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Increased demand for premium products or is it just compelling costs?

In many countries in the western world you’ll find more and more companies going up market and into the “premium segments” of the market. One might wonder if it’s an increased demand from consumers that drives this development or if it’s something else that’s the driving force. For the last decades there have been a lot of different programs that companies have run to improve the operations. Six Sigma, Balanced Score Cards, Lean Production and other sorts of continuous improvement programs. The companies’ operations have in general definitely become better due to these programs. However, over time things happen within lines of businesses and disruptive innovations occur. Do companies then have the skills to act according to these innovations, or are they caught in their focus on improving the existing operations – just like our old friend Narcissus? Sometimes, one might ask oneself if the increased complexity and the lack of having an overview of the operation force us to go up market? Do we really need all these extra features, all these small enhancements on the products or phrased another way do these features really add value?

In some cases one can identify that the increased complexity in the development- and production processes have forced companies to go up market and into the premium segments, and not surprisingly they aren’t prosperous. The compelling and increasing costs and the believe in improving what they already are doing make the company blind and they miss the disruptive innovations just around the corner.

So:

Is there a true increasing demand for premium products or is it just an excuse when costs force us to sell our products at a higher price?

Is there a pattern emerging, that threats the competitiveness of successful companies?

How do we combine the ongoing improvement of our processes with disruptive innovations?

How do we combine the enhancement of our products with the disintegration of these products to create something ingenious?

Do our products take future customer values – different values – into consideration?

Are we as managers and employees rigid or flexible?

One thing is for sure; the cycle upon cycle of change will continue. That’s paradoxically, the only thing that remains in the state of status quo!

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