It's Not Luck - Eliyahu M. Goldratt [69]
“Exactly,” I say. “And if Jonah is right, it should give us a detailed understanding. So detailed that we’ll know how to accomplish it.”
“Good idea,” Don smiles. “Can I continue?”
“Be my guest,” I hand him a post-it pad.
He writes another note and reads, “If, ‘The perception of value the market has for the company’s products is higher than the current prices,’ then ‘The market doesn’t have any quarrel with the company’s requested prices.’ ”
“Good,” I say, “but not good enough. This still doesn’t guarantee a competitive edge.”
“Right,” Don agrees. “The market might not have any quarrel with our prices but at the same time it might have even less of a quarrel with our competitors’ prices. You’re right, we’ll have to add another injection. Something like, ‘The perception of value the market has for the company’s products is higher than the perception it has for the competitors’ products.’ This will give us a competitive edge.”
“Considering that we have to reach a ‘dominant competitive edge’ I suggest you change ‘higher’ to ‘much higher.’ That will take care of it.”
“The paper suffers all dreams,” Don mutters as he corrects the injection. “Now it looks like we can connect to one of our objectives: ‘The company has an apparent, dominant, competitive edge.’ I told you that it would be too easy.”
“Don,” I patiently say, “you addressed ‘competitive edge’ but you haven’t substantiated that this competitive edge is apparent. To do that you have to prove that our market share grows.”
“You are right, I need both injections.” He is not impressed. “If, ‘The perception of value the market has for the company’s products is much higher than the perception it has for the competitors’ products,’ and ‘The market doesn’t have any quarrel with the company’s current prices,’ then ‘The company increases its market share.’ Now we’ve reached the point where the market prefers us over the competitors and as a result we increased market share. Is it okay with you to connect to the appropriate objective?” And he draws the corresponding arrows.
“Don, I think that you are being too hasty. I don’t think that you have established a dominant competitive edge.”
“What else is missing?”
“What guarantees that the competitors will not immediately copy our actions and wipe out our advantage?”
“I see.” He thinks for a minute. “I guess we’ll have to add another injection. Something like, ‘The actions the company takes are hard for the competitors to follow.’ ”
“That will do,” I agree.
When he finishes adding it to the tree, he says, “Based on the same logic I can connect to the other objective as well. ‘The company sells all its capacity without reducing prices.’ Okay?”
“No, it’s not okay, I think we have to add another injection,” and I hand him a post-it. “We have to make sure that we increase the perception of value in a big enough market or markets. Much bigger than our available capacity.”
He reads the post-it: “ ‘The market that the company targets is much bigger than our available capacity.’ No problem,” he sticks it on the big, white sheet and completes the tree.
“It’s very easy to formally achieve your objectives when you are allowed to use dreams,” he comments.
“Yes,” I laugh. “It looks like our injections will be real about the time that pigs fly. But, you must admit that so far we haven’t wasted our time. Now we know what’s needed. It’s not enough to increase the market perception of value to be above our requested prices, we also need to increase it to be much above the market perception of value for the competitors’ products. We need to do it in a big enough market, big enough to exhaust all our capacity. And we need to do all of it in a way that will be difficult for our competitors to copy.”
“That’s all? No sweat.” He tries to be sarcastic. “So now instead of one flying pig, we have four. This is what I call progress.”
“It’s not really four. The injections that we added are elaborating on the original one, they make it more explicit.”
“Not explicit enough, at least