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Pick Critical Elements That Can Lead to Breakthrough Cost Reductions

Feb 27, 2008
Those who analyze systems understand that a process can only operate as well as the least effective activity. Mr. Henry Ford's assembly line couldn't go any faster than the slowest step in the process. If Ford broke the steps down into too many elements, the assembly line itself became longer and the whole process slowed down. Somewhere between too much speed and too many steps lay the optimum solution for one of his assembly lines.

Consider performance constraints from another perspective. To do that, let's look at a used vehicle.

Chances are that many of the parts are in virtually new condition. For instance, the rubber doughnut that serves as a temporary spare tire will be flawlessly clean and shiny if you haven't had to use it.

If you seldom have passengers in the back seat, the upholstery and carpets there will be remarkably fresh. Look under the hood and you'll notice that the container for windshield wiper fluid is just as functional as the day you left the dealer.

But at some point, you will sell or give away your vehicle. Often the reason will relate to mechanical unreliability.

For instance, you may start to experience mysterious episodes of the engine shutting down while you are driving. Or you have to replace the engine because someone forgot to add oil. Naturally, vehicle breakdowns occur more often in some areas than others. Understanding this point, many purchasers check out the maintenance records of new and used models before selecting a vehicle.

Unlike the Mars rovers that have lasted more than four years longer than expected, terrestrial vehicle makers aren't really in the business of providing transportation that will last as long as possible. That feature would mean selling fewer vehicles.

Also, the makers know that many people will sell their vehicles long before they cease to run. Spending less to make the vehicles allows both lower prices and higher profits.

Working in a for-profit or nonprofit enterprise, in many cases you have a different incentive than a vehicle manufacturer. Certainly, you would like your solutions to require as little maintenance as possible.

That approach makes solutions less costly and saves time. If there is a large economic benefit from providing a more reliable, longer lasting offering, you will accomplish more if you supply that benefit. For example, even vehicle makers who produce more reliable, durable trucks that are used for long-distance commercial hauling will probably earn more.

Start by verifying that greater performance is a good idea. Then begin to identify those elements of current offerings that fail most often and cause the most problems when they do fail. For a vehicle, engines and brakes will be high on the list.

The Mars rovers provide a good metaphor for identifying problems. Unlike on Earth where you can go into a gas station and refuel, these rovers can only refuel by using their solar panels.

Leave the rover in the shade or at the wrong angle towards the sun, and the power would soon be gone as batteries are drained. But if you create a vastly increased capacity to gain that power (as the rovers did with the unusual solar panels), you have lots more room for error.

It's as though a terrestrial vehicle had a fuel tank large enough for a nonstop trip of 3,000 miles. Seldom would such a vehicle run out of fuel while looking for a gas station.

The conventional solution for such a vehicle is a bigger gas tank. This vehicle might look something like a gasoline tanker truck. If the gasoline sloshed in the wrong way on a turn, the vehicle might easily roll over and ignite itself. Who would want to drive around in such an ungainly moving bomb?

But the goal of making long trips without adding fuel is a good one. Here are other examples of conventional thinking for incremental gains. Many alternative technologies could help . . . including those used in hybrid vehicles (such as the Prius), and those that provide for carrying lots of stored energy in batteries charged by flywheels and solar panels at home or work. Reducing energy consumption helps, too.

Every so many years, gasoline prices spike. When that occurs, more people want fuel-efficient models. Make the vehicle fuel efficient enough and you've added new value for owners who will pay more for the benefit.

If your engine is also less polluting, those who are concerned about cleaner air will prefer your vehicle and may pay a premium for it. Some technologies offer the potential to use less fuel and pollute less.

For instance, there are promising ideas for storing braking energy in batteries. Most of these technologies are not yet as efficient as most drivers would like, but the technologies offer the potential of being more reliable sources of power for vehicles that are otherwise likely to run out of fuel.

As you can see, this line of thinking has taken us to where the major vehicle companies are experimenting. But that's still incremental improvement, rather than breakthrough progress.

Let's look at the problem of providing breakthrough results by applying the thought process of the Mars rover designers. They might start from scratch to consider all vehicle elements to see how to sparingly supply more of what's most critical to performance while cutting back on what's unneeded.

Here's one insight: What's a big part of the joy of having a vehicle? It's often the sense of freedom and excitement that the driver feels from high-performance jaunts.

With ever more crowded roads pitted with more potholes and less time for joy rides, a different route to joyful ownership may offer more promise. Perhaps adding a little more joy driving could replace much of the urge for long drives.

Vehicles don't need to be as big as they are today to provide high-performance experiences. After all, didn't the rover team miniaturize everything that was carried to Mars and accomplish more as a result?

How can that principle apply here? Having driven the tiny versions of Grand Prix race cars, I was astonished by how exciting it was to run those twisting loops at little more than go-cart speeds. A drive once around the teeny track brought more exhilaration than driving across country in a full-sized vehicle.

An entrepreneur who wanted to create a breakthrough driving experience efficiently might skip making conventional vehicles. Undoubtedly a great version of the scaled-down sports cars could be developed to sell for around $7,000 that would be much more fun to drive than any $150,000 sports car is at legal speeds on regular roads.

Naturally, the driving experience wouldn't be as prestigious, but that's a separate opportunity. Such cars would operate on teaspoons of fuel per lap around a race track rather than gallons per trip on the public roads.

Without an interesting place to drive such vehicles, however, there wouldn't be much demand. The manufacturer could put a variety of challenging tracks in major metropolitan areas.

The mini race cars would be transported to and fro in tiny trailers towed by any conventional vehicle with a trailer hitch. For those who wanted to race more often, mini garages could be rented next to the tracks for a few dollars a month.

Suddenly, some families would double or triple the number of vehicles they owned to take advantage of these improved driving experiences. Make the engines fun to tinker with and a whole new generation of auto mechanic buffs would emerge. Fewer long-distance trips would beckon to such owners, and fuel use would drop while driving enjoyment would soar.

How can you add more customer benefits at 5 percent of the cost for today's offerings?
About the Author
Donald Mitchell is an author of seven books including Adventures of an Optimist, The 2,000 Percent Squared Solution, The 2,000 Percent Solution, The 2,000 Percent Solution Workbook, The Irresistible Growth Enterprise, and The Ultimate Competitive Advantage. Read about creating breakthroughs through 2,000 percent solutions and receive tips by e-mail by registering for free at

http://www.2000percentsolution.com .
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