Pitfalls In Business Redesign

Companies that would like to emulate IBM Microelectronics' adoption of a new business model should be aware that such efforts do not always proceed smoothly.

At the top of Adrian Slywotzky's list of potential pitfalls is trying to move to the next business model without a broad and deep quantitative understanding of the customer base and how it is changing. "For example, what are going to be the segments tomorrow? Who will pay for what? Just make sure that information drives the redesign," says the vice president of Mercer Management Consulting Inc. Error number two, he says, "is probably not being sensitive enough to how I can accomplish what I need to do for my customer in a way that is flexible rather than fixed. For example, what are all of the things that I could do to reduce my fixed costs or my fixed commitment? "The third and probably the toughest error is failing to do what I call internal marketing. It's employee education -- explaining what the value chain is and why it is important. Just like external marketing it depends on the same factors: the right, simple message delivered over and over. And it needs to be done quickly -- before it's time for the next change."

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