Dear Group Members,

Here is a wonderful article from a completely different point of view. The examples quoted to support the view point are truly amazing.

This is called Lateral Thinking in Business.

Innovation by subtraction

We tend to think that the best way to innovate is to add new features to our products or services. What can we add that increases the appeal of our offering? This route can easily lead to extra cost, feature overload and customer fatigue. Sometimes a better answer lies in subtraction.

EXAMPLE:
Michael O’Leary, the founder of Ryanair, looked at the business process of passenger flights and built a new model by subtracting all the frills that meant extra cost. He subtracted:

Travel agents – you book direct over the Internet so the middlemen and their costs are cut out.

Tickets – you show your passport and quote your reference number. Subtracting tickets saves costs.

Allocated seating – you choose a seat when you get on the plane – just like on a train or bus.

Free drinks and snacks – if you want a drink you have to buy it.

Customer care – Ryanair has one-tenth the number of customer care attendants per passenger mile compared to BA. If you have a complaint the answer is generally – ‘hard luck but what did you expect with such a cheap flight?’

In the U.S., Southwest Airlines operates based on a very similar model.

What can you take away from your current business process in order to save cost and simplify operations? Can you unbundle your product into separate components? Can you strip out costs or processes that not all customers want? Can you bypass a middleman on the route to your customer – as Direct Line, Amazon and Ryanair did? Egg and First Direct offered on-line banking and made it cost effective by cutting out all the branches that burden the traditional banks



Pushpinder Kaur,
Director Trainings
Creative Learning Systems
New Delhi.
9818920097, 011-42143006.