Affordability is about Value, Customer and Cost.  Focused on Customers, centered on Value with a strong fiduciary stewardship of Cost management.  None of the three are more important than the others, nor or any subordinate to the others.   Value is what is delivered to meet Customer requirements at a price and expense that optimizes Cost.  Any Affordability related initiative must consider all three factors of the triple aim.  Any initiative that does not … is a ‘pseudo-initiative’.

An initiative based on cost and cost alone, is a pseudo-initiative.  A business can not be successful on cost reduction alone.  Many companies have failed on executing such initiatives.  A cost-only focus takes necessary focus off of value and customer.  In order to deliver value and exceed customer expectations, there are necessary expenses that must be assumed.

Although a customer focused initiative is a good idea, an all-things-to-all-customers initiative fails because of negligence to value and cost.  The triple aim must consider all dimensions of Affordability.  An organization can not be all-things-to-all customers and succeed.

When an organization focuses internally on its own internal paradigm of value, it too fails.  Examples from the 1960’s include the Swiss watch industry the slide rule industry.  From the 1970’s, the American car industry.  From the 1980’s the IBM competitor “BUNCH” companies (Burroughs, Univac, NCR, Control Data and Honeywell).  From the 1990’s the Tech Bubble companies.  From the 2000’s … many many disasters.  Value must be focused on delivering what the Customers’ want, when they want it, at a reasonable Cost and price.

When initiatives are masked as growth or improvement efforts, and are really executed at cut-back and reduction, these pseudo-initiatives fail.

The Learning’s:  Be truthful about initiatives.  Affordability is a good foundation and framework for improvement initiatives.

Thanks, Paul