It's Not Luck - Eliyahu M. Goldratt [66]
I nod approval, and he continues, “Then you are going to see what changes you have to make, not to the physical product, but to the offering as a whole, so that you are better addressing a deep problem of the market. This is intriguing.”
“Intriguing? It’s ingenious,” Brandon slaps the table with approval.
I lean back, and finish my beer. They do the same. After a while, Jim asks, “How do you know that you haven’t forgotten something? That you haven’t neglected an angle that might come and bite you?”
“Good question,” I say. “Let me enhance it. You know that when many of a person’s problems are eliminated, that person might change his behavior. Here we are talking about addressing a deep problem, which will eliminate a lot of UDEs. We must expect that the market behavior will change as a result. What guarantees that this change will be to our benefit? Who says it won’t boomerang on us, and after a while leave us worse off than we were before we started?”
“Good questions,” Brandon says. “But I think that with any change we have to take some risks.”
“Some level of risk is unavoidable,” I respond. “But I am too paranoid not to try and reduce the risk as much as possible. And we have the perfect mechanism for that.
“You see, once we have built the Current Reality Tree of the market, we are well aware of the underlying causalities. Then what we do is start by assuming that we are launching our new offer, and logically predict what must be the unavoidable impact on the client. In other words, we build the Future Reality Tree of the market.”
They seem to understand.
“Now we are going to use the most abused, but powerful resource that we have. At our company, like at any company, we have no lack of people whose instinctive reaction to any suggestion is ‘Yes, but . . .’ Small yes, big but. So we take this Future Reality Tree that we have built and send it to as many functions within our company as possible, asking for reservations.”
“No doubt you will get them. Piles of them.” Jim laughs.
“It is very important not to ignore these nasty reservations. Each one of them is a pearl, because if we do take them seriously, if we write each reservation as a logical Negative Branch, we can identify everything that can go wrong.”
“And a lot that cannot,” Brandon adds wryly.
“Now, the Negative Branches that lead to real hazards have to be trimmed, which means we have to complete our offerings with additional actions that will almost guarantee that the identified negatives will not occur.”
“Yes, very smart. This way, if it works, you’ll end up with an excellent offer, one that will significantly increase your competitive edge. Alex, how long should this process take?”
“I don’t know. But my guess is less than a month. I have to leave time for implementing it and getting the orders.”
“To the orders!” Jim raises his mug. We look. All our mugs are empty. Jim grabs his water glass. Brandon and I do the same, and we all join in the toast.
“Alex, what about market segmentation?” Jim asks. “This beautiful idea that came out of our Current Reality Tree? You’re not going to use it?”
Again I marvel at how much they learned from that tree. “Maybe not in the beginning, but I am definitely going to use it.”
“The point was to cause the segmentation in what is now a uniform market, not to just go after niches. Do you know how to do this, how to cause this differentiation?” Jim is relentless.
“I think so.”
“Well?” Once again, they’re getting pushy with me.
“Well, it’s quite simple.” Maybe it is, but again I wonder how to explain it so that it’s clear. “Actually, it’s a derivative of what we’ve been talking about. You see, Jim, we’ve left an open question: what is the market of a company? We can define it as the person who the company interacts with. We can define it as the companies to which it sells its products. We can define it as the companies that buy from the companies whom we sell to. Or we can go