Growth simply for the sake of growth is the ideology of the cancer cell, not a strategy for a viable, profitable company.
So says Ronald J. Baker in his incredible tome on the economics of creating and capturing value, Pricing on Purpose. Smart businesses of this century will increasingly focus on profit share over market share. Where chasing market share involves doing whatever gets you more customers at any price, attaining profit share requires you do what you do best for the people that value it the most, and at the right price.
6 Comments
A mantra the 37signals boys preach and I agree completely.
Posted by Derek Organ at 2:32 pm on 12 August, 2009.
What about axioms for the sake of axioms? I call it the Greenspan Gift - The ability to make the obvious seem sagely and profound
Posted by Ed Benton at 3:05 pm on 12 August, 2009.
So, Ed, does that mean you agree with it or you do not? If not, why not?
Posted by Eoghan McCabe at 3:19 pm on 12 August, 2009.
I agree fully - That kind of excessive growth that puts priority in market share can lead to a very “thinly” spread customer base of low loyalty. By identifying the most profitable customers (data mining anyone?) and catering to their needs to retain their custom and profit from them more, business can grow without the need for excessive organic or market share growth.
This is increasingly the focus of the more profitable brands in retail for example, offering bespoke or tailored products to loyal customers who share such a sense of brand loyalty that it becomes a talking point or badge of merit among their social circle. This kind of customer focus allows for much deeper, more profitable market penetration than the shotgun approach of gaining as many “disposable” consumers as possible.
Posted by Ed Benton at 4:26 pm on 12 August, 2009.
A similar principle we apply in Google is “usage, not users”. We design for high levels of engagement amongst the people who do use the product, as opposed to trying to attain the maximum number of users.
Slightly off-topic: “Usage, not users” is sometimes translated (and abstracted) to “design for power users”, which is sometimes mis-translated to “design for expert users”. The last “translation” is often the source of much debate and criticism amongst the user experience team.
Posted by Paul Adams at 9:32 pm on 12 August, 2009.
I think it’s worth expanding the quote to include this - “nor is it a viable strategy for an economy.”
Posted by Dennis Deery at 11:28 pm on 12 August, 2009.