Contact Chris or subscribe to updates for free - here

High value from low cost?

IMG_20160805_112433Over the last few weeks I have become fascinated by low cost models in business.  Be it airlines, hotels, or indeed banking, many of us are turning to these businesses to find value and in some cases more responsive service.

I have found myself, becoming quickly reliant on ‘apps’ to book low cost travel, buy quality produce from no frills supermarkets and even manage work life through low cost alternatives to traditional players (remember linux).

Okay, maybe I am just cheap…! however, I have also found there is plenty of value there too, with some interesting lessons to be learnt for us all.

The low cost model

After ‘extensive market research‘ it feels like they are three main variations of low cost model in place.

  1. The ‘all inclusive’.  In this model everything is included in the price. It may be cheap, but you are promised the same as the traditional businesses, just for lower cost.
    Pros: if everything works well, you get what you need at a much lower cost
    Cons: if something goes wrong, there is little margin available for the company to resolve properly, it can be frustrating
  2. The ‘everything is extra’. In this model you are presented with a rock bottom price, it is unbelievably cheap for the basic service.  However everything else is extra, including some things you may expect to be included.
    Pros: can be really cheap if you know the tricks to get the deals
    Cons: if you end up not being aware of some features, you can get stung with additional charges and end up paying more.
  3. The ‘half and half’. This is the blended model. Some things are included, some are extra, billed as you need them.
    Pros: you get a low cost no frills deal, but with a little extra so there are no surprises
    Cons: not as cheap or as great a sense of value as others.  Sometimes add ons can be a expensive too.

Hopefully you can recognise these from your own experience (drop me a note if you need an example or two).

However, what does all this mean for us in the rest of the business world?

A focus on cost, a focus on value…

Across the more traditional business world there is continued focus on reducing costs.  We are all looking for opportunity to do more with less it seems.

In this environment, the low cost business model seems very attractive and is being pursued by some as a clear strategy.  They are transforming their businesses in order to be competitive; digital automation is a hot topic, as is reducing cost and eliminating waste.

However, there is much more to this than just automation and slashing expense.

A template for organisational culture change…

In many ways these low cost businesses also offer a template for cultural change, re-thinking and streamlining products.  It is not just about being the cheapest, but also how to offer the most value.  Key to this is how the business interacts with the customer; there are extra new rules is seems.

  • Automate, but keep the customer informed at all times where they are in the new process.  Transparency is key.
  • Build in standardised flexibilty, but still stick to the process. Unplanned variation costs money, standardised processes generate economies of scale
  • Find alternatives to traditional suppliers.  There is a lot of flexibilty out there, spend only on what you need and similarly look for net value not just lowest cost
  • Provide core services (include for most customers), however also have extra services available on an as needed basis.  The customer saves as they only spend on what they need.  If the price is reasonable they will still buy more.

We are all low cost now…

Undoubtedly these new businesses are shaking up the market.  Customer expectations are changing and without legacy products these businesses are moving fast.  They are unemcumbered by legacy systems, enabled with new technology and quickly gaining market share.

For the rest of us there is plenty to learn… and it is an opportunity to adopt some of the best practise out there.

Who will win in the end…? 

I am not sure it is even a competition.  Large established players will gradually transform, taking and incorporating the best ideas into their businesses.  New businesses will grow rapidly, becoming large businesses and then become subject to some of same rules as the rest.  All we can say is there will be change and standing still is not an option.

However, by watching, listening, and extracting the principles for your own business it is possible to stay abreast of these changes, providing extra value for your customers.

In the end this does sounds like a win to me…..

 

Posted in Blog | Tagged | Leave a comment

Struggling with the new reality

almond-blossom-5378_1920 I admit I have been having trouble holding it together post the EU referendum result.

To sit by and have to watch the effects predicted take place is very hard for many.  The Leave camp responded to presented facts, by persuading people they were lies, to not believe experts and that we are Great Britain, be optimistic it will work out.

However now they are happening, it is being reported as fact, the mistruth is clear, yet the damage is done.  It is upsetting.

