Last Friday, I heard an interview with Paul Stein, the chief technology officer at Rolls-Royce (RR). He described the new mini nuclear reactors that the RR consortium have designed and how they should be fully operational within 10 years and therefore could significantly contribute to the UK’s emissions target whilst providing affordable electricity.
What particularly interested me was how these new plants will be a fraction of the size compared with say Windscale, (approx 10 acres compared to 2 square miles), and how they have been cost engineered to be financially viable by utilising mass manufacturing techniques and factory assembly as opposed to onsite construction.
It also struck me that the company leading the consortium, RR, is one I associate with luxury cars and aircraft engines, not nuclear power. I also wondered at what point they looked to cost reduction as a business strategy where previously I would imagine the whole focus of the company would have been on product development which often leads to increasing costs.
I don’t know this for sure but the pivot in the RR business has all the hallmarks of ‘Blue Ocean Strategy’ a concept introduced by Professors Renée Mauborgne and W. Chan Kim in 2004 and the subject of one of our workshops within our Leadership Group programme. Of the several BOS tools, I thought this one in particular would be of use to most businesses.
The ERRC Model asks four great questions about your industry (not just your own business) –
1. What things in your industry can be Eliminated?
These might include things that are regarded as sacrosanct, for example, 20 years ago estate agents would never conceive of eliminating local press advertising.
2. What things in your industry can be Reduced?
In the airline industry the low cost operators led the way in reducing food and drink options on short haul flights that most of the major airlines have also now adopted. Some people might look back to the “chicken or fish” days but personally I’d rather eat prior or on arrival and have cheaper fares. In estate agency, I believe the number of viewings can be reduced, (it shocks me how many some properties have), perhaps by adopting the Australian “Open for Inspection” approach with just two set viewing times of 20-30 minutes.
3. What things in your industry can be Raised?
Well, fees for starters! And how about portfolio management – going from a transactional letting agent to a fund manager perhaps?
4. What things in your industry can be Created?
In the same way RR pivoted into becoming an energy business, what new services could you provide? At the risk of a deluge of brickbats, PurpleBricks showed estate agents that completely new models can gain market share. If upfront fees aren’t your cup of tea, then what else could you create that would have a major impact?
These examples are just to illustrate the model – I’m not suggesting any are necessarily adopted. What I do recommend is you ask yourself the four ERRC questions, they should cause some interesting answers.
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