You Can Have the Cake and Eat It Too

Conventional thinking tells you that if you want something, you have to give up something else. You can’t have your cake and eat it too. Business decision is rarely black and white. It is often a trade off between two or more opposing forces and the general teaching is to balance the opposing factors and find the appropriate balance between those factors.

The most obvious example of trade off in any business is the trade off between product price vs sales volume. If you want to sell more, lower pricing is the most convenient option to achieve the objective and many businesses often do choose this option as the most convenient route. Another classic example is the trade off between product quality and manufacture cost. High quality is conventionally associated with higher manufacturing cost. If low cost is necessary, quality standards often suffer accordingly. Product quality and product varieties are another trade off. If you want to improve product quality, you have to keep product consistence. Reducing the number of product offer is indeed an effective way to control quality issues. One can easily generate a long list of similar examples.

It turns out convention is just that - conventional thinking. If you want to be a game changer, you have to change the game. That is exactly how breakthrough and innovation occurs in the business world. Rather than being satisfied with trade off, one can achieve break through or innovation by completely shifting to a new paradigm. 

Toyota’s just-in-time production system, the precursor for the widely know lean manufacturing, achieved consistent quality by focusing on designing out overburden, inconsistency and to eliminate waste. The net result is a high quality and lower cost which eventually propelled Toyota to be the world largest automobile company. The system did not trade quality vs cost, it completely changed the paradigm.

The conventional marketing principle focuses on market segmentation to determine where and how to compete with the available resources to balanced the business opportunity vs. customer acquisition cost, which is still fundamentally important for most businesses. In the case of digital world such as digital music, near zero marginal production cost or marginal customer acquisition cost in the digital world would allow businesses to pursue the so called long tails. 

In another example, Corporations and their supply chains are increasingly required to prove that they are acting in a sustainable, environmentally-friendly way. However, consumers rarely agree to trade quality and performance for sustainability. Rather than focusing on trade off, identifying options to become energy-efficient would in most cases benefit the environment and simultaneously cut costs. UPS’s adoption of more energy efficient trucks for delivery is a perfect example of such a case.

Trade off is linear thinking while the business world is generally much more complex. Having the constant awareness to seek another dimension often provides opportunity for creative solutions. Rather than focusing on trade off, look for paradigm shift. Would it not be nice if you can have the cake and eat it too?

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