  • It is upsetting to watch the pound fall, markets drop, summer holiday prices and eventually food go up.  This is now being talked about as fact.  Where was all this reporting 1 week ago?
  • It is upsetting to have to read openly racist, bigotted and xenophobic comments being posted online.  It insults educated and respectable figures (not to mention making my blood boil).
  • It is upsetting to find out that a significant majority of those under 45, those that are the future of the country voted Remain, is heartbreaking. The young, the middle aged and the EU citizens who could not vote, are paying the pensions of the older group.  Those that voted Leave have denied their children and grand children many of the very opportunities they had, a (somewhat selfish) slap in the face.
  • It is upsetting to hear the leave campaign now admit some of their claims were false. Some clearly believed this stuff and yet now it is said untrue.
  • It is upsetting to hear talk of Scottish independence the very next day.  Hardly surprising for those in Scotland, however stunning that the leave group are surprised this would occur and the possibility of a UK breakup.
  • It is upsetting to observe the panic and now subdued nature of the leave campaign. They clearly did not expect to win.  The reality, there was no plan it appears, and now they need to solve for the mess they have created.
  • It is upsetting to hear EU officials talk of hardline negotiations and limited concessions.  The arrogance of some vs our true place in the world is becoming clear.  Our bargaining power is now limited.
  • It is upsetting to hear of EU nationals, who have been here for many years, paying UK taxes and being pro-UK now not feeling welcome in the country, being in tears as they drop their kids off at school and worrying about the uncertain prospects for their future.

And lastly

  • It is very upsetting to hear about Leave voters, being surprised and concerned on the result.  Saying ‘we never expected to win’, ‘it was a protest vote’, or ‘I didn’t expect this to happen’. This was not the vote to ‘send a message’, it was the real deal.

I will calm down, and probably need to stop posting, however I do not want to return to the pre-EU world of the 1970’s.  Something needs to be done to fix this.

Posted in Blog | Leave a comment

After the vote

europe-1456245_1920Tomorrow in the United Kingdom the population is heading to the polls to vote to decide on continued membership of the European Union.

Whilst I have hesitated to mention politics on Linkedin (I have previously expressed my views here, with more articles here and a video here), this is a momentous vote.  Whatever the outcome it will undoubtedly have long reaching, long lasting effects on the economic and business environment for years to come.

The Great Debate

Watching the debate on the BBC last night, the tone of the recent campaign messages was particularly concerning. Flag waving, naked nationalism, rubbishing expert/scientific advice and a Pollyanna outlook were all on display, as were the divisions that have opened up in British society.

Throughout this, the media have been at pains to appear to show an unbiased view.  Every argument has had to have a response from the other side.  This is even if there were no facts and just a ‘the others are talking rubbish’ or ‘don’t worry it will be fine’.

They have appeared to relish in observing the fight, stoking the arguments and fanning the flames of discontent.

A step back for diversity?

Unfortunately this has had the unfortunate effect of surfacing some very unsavoury, xenophobic views.

And, these views have been provided a voice and disproportionate airtime.  With this airtime having a legitimising effect, normalising what would have previously be seen as unacceptable.

Diversity, it seems, may have just taken a big step backwards.

It may run deep and could have long consequences, beyond just the vote tomorrow.

After the vote:  some concerns

If the Remain group win, we should expect groups holding these views to be vocally upset; they have just been emboldened.  Further violent outbursts may indeed follow.

If the Leave group win, the group will be further encouraged, they will be in power and writing the laws. The views could easily get more extreme and easily written into legislation (especially if there is an economic collapse, with a search to find someone to blame).

British society has been built on diverse, tolerant, understated and pragmatic principles. It is something I am proud to be part of.

However a vote to Leave and the associated lurch to the right is not.  I believe it will be bad for business, our daily working environment and the strength we gain from diversity in the workplace.

Typically British

In typical British fashion, many do not want to say anything or rock the boat.  It is important however, in my personal view, to make your voice heard and vote for the tolerant, kinder society being presented by remaining in the EU.

I am still Remain.

(I also remain extremely concerned about the economic fallout:  the financial markets are swift, unsentimental and hard nosed, we should expect the pound to drop and consumer prices increase on a leave result, but that is another topic…)

Posted in Blog | 2 Comments