Cost Models That Change Over Time Need Performance Reboot

Consider a major corporate, begun as first in line, first in class, best return on investment. A corporate in a niche technology development sector. What are the challenges?

Once funding is raised, its a cruise ride, with keen customers buying an essential technology

The company hires the smartest developers, paying attractive packages, growing a sustainable, long term, successful business.

At the outset, product sale price is calculated based on cost of generating the intellectual property value. Sale price is a royalty fee for use of intellectual property. A kind of cost plus pricing model.

Over time the intellectual property licensed for use, allows external parties to become experts in its further development. They figure out ways to compete, to drive globally competitive market prices. The initial developer company loses control of its dominant market position. Competition drives down profit margins.

The first corporate in this niche sect has to change sales price calculation from cost plus, to a royalty fee for use of intellectual property. Effectively its a rent. A royalty for use of intellectual property. The sale price moves down, with competition.

Finer profit margins bring into focus cost of resources. When the underlying engine of the business is intellectual property, changes to cost of resources, focuses on employee cost.

One challenge is, with a solid customer base using the intellectual property, at a old sales price model, there’s an extra internal challenge of getting more for the buck on costs, to generate upgrades, while some customers are still paying an old pricing model.

In a highly competitive sector, team select, team engagement, team performance, team loyalty, and timely development team output, of product upgrades, highly influence group profitability outcomes. Internal performance becomes critical to maintaining market lead, maintaining profit margins to satisfy investors, and compete. Especially when competitors operate on a lower product development cost structure.

How do you meet the challenge of a required higher level of performance, with the same team, in the same technology?

You look at how much of the 100% potential is being met now. What’s the percentage of potential performance now, versus what’s possible?

Why is that possible? What is it that brought the team to this place, that can now be leveraged to take it up a notch in performance?

What are the unique sales propositions that only this team can do?

How much of team operations are this corporate’s unique sales proposition offering to the market? How is that being capitalised on?

How can this be developed? Protected? At what cost? By whom?

What roles and processes could be eliminated to tighten up team operations?

What are the narratives held by team members? What narratives are contributing to better performance, and which narratives need a shift to replace with something more fruitful?

How does the 80/20 rule figure in team activities? Time spread? Cost effectiveness spread? Point?

Where are the big wins happening in the team? And where are the losses being felt?

How are the wins communicated internally? And how do we deal with, or not deal with, where team performance isn’t working?

How much can we improve communication?

What’s the focus of the team? How is that working out for everyone?

Often, if you ask these questions, you’ll get a casual answer, that to the untrained eye is like a tick box exercise. To an astute exectuive coach, how the questions are answered, what’s said, what isn’t said, tells way more than a tick box answer.

When you ‘get’ the culture, and the true focus of a team, you get access to how to raise performance. Its NEVER what it first appears to be. How to know when you’ve hit the lode? The people involved see solutions that weren’t possible before, able to move forward with enthusiasm to put them into action.