difficult. I have the list here. . . . Somewhere.

It doesn’t help. This list was composed by Trumann and Doughty and it encompasses UDEs from all their companies. We don’t necessarily have to upgrade our sales force’s skills or improve engineering. As a matter of fact, we cannot afford the time it requires. For us, I laugh dryly, it will be enough if we can somehow gain a dominant competitive edge.

No, wait a minute. Even that won’t be enough. We must achieve something that most companies don’t have to. We must be able to quickly demonstrate impressive, bottom-line results.

Slowly I write the first objective: “Sell all the capacity without reducing prices.”

Considering the amount of excess capacity that we have it will result in an impressive bottom line. The problem is that we’ll have to convince everyone that we can sustain such results for the long run. This is just as important.

I add another objective, “Have an apparent, dominant, competitive edge.”

Yes. That will do it. What I have to do now is figure out how, by starting from my suggested direction, we can reach these two objectives. I’ll have to build a Future Reality Tree.

If there is one thing that is more tedious than constructing a Current Reality Tree, it is constructing a Future Reality Tree where the starting point is something that looks no more

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