A consumer product client redefines itself
A global consumer products company offered a wide range of products. They wanted to find out where they could offer a more differentiated value proposition and create a unique position in the marketplace.
Q: What is truly differentiating for this company?
A: We created a Component Business Model that identified the key areas where they held a leadership position.
Those areas are where they would focus their spending to get the biggest impact from their budgets.
They needed to see where they held the advantage over their competition and which parts of the business truly created unique value. The componentised approach gave them new perspectives and enabled them to identify the capabilities that supported their strategic imperatives. And to help ensure they're spending appropriately.
When comparing their investment to their strategy using the Component Business Model, they saw something surprising: investments were not aligned with their goals. They were spending anywhere from one-third to nearly one-half of their budget on components or processes that were non-differentiating and not adding substantial value. What's more, they found that exceeding expectations in non-differentiating areas was an unnecessary expense that offered no additional positive impact.
In order to satisfy both consumers and retailers, and position themselves to be an innovation leader, they needed to make some changes to align their spending with their goals. They knew that their differentiating competencies would need the highest levels of effectiveness, and their non-differentiating activities would be handled for efficiency.
How the Component Business Model helped
The Component Business Model created specifically for this company helped them get a better perspective on what this really meant, and how to achieve it.
They focused on their differentiating activities. They identified opportunities to increase cost efficiencies through partnering with strategic providers.
The Component Business Model helped them operationalise their strategies - to take their plans and turn them it into real results. It helped them establish a common understanding of what activities are truly differentiating to the company, and this in turn led to adoption of a common language across the enterprise. Universal acceptance and understanding of these activities helped keep this project on track, moving them closer to their goals.
These steps helped them move toward becoming a more focused company , positioning themselves for the success they envisioned.
Results
The project is ongoing, but these results are coming to light: They expect to drive incremental savings by understanding what can be done as inexpensively as possible. They plan to reinvest those savings in areas that drive value. And they expect this will increase revenue and profit.
