I’ve worked in many service organizations in the Denver area. In a perfect world, a service organization would give the best work possible, very quickly, and at a highly competitive price. This would be “Better Faster Cheaper”.
It’s not possible for a company to operate this way for a long duration. It’s just not. You have to give up at least one one of these areas to fuel the other two. Let’s use a roofer as an example:
- The Better-Faster roofer: He does the best work in town, and can get it done on short notice. He doesn’t need to compete on price, because the people want his service will pay a premium (either for his speed or for his expertise).
- The Faster-Cheaper roofer: To many people compete in this arena. Fast and cheap rarely result in high quality work. To be cheap, a service organization generally has to give up on either 1) material quality or 2) skill of the person doing the work
- The Better-Cheaper roofer: This seems like a rarity….it is. Few true businesses operate in this space for long, because they figure out that they can ask for more money then what they are getting now. Because they are doing better work for a cheaper price, it should be expected that you’ll wait longer for this. Example: The roofer who is moonlighting from his normal job under the table to do your job on the weekend; he’s not going out of the way to get you done ASAP.
So what about strategy?
Does that mean that a company should focus on being “Better Faster”? No. But, a company CAN focus on the a single term. This is differenation, and really the backbone of a company strategy.
- The Better roofer: He acknowledge to his clients that he sells quality, and might use products that have a longer lead time (time to get materials). He takes time to do his due diligences while preparing his proposals, and forms a relationship with his client. The process takes longer, and the contractor doesn’t budge on his pricing.
- The Faster roofer: Uses products that he can get quickly, so his product offering will be limited to current availability of his suppliers. Relationships are not focused on with the clients. Clients are left with a feeling of organized kaos, as the company was in & out very quickly. The price might be lower, but the client is left with a feeling of buyers remorse hoping that there won’t be any leaks during the first storm.
- The Cheaper roofer: The products used by the contractor are lower quality and installed by workers with limited experience. The experienced staff (leadmen/foremen/managers) are stretched thin on time and resources, trying to get as much work done as possible. The cost is low, but the client is not given other quality indicators to reasure them of their decision. The project can get delayed or start late, as the managers move resrouces around to cover other obligations of services promised.
Interestingly, I don’t think the choice of this matters to the bottom line. I have worked for companies (all about the same size) that have sought each of these different strategies, and they all made about the same amount of money with about the same stress levels. So what do you want your company to be known for? What things do you need to change, to ensure that you are known for this area? Is any one better then the other? I’d love to hear your thoughts!