Fast, cheap, good. Choose 2. At first I was jilted when I read that. For many years in business, I have been trying to be all 3. But this was a wake up call. What the person was saying is that it is impossible for you to be all 3. At best, you should choose 2 or sometimes only 1. You have to choose your place in the customer’s preference – You cannot both be the best and the cheapest, or you cannot do it the fastest, and still be the best.
This is almost similar theme as a 1995 business book bestseller, the Discipline of Market Leaders, which was written by Michael Treacy and Fred Wiersema. The book was in the best seller list, and discusses business strategies which emphasizes choosing our customers, narrowing your focus, and at the end, dominating your market. This is even worse than the quote – you can only choose 1 of the three to make your business successful. These are:
a.) customer intimacy. Some businesses are better than others because they treat their customers well and make them feel good. Like Marriott. Like Marco Polo. Like Starbucks. Like IBM. Like Conrad Hotels, Singapore Airlines or Nordstrom. Like most private banking where they know you by name, and treat you like a king. Or like many five star hotels, or airline business class passengers. Or gourmet restaurants. Or like many Japanese companies, where always preferring to do business with existing relationships is a very important consideration. They are for sure not cheap, but people are willing to pay extra for being able to work closely and intimately. These companies excel in spending resources and time with creating that special intimacy with their best customers.
b.) operational excellence. Some businesses succeed because they are operationally well. like Walmart. like mcDonalds, Jollibee or most fast food. Or Cebu Pacific and most discount airlines. Nobody said that they have customer intimacy. They sell goods at reasonable prices, and still make money because they are efficient. In managing their inventory. In managing their receivables. In understanding and buying what their customers want. In making their people move fast, and the inventory faster. They sell goods at lower or competitive price, because their efficiency makes them also a lower cost business.
c.) technical and management superiority. like Microsoft, SAP, or Cisco. Or Lexus, BMW, and Mercedes Benz. Or Yamaha musical instruments. Or Apple phones and computers. People buy the products because they are the best in what they do. People respect people with mastery, so they are willing to pay extra to eat at Michelin Star Restaurants.
So there you are. The next time, don’t try to do everything or be everybody. One thing for sure – you cannot be the best and cheapest. In your business, which segment are you trying to be?