Design Advantage : The Secret to Creating Long-Term Value – 3
Derived from Roger Martin’s The Design of Business
RAP1 : The Business Paradox
PROFIT
What’s the best way to create value for your organization?
Surely, it’s to make the most of the opportunities right in front of us.
That may work for a while.
And at some point, you need to question everything you do to create new knowledge, new opportunities and create new value.
It’s relatively easy to do both in isolation.
And, how do you do both simultaneously?
To ‘exploirt’ is the Business Paradox.
A painter literally starts with a blank canvas.
They’re usually not sure what the finished product will long like or how long it will take to complete.
Sometimes even when a painting is done it’s hard to know that it is.
To earn money they must sell the work they have created – a once-only opportunity.
Unfortunately, this means they don’t get to see their previous work again.
Imagine an author who writes a book and doesn’t get to read it once it’s sold.
Whilst the work may be highly satisfying, the income is usually not.
Some artists make it big. Most don’t.
Typically, artists fail to find the right blend of explore and exploit.
McDonald’s has turned making hamburgers into a science and a global mega-business.
Ray Kroc created a precise money-making machine.
Every procedure is described and executed as a set of step-by-step ‘do it this way’ instructions.
Including: hiring, cooking, location selection, cleaning, managing and franchising.
This enables their restaurants to be run primarily by minimum wage teenagers and students.
This level of efficiency is perfect for building size and scale.
McDonald’s success enables travellers to walk into any store in the world and know exactly what they’re buying.
The trade-off is the lack of work satisfaction and variety.
The tight system strips away uncertainty, ambiguity, judgement and any opportunity for innovation.
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