Page 163 - Accelerating out of the Great Recession

ACCELERATING OUT OF THE GREAT RECESSION

its value proposition while reducing the risk and up-front capi-
tal expenditures for its customers. It also required Cessna to
develop and manage a new set of capabilities.
In the Great Recession, some companies have been making
the products-to-services move. For instance, in March 2009,
Daikokuya, a Japanese luxury handbag retailer, launched a
handbag rental service that allowed customers to rent expensive
handbags for short periods of time. The company also devel-
oped a rent-to-own program, allowing customers to pay the dif-
ference between their rental costs and the price of the handbag
if they decided to purchase it. By lowering the up-front cost of
using a handbag, and by letting people try out a product,
Daikokuya was able to attract new—and retain existing—cus-
tomers who were feeling the economic pinch.
Deconstruction

Deconstruction is an approach that disassembles the value chain
and then looks to develop a solution that can provide faster,
lower-cost, and more reliable products and services. In essence,
it involves outsourcing internal functions to more efficient
providers.
This business model innovation can take three forms:

1. Shared development lowers capital intensity and shares
product risk across a range of suppliers.
2. Orchestration leverages a network of suppliers, providing
more flexibility and lower costs while often offering a
superior product.
3. Facilitation connects the buyers of products directly with
a range of suppliers, allowing a company to facilitate
rather than intermediate between buyers and suppliers.

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