Comments on: Creating Efficiency vs. Creating Value

By: Greg

Greg — Mon, 23 Aug 2010 07:39:28 +0000

Siddhartha,

Thanks for an excellent analysis from an emerging markets perspective. Extremely interesting!

- Greg

By: Siddhartha Bhattacharjee

Siddhartha Bhattacharjee — Mon, 23 Aug 2010 04:45:11 +0000

Greg,

a fantastic post. When we look at US and Europe from our part of the world,the terms efficiency and value have very different connotation. Our companies have pegged on efficiency with high focus on PDCA cycle, with a major difference on value. Most innovation , coming from the west has a value , addressing decision and choice sensitivities of those geographies with a scalabality of low to high approach. In Asia, the companies have been forced to innovate to match the value scale (affordability) and choice sensitivities of the local populace. While IPOD may be popular in West, a low cost MP3 has a mass market here. Nokia learned to respond to these conditions and introduce products that served the local needs, but got locked up in the western philosophy of scalability. India and China have many examples where value scale are driving frugal engineering and disruptive innovation in a high efficieny environment.Most examples in India , combine both aspects of high efficiency and high value addressing mass appeal. Therefore feature rich mobile phones, supporting a wide range of applications are available at less than one third the prices of standard American and European companies.This is an example of bundled value approach , very different from the scalability of the west.Likewise a $2000 car and sub $100 refrigerator.Examples abound in services as well. Bharti Airtel , India’s leading mobile telephone company , has a stated position of “minutes factory”. The entire operations of the business revolves around 1 minute of telephone use.The Chinese and Indian markets have a blended model of efficiency and value , creating a bottom of the pyramid approach.Neither Apple nor Toyota is successful here, but Maruti Suzuki.

By: Greg

Greg — Tue, 27 Jul 2010 03:15:37 +0000

Eric,

It’s a very good question. I would probably agree, but it’s tough to tell (it varies so much by country and by industry).

I would say that it is usually the mark of a poor company when efficiency efforts are very visible (then it’s not really efficiency, but cutting corners).

- Greg

By: Eric Goldman

Eric Goldman — Mon, 26 Jul 2010 18:55:07 +0000

Greg – another outstanding post. Thanks!
I guess I’m going to have read some Coase… As you have probably guessed by now, I’m something of a Process bigot and your remarks on efficiency fall into that category in terms of Continuous Process Improvements. It’s mantra is: Think, Plan, Do, Measure and Repeat. And while the accent or focus during the “Thinking” stage is aimed primarily at improving efficiency, the really good practitioners also use the thinking time to reflect on a new or more innovative way of doing things, too.
As you say, however, firms must both improve efficiency and innovate. Strangely enough, as an observation I would believe that many North America companies are focused on the innovate or die, while lacking a Process view of their operations. Is this true of Europe, too?
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By: Greg

Greg — Mon, 26 Jul 2010 04:18:28 +0000

Tim,

Yeah, between his ideas about the nature of the firm and his ideas about energy markets, I think we’ll be talking about Coase for a long time:-)

- Greg

By: Tim Kastelle

Tim Kastelle — Mon, 26 Jul 2010 00:05:45 +0000

Another outstanding post Greg!

I’ve been thinking about Coase recently because I think that one of the critical strategic issues for organisations to consider these days concerns the boundaries of the firm. We have technology now that makes these much more permeable than they’ve been in the past. Consequently, it puts some choices back on the table that we’ve been taking for granted for 40 years or so…
Tim Kastelle´s last [type] ..Managing Different Creative Styles