Bertrand Duperrin's Library tagged pareto → View Popular, Search in Google

Feb

2012

Edge Perspectives with John Hagel: Pull Platforms for Performance

"We live in a world of mounting performance pressure. Our Shift Index reveals that return on assets for all public companies in the US has eroded by 75% since 1965. Companies clearly are failing to respond effectively to these mounting pressures. If we hope to turn this around, we need to step back and take a systematic look at the performance levers that drive these results and question the approaches of the past. "

edgeperspectives.typepad.com/...platforms-for-performance.html

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performance measurement metrics crm socialcrm profit pull KPIs innovation loyalty customerloyalty pareto costs costcutting

Most businesses can be understood as bundle of three core operating processes, each driven by a unique performance lever. These three operating processes are: customer relationship management, product innovation and commercialization and infrastructure operation
In most industries, customer loyalty is eroding, leading to a significant reduction of the average life of a customer. To make matters worse, margins are eroding as well, diminishing the profit generated per year of a customer relationship. In many industries, the cost of customer acquisition is also rising
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- Brand used to help a lot in charging a price premium, but the brand premiums are rapidly eroding in most industries. As if that is not bad enough, the cost of developing new products and services is also increasing in many industries.
- Margin pressure reduces profit generated per year, accelerating technology and consumer preference changes diminish the average years of asset viability and cost of building/acquiring assets tends to increase.
- it's hard to manage these levers, if they are not even measured. I continue to be amazed at the number of companies that have yet to even systematically measure and monitor these levers
- In fact, the Pareto principle is often missed by companies – 20% of the customers, products and facilities usually generate 80% of the profits. But which 20%? Few companies can answer this with any assurance or precision.
- One way to start improving performance dramatically is to ask two questions. First, what are the characteristics of the 20% that generate the 80% of the profitability and is there anything that can be done to increase the share of these highly profitable parts of the business? Second, is there a compelling reason to retain the other 80% of customers, products and facilities given their low contribution to profitability and, if so, what can be done to increase their profit contribution?
- Measurement is just the beginning. The key is: what actions can managers take to improve the overall performance of these operating levers? Unfortunately, the prevalent instinct of executives as they focus on these operating levers is to cut costs.
- cutting costs is a diminishing returns proposition. The more costs are cut, the harder and harder it will be to achieve the next increment of cost reduction.
- What if we viewed the ideal customer relationship as one where I, the vendor, seek to build an expanding platform to help customers connect more effectively with the resources that are most valuable to them individually?
- What if we began to re-conceive products and services as platforms that would invite and support third parties to add customized modules and extensions to the functionality available in the core platform?
- we might explore ways to make it available to third parties so that we can increase utilization of the resource and generate more profitability from our investment.
- I explored this option in a Harvard Business Review article – Unbundling the Corporation – which has gotten a lot of attention from executives around the world. The article had a provocative proposition – companies will ultimately have to choose one of three business types to focus on and shed the other two.

Jan

2011

Enterprise microblogging should be pay-per-use

"Social has its own Pareto rule: 90-9-1 versus the old-fashioned 80-20. It means that 1% of people creates content, 9% curates it, and the remaining 90% is consuming it. That’s not a very homogeneous group, is it? Yet, when it comes to paying the bill, all of them are considered equal."

www.cloudave.com/...blogging-should-be-pay-per-use

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socialsoftware pricing pareto use microblogging

Normally, you only pay for what you use. We all have stuff in the house we purchased once because we thought we needed it, and hardly or even never touched it since. Heck, maybe some of that is still even gift-wrapped or unpacked. But none of us have ever payed for something we then knew wouldn’t need.
You might also reverse the model (slightly going crazy now, apologising up front): users who contribute most will be free from charge, users who contribute least will be charged more – that will get out a really valuable knowledge pool, won’t it? Or will it just increase the volume and drag down the value?