- Owner - We optimized all processes and digitized to reduce costs;
- Me - How are sales going?
- Owner - In systemic decline;
- Me - Then you’re basically only prolonging the date of failure…
The 99% of marketing pushes on efficiency: methods, tools, management, and more (AI, robots, etc.). All correct, but there’s one big “BUT”: cutting costs won’t allow you to survive in the long run.
Great exploiters, but lousy explorers (James G. March)
3 REASONS TO FOCUS ON ASSETS INSTEAD OF LIABILITIES
Making costs efficient is important, but without sales it is pointless: it would be like having a beautiful carriage, but without horses.
The reasons to focus the business on assets are:
1) Over time, assets deteriorate because any business becomes a commodity
In the 1970s, any new product/service was only that. No competition.
That world has ended, so the focus shifted to processes, because everyone does everything.
The commoditization of businesses causes loss of volume and price wars.
2) While costs are influenced by the external context, assets depend on the innovation of your business model
Under the principle of efficient markets, globalization has led to costs becoming homogeneous within a few weeks.
This allows playing margins through limited economies of scale or speculative purchases, not offset by the corresponding management costs.
Instead, assets depend on the method used to innovate the product/service, processes, and every other aspect of the business model—so the creation of new assets is completely in your hands.
3) Innovative pricing and volumes are independent of costs
Although in many countries only cost-based pricing is known (cost plus), there are 2 other methods that are much more profitable.
However, they can be used in only one way: your company must follow the innovation methods. Consolidated, applicable to any business size, industry, context, and number of employees.
Innovative assets are immune to price wars.
CONCLUSION
Reducing liabilities while assets decrease only causes the agony to be prolonged before the end.
At that point, it’s better to stop the business.
The alternative is the business model innovation: it allows you to develop continuously new products/services through a standardized process that doesn’t require investments, software, machinery, or technologies, as it leverages the best practices used by the most innovative and established companies in the world—through secret know-how (so far).
If you don’t believe in intangible assets, think about this: your customer’s needs that are satisfied are intangible.
Rely on professionals who do this work every day and support hundreds of successful companies with a patented Industrial Model patented like the Socrate® Program.