What are some of the operational challenges with highly configurable products?
Here are some observations I’ve made about the operational challenges with highly configurable products that companies often experience:
In essence, most organizations are reactive, choosing to wait for problems to occur so they can be corrected. Dr. Alan Weiss offers the following insights and diagrams from his book, The Great Big Book of Process Visuals:
There is an over-emphasis on problem-solving, usually at the expense of innovation. If people are continually trying to fix things, then they are seldom trying to improve things. And most organizations reward the former and penalize the latter (since it’s somewhat risky). I use this graphic to demonstrate the difference between the two pursuits.
The first diagram below represents “problem-solving” or “firefighting,” while the second considers the impact of “innovation” in resolving an issue.
Standard Performance + KPI Trigger + Decline + Fix = Restored to Standard Performance with Losses
Standard Performance + Management Initiative + Innovation = Improved Performance & Profits
According to Dr. Alan Weiss, companies seldom ever approach a 50/50 ratio between problem-solving and innovation. The average is more of a 95/5 ratio in favor of problem-solving. If a company only concerns itself with fixing problems, the company doesn’t get any better. Innovation is required to improve performance, profits, and market share.
Many years ago, the chief operating officer (COO) of a company wanted to contract my mass customization consulting services for assistance resolving challenges with product configurability that he alleged was “killing my company.”
After investing a modest amount of time with his team, I concluded they weren’t serious about resolving their issues and declined the opportunity to assist them. It was only after the third call from the COO that I (reluctantly) offered to do a small project. I should have followed my instincts.
The people in the company loved fighting fires. As I anticipated, I could not get people’s attention to work on a solution. The COO repeatedly canceled meetings to discuss the situation as “something came up.”
The company ended up losing its biggest customer. The customer who represented more than 80% of the company’s revenue. Their company-wide culture of putting out fires, instead of focusing on what the market required, failed to come to grips with its biggest challenge: product configurability.
While this may be an extreme example, it is more representative of the norm than one might think. It’s one thing to say you want to make changes, but as we know, it’s strategic actions that make successes happen.
The content on this page is derived from Dave Gardner’s Book “Mass Customization”.
If you wanted to start a company that offered highly-configurable products, the worst business paradigm you could select would be …
There is conventional thinking for durable competitive advantage during normal economic conditions, but I’ve added 2 action steps for durable …
Recurring Operating Challenges That Affect Customer Satisfaction and Profits