GUEST POST from Paul Sloane
Sometimes the by-product, the surplus or the unwanted extra can become the unexpected success. All it takes is a little imagination.
Brandy was originally a by-product used to help transport wine. In the middle ages in France duties were levied on the volume of wine being transported. Merchants boiled off water to concentrate the wine so as to reduce the taxes they paid. Water was then added later. However, someone discovered that the concentrate, brandy, tasted pretty good on its own.
In the 19th century diamonds were a rarity. They were primarily used as drill bits because they were so hard. The South African mining giant De Beers wanted to find a high-value market for all the surplus small diamonds that they found in their mines. They created the concept of the diamond engagement ring. They employed the ad agency N W Ayer to successfully promote the concept of the engagement ring as the ultimate sign of love and devotion. Their strap line ‘A diamond is forever’ is considered by marketing experts to be the greatest advertising slogan of the 20th century.
Amazon developed tremendous IT skills and capacity as it grew rapidly selling books and other products on-line. It was a giant in B to C (Business to Consumer) products. After the dot.com crash in 2000 Amazon found itself with excess IT capacity in its data centers. It offered web services to businesses and became a leader in B to B (Business to Business) services – a completely different field from its original strength. Amazon Web Services is now a leader in Cloud computing.
In his excellent book, The Four Lenses of Innovation, Rowan Gibson gives the example of Imperial Billiards, a small New Jersey company which for 40 years specialised in making pool tables and other carpentry-based items. But sales of billiard tables were in steady decline. Then a customer suggested that they use their unwanted surplus sawdust and wood chippings to make wood pellets to burn in stoves and fireplaces. This turned out to be a better and more profitable business. A customer will only buy one pool table but will return time and time again for wood pellets for his stove.
Can you innovate with the under-utilized assets in your business? What by-product or surplus capacity could be put to better use?
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