providing the same or better service for free. In Vonage's case, the market has responded by making its heralded IPO and subsequent share price lacklustre, to say the least.
Skype's challenge to the telephone business as usual does not mean that you have to give away your products and services for free, even at the entry level of a tier of products and services. My point is instead that Skype shows you can't take the customer value of your pricing for granted. If I'm going to be on one side of the change outlined above for the telecommunications industry, I want to be on Skype's side, not Vonage's or Engin's. I want to be so fast, good and cheap at the level where customers are uncomfortable with how much they are paying for something that they willingly pay me a premium for what I deliver on top of that. That's the formula eBay is following with Skype.
Sooner or later, somebody or something is bound to come along and yank the price floor out from under your entire industry. Flipstar Richard Branson has made a career doing just that. His most notable achievements in this regard are taking on the European, trans-Atlantic and Australian airline industries with his Virgin Express, Virgin Atlantic and Virgin Blue airlines. The result was a substantial reduction in the price of air fares in all three markets. Onya Rich! Unfortunately for Branson, the launching of Virgin America (for air travel within the US) is still hitting regulatory brick walls, but by the time you read this he may have managed to break through.
In any case, remember that cheap today is not cheap enough for tomorrow. Virgin Express opened the door for Ryan Air and other low-cost air travel competitors in the European market. And Tiger Airways, backed by the founder of Ryan Air, will be giving Virgin Blue and Jetstar a run for the low-cost air traveller's dollar in Australasia, which has always been a very cutthroat market. At the time of writing Brett Godfrey had a proposal in front of Virgin Blue's board to launch a super-low-frills discount service to combat Tiger Air. It will require no increase in capital expenditure, as Virgin Blue already has more than twenty new aircraft on order.
FAST, GOOD, CHEAP AND MORE!
The price of entry in every market today is undeniably 'Fast, Good, Cheap – Pick 3'. But because a satisfied need no longer motivates and expectations keep rising, the price of entry will soon be 'Fast, Good, Cheap, X-factor – Pick 4'.
The ante to get in the game keeps rising, the table stakes keep getting bigger, because of the feedback loop between increasing compression of time and space, increasing complexity and ambiguity, increasing transparency and accountability for actions that have to be performed in conditions of high uncertainty, and increasing customer expectations. You can't escape that challenge. You can only flip it to your advantage by meeting it sooner than your competition. You can attune your behaviour with the psychology of human expectations in a time of constant technological development, or you can be left by the side of the road.
As this chapter's examples illustrate, if 'Fast, Good, Cheap – Pick 3' is not yet the price of entry in your market, it soon will be. And if you want to top the league tables when that happens, you must not only ensure that you are fast enough, good enough and cheap enough for today and tomorrow, you must also offer customers something else as well. With that in mind, let's look closely at the flips that are needed to create the value customers want in addition to fast, good and cheap, beginning with the fact that superficial is anything but!
Five Things To Do Now
1. Go to five of your smartest people and put the following scenario to them individually: you have to speed up your service delivery or out-of-the-box performance by 20 per cent in the next three months. Ask them to figure out how they'd do it, then get them together to discuss the different approaches they've come up
Skype's challenge to the telephone business as usual does not mean that you have to give away your products and services for free, even at the entry level of a tier of products and services. My point is instead that Skype shows you can't take the customer value of your pricing for granted. If I'm going to be on one side of the change outlined above for the telecommunications industry, I want to be on Skype's side, not Vonage's or Engin's. I want to be so fast, good and cheap at the level where customers are uncomfortable with how much they are paying for something that they willingly pay me a premium for what I deliver on top of that. That's the formula eBay is following with Skype.
Sooner or later, somebody or something is bound to come along and yank the price floor out from under your entire industry. Flipstar Richard Branson has made a career doing just that. His most notable achievements in this regard are taking on the European, trans-Atlantic and Australian airline industries with his Virgin Express, Virgin Atlantic and Virgin Blue airlines. The result was a substantial reduction in the price of air fares in all three markets. Onya Rich! Unfortunately for Branson, the launching of Virgin America (for air travel within the US) is still hitting regulatory brick walls, but by the time you read this he may have managed to break through.
In any case, remember that cheap today is not cheap enough for tomorrow. Virgin Express opened the door for Ryan Air and other low-cost air travel competitors in the European market. And Tiger Airways, backed by the founder of Ryan Air, will be giving Virgin Blue and Jetstar a run for the low-cost air traveller's dollar in Australasia, which has always been a very cutthroat market. At the time of writing Brett Godfrey had a proposal in front of Virgin Blue's board to launch a super-low-frills discount service to combat Tiger Air. It will require no increase in capital expenditure, as Virgin Blue already has more than twenty new aircraft on order.
FAST, GOOD, CHEAP AND MORE!
The price of entry in every market today is undeniably 'Fast, Good, Cheap – Pick 3'. But because a satisfied need no longer motivates and expectations keep rising, the price of entry will soon be 'Fast, Good, Cheap, X-factor – Pick 4'.
The ante to get in the game keeps rising, the table stakes keep getting bigger, because of the feedback loop between increasing compression of time and space, increasing complexity and ambiguity, increasing transparency and accountability for actions that have to be performed in conditions of high uncertainty, and increasing customer expectations. You can't escape that challenge. You can only flip it to your advantage by meeting it sooner than your competition. You can attune your behaviour with the psychology of human expectations in a time of constant technological development, or you can be left by the side of the road.
As this chapter's examples illustrate, if 'Fast, Good, Cheap – Pick 3' is not yet the price of entry in your market, it soon will be. And if you want to top the league tables when that happens, you must not only ensure that you are fast enough, good enough and cheap enough for today and tomorrow, you must also offer customers something else as well. With that in mind, let's look closely at the flips that are needed to create the value customers want in addition to fast, good and cheap, beginning with the fact that superficial is anything but!
Five Things To Do Now
1. Go to five of your smartest people and put the following scenario to them individually: you have to speed up your service delivery or out-of-the-box performance by 20 per cent in the next three months. Ask them to figure out how they'd do it, then get them together to discuss the different approaches they've come up
Similar Books
