Here are Fahrenheit 212’s top 10 tips to utilize existing assets to increase your company’s revenues:
Know what you do well. Dig deeper to understand the competency behind the processing. As we heard from then President of Campbell’s Soup Sean Connolly, now CEO at Hillshire, “Campbell’s are not just a soup manufacturer, we puree vegetables really well” – which makes acquisitions like Plum Organic strategically sound. Lowe’s is a world-class logistics company, not just a home improvement company. And when we are utilizing technology by Samsung, it always needs to be considered not just by what it does in products today but by what else it could do today – what is the raw competency of that technology?
95% of the production line in a plant is either impossible to change or would cause very little variations in the outcomes if changed. The same can be true of a service, where certain core functions need to be delivered, changing a POS system for instance is a scary undertaking. Understand what those catalytic points in the production line or in the service based business are, where changing the input in a tiny way can create a massive difference in the outcomes. Try to identify these transformational points of impact, where 1 degree of difference makes all the difference to the end consumer. Where is there flexibility? How big, small can it be? What ingredients, actions and interactions, can you add, substitute, remove?
We define ‘capability’ as the knowledge base and production breadth, within the plant or company, both human and mechanical.
Production history at a plant location can go back many years, and often employees remember other methods of production, other machines, other outputs that could be re-created again. The machines themselves might also be capable of creating other types of outputs but are being used for this specific one today. Understanding a location’s capability will allow you to see the realms of possibility for innovation.
The assets and products you have are often appropriate for a new target, a different occasion or alternative channel. For Nutrisystem we were able to ease consumer adoption by changing the channel for Nutrisystem’s meals, by going direct to retail with a 10-day starter pack, instead of direct to consumer for a full month. We asked Jimmy Dean, “do breakfast sandwiches need to be eaten in the morning?”. For Campbell’s the core competency for pureeing vegetables allowed them to reach Millennial moms of newborns and toddlers with baby food.
It is crucially important to separate facts from opinions. Sometimes things have just always been that way, and too often are accepted as given. Challenge the established paradigms – while many will be there for good reasons, others may be historical opinions or based on facts that have now changed. Why do all spirit manufacturers make spirits at 40% ABV when only 5% of people actually drink it that way? Is delivery still the gold standard in pizza? Or as we asked Lowes, “do you need an urban store to serve an urban community’s home improvement needs?”.
Understand the history of production for your company – what else have you done? Many times the right product might have been brought out at the wrong time, or in the wrong way. Asking R&D to “open up their closets” is a favorite exercise of ours. There is often huge passion and excitement for things that previous teams did not see value in. Coca-Cola once provided us with a “golden list” of trademarks that they owned globally that might be appropriate for a new brand in the US. Relationships with contract manufacturers allow you to further extend the competency of your company – their capabilities can become yours. The same is true of other joint venture relationships that might exist.
Capacity gaps are the fastest areas to be filled. Excess capacity means lost revenue, pressure on the plant and possibly job losses, but it also means massive opportunity if that can be repurposed in an effective way.
Please note, “Seasonal Capacity” is typically a very difficult problem to solve directly—if there were a way to sell more Easter Eggs throughout the year someone would likely have tried it—but the installed equipment might have other outputs that can be marketed in a different way.
Double up your assets. The P&G trick of utilizing brand assets across brands is a simple and effective way of utilizing assets to create new consumer benefits. Cascade with the power or Dawn or Tide with Febreeze support the main proposition with additional gravitas. Cross-pairing existing products with a new brand from the portfolio can help with category management, price tiering and staving off competition.
Often one of the most effective things we can do for our clients, is bring a fresh perspective together with a curious mind and no ingrained beliefs. Try and think with a clean and fresh perspective on the challenge. How would a person look at this for the first time, what would they see?
It may not be imperative that you do something very well, as long as you do it better than your competition. Take time to understand the limitations of your competitors and then look again at how your assets can be utilized to take advantage of this arbitrage of capabilities.