timing in business, cut-off point, cut-in point

In designing the implementation of a new idea it usually makes sense to design the cut-off point. This may be determined by time, by cost, by market response etc. It is said that McDonald's had to wait for four years before the idea of serving breakfasts became profitable - and then it became the most profitable part of the organisation. It might have been anticipated that getting people to change their breakfast eating habits would take a long time. Instead of eating breakfast at home people got used to eating out.

There are not many organisations that would stick with a money losing idea for four years before exercising a cut-off. Cut-offs may be designed in at the beginning of the implementation strategy or may be inserted as you go along. When things are not going as well as hoped, there may be a need to decide upon a cut-off. This may not need to be exercised if matters improve.

An airline decides to try out a new route. How long should that route be allowed to operate at a loss before a cut-off is exercised? A new magazine is launched. How many issues have to be published at a loss before readers and advertisers show serious interest? It is notoriously hard to get the cut-off right. Many ideas are killed before they get a chance to show their worth. Many poor ideas are carried on long past the point where there might have been a cut-off.

There are no easy rules or guidelines. Culture changes take much longer to effect than might be supposed. In the UK at the moment only 0.09% of retailing is done on line (if you strip out financial services). In ten years' time 15% of retailing might be done on line. How does the culture change? What might accelerate the culture change?

If a young man is courting a woman, when does he give up? When does the cut-off kick in? I have known some very persistent young men who have persevered for a long time, beyond all reason, and been successful in the end.

RESOURCES
Cut-offs are determined by the level of resources available, by patience, by a model of market response and also by the availability of other opportunities. In some areas Japanese companies are said to scatter resources over a wide range of innovations and then to follow up whichever innovation has succeeded. This 'scatter gun' approach does not appeal to everyone. Most people prefer to believe that thorough market analysis can reduce the risk. This is true, but sometimes market analysis can only produce 'the son of Lassie' and 'the grandson of Lassie'. If the film 'Lassie' succeeded in the marketplace, then derivatives of this are seen as likely to succeed. Really new initiatives are excluded by this process.

Failure of an idea in the marketplace may be due to several factors. The idea may offer little value. The value offered may not be that different from what is already on offer. Communication may be poor. The idea may indeed be good, but is not yet perceived as such. Distribution may be at fault. Too big a change in habits and culture may be required for the idea to succeed.

There are cut-offs of time and cut-offs of resources. A cut-off of time means that the innovation seems to have been given enough time to prove itself, but has failed to do so. There seems little point in giving the idea more time. When an idea seems to demand more and more management time or cash, there can be a decision to halt this further input.

ACTION
Is there any reason to suppose, or to hope, that things will get better? Why should they get better? Does allowing more time make sense?

Are there any defined actions that might increase the chance of success for the innovation? If so, what is the cost of such action and why might it make the difference? Action just for the sake of action merely delays the cut-off date without really helping the idea. If an idea does not succeed in the chosen test market, does mass marketing make sense? If an innovation is not successful, does changing the price make sense? It might.

If you try several changes all at once you will never know which particular change made the difference. But if you try each change separately, that might take a long time and be very expensive.

CUT-INSA 'cut-in' is not a well defined term like a 'cut-off' but it has just as much validity. If a cut-off determines the time when you abandon an idea, then a cut-in determines the point at which you buy into an idea.

It may be the success of other parties with a very similar idea that causes you to look again at an idea. If other people can do it, then a 'me-too' should be successful. It may be a change in price of supplies or technology which suddenly makes an idea attractive. It may be the sensing of an emerging market need which induces the 'cut-in'. There is a growing amount of talk about 'bulk-buying' in communities and on the internet. This may encourage the 'cut-in' for a particular bulk-buying concept. Why wait until others have been successful? Why not wait until others have been successful?

It sometimes happens that the 'first in the field' achieves and keeps a dominant position, as with the Sony Walkman. It also happens that the first in the field develops the market which a late-comer then captures, as with the VHS system that overtook the Sony Betamax system. If you are likely to have a long lead-time, then being first in the field can be valuable. If, however, the lead-time is likely to be short, then having a better product may be more important than being first on the market. 'Better' includes price - provided that the device is adequately competent.

VALUE CHANGES
Values do change. Large department stores used to offer the value of reliability. Their products were of good quality. Today, in the clothing market, quality in general is fairly good, so young people prefer to shop at smaller 'funky' stores which offer more variety and more 'edge' fashion. The attempt by department stores to offer a similar variety in-house has not been very successful. Perhaps these stores should personalise different 'buyers', so that the goods on sale are seen to be chosen by different names.

Because a 'cut-in' is determined by so many factors apart from the intrinsic value of the idea itself, it is well worth reviewing older ideas which were rejected at the time. Circumstances may well have changed and a cut-in may now be worthwhile.

Cut-ins depend a lot on value sensitivity. This is a subject I have written about previously. It is also a subject that I shall return to again. Value sensitivity is the ability to sense values in any situation: values for whom? under what circumstances? how large? how durable? how dependent?, etc., etc. Ideas are like roads. Do I want to continue to travel along this road? Do I want to take this road?

For those who are interested a biography about me has been published. It is written by Piers Dudgeon and covers various parts of my activity. 'Breaking out of the Box' is published by Headline Press.