BQF Innovation

Is there a completely different way to operate in your business?  If all your competitors are using a broadly similar approach, is there an entirely separate approach that could deliver what your customers want?

In the early 1980s the leading manufacturers of Personal Computers were companies such as IBM, Compaq, Toshiba, Hewlett Packard and Olivetti.  They operated a similar model.  They built PCs to standard specifications and then shipped them to dealers who sold to end-users.  Michael Dell conceived a different model.  He allowed end-users to specify the exact configuration they wanted (e.g. memory, disk size, special function cards etc) and then built it to order.  The Dell PC was then shipped direct to the customer who could get telephone support to help set it up.  Because there was no inventory waiting in distribution channels Dell was able to operate with much lower stock levels than his competitors.  In a world where components were continually falling in cost and improving in specification this was a huge advantage.

Geoff Bezos used internet technology to develop an entirely different model for book and CD distribution when he set up Amazon.  The traditional book and CD retailers had high overheads in retail premises and inventories.  They could not compete with Amazon’s huge selections, slick search facilities, customised recommendations and fast deliveries.

ARM was launched in 1990 as a tiny microprocessor company competing with huge players like IBM, Intel and Motorola who all designed and manufactured their own chips.  ARM took a radically different approach.  Sir Robin Saxby, the visionary CEO, said. ‘We had very little money so our only hope of creating a global standard was to license the design to everybody – turning our enemies into our friends.  That put ARM into a different space.  It was our open licensing business model and the power of our connected community that was the most significant factor in changing the world.’ By 2006 some 98% of the world’s mobile phones were using at least one ARM designed processor and hundreds of companies have licensed ARM designs (including Intel).

How could you change your business model to completely bypass your competitor and delight customers with a radically better service?

Paul Sloane