Premium Pricer

The Power of "And" verses "Or" Thinking

I written about “The Genius of the AND” and “The Tyranny of the OR,” previously.  In fact, my last post on the subject still comes up on page one of a Google search.  Nevertheless, their importance in business and life warrant a continuing discussion.

To refresh your memory, In the book Built to Last by Jim Collins and Scott Porras, the authors noted that the common decision process is merely choosing between two or more choices—it is an “either/or” process. For example, shall we minimize cost or maximize quality. It is an approach that “…pushes people to believe things must be either A OR B, but not both.” That dampens the imagination, limiting the possible.

On the other hand, what distinguishes the truly remarkable leader and organization is, in the words of the authors, “The Genius of the AND.” Groundbreaking individuals and organizations have replaced the traditional OR approach to decision making with an AND approach—for example, rather than choose between low cost or high quality, they ask, “Why not both?” “Why not give our customers both the highest quality at the lowest cost?”

An interesting exercise is to consider the “Or verse And” issue as it relates to Peter Drucker’s concept of Management Judo. Peter Drucker identified five weaknesses that the larger competitor is likely to develop.


  A "not invented here" attitude is likely to make the competitor slow to take advantage of new ideas or lower cost methods. The "Creamer" concentrates too long on the higher profit, upper end of the market, leaving the door open to enter the market through the lower end.  The “Premium Pricier” begins to believe that their size entitles them to over price the services they provide. Failure to stay in touch is likely to result in the company emphasizing its idea of quality or features ("Wrong Quality") leaving the customer’s real wants unsatisfied or the product price too high.  The "Maximizer" keeps adding features to satisfy added market elements, leaving the door open for the Niche Company that will provide a simpler or lower cost product or service that just addresses the needs of a particular market segment. Understanding Drucker’s weaknesses means that you can use your larger competitor’s size against them to your advantage.  Or, looking inward you can reduce the occurrence of these weaknesses within your firm.

In addition, it is useful to look at these five weakness as the byproduct of “OR” decision making and strategic thinking. Contrast the single-track, “Or”, mindset that leads to each weakness to the dual tract, “And”, approach of Steve Jobs at Apple.  Given the choice between robust complexity and simplicity—Steve Jobs insisted on both, complexity and simplicity. Given the choice between utility and beauty, Steve Jobs chose both.


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Management Judo

Peter Drucker identified a common behavioral trait among established organizations. One that over time renders them competitively weaker and gives the alert company the opportunity to achieve increased market share through Management Judo—leveraging off of the competitor’s weaknesses for an advantage.  The weaknesses companies tend to develop over time include:

  • A “not invented here” (NIH) attitude that will make the company slow to take advantage of new technology, processes, or materials, etc.  
  • The “Creamer” will concentrate too long on the higher profit, upper end of the market leaving the door open for others to enter the market through the lower end.  
  • Failure to stay in touch with clients will result in the company emphasizing its idea of best  quality or features (Wrong Quality) leaving the customer’s real wants unsatisfied or the price too high.  
  • The “Premium Pricer” is the high price alternative and continues to maintain or even increase price in the face of equal or superior competitive alternatives.  
  • The “Maximizer” keeps adding features to satisfy marginal market elements leaving the door open for the niche company that will provide a simpler, lower cost product or service that only addresses the needs of a particular market segment.  

The marketplace is littered with the bones of those who died at the hands of competitive Management Judo.  It is important to understand that without constant management effort these weaknesses will develop.  For the excellence company that means that the opportunity to gain market share through Management Judo will arise repeatedly.  But perhaps even more importantly, you must recognize that the seeds of these five weaknesses are also within your organization.  They will develop and you will lose market share and eventually fail as a company unless you are continually making changes and altering course to counter their development.  Left unattended they will development.  They are part of the natural changes that pull an organization down.

The successful company must always be on guard against developing Drucker’s identified weaknesses and at the same time remain alert for opportunities it can take advantage of when its competitors fall into the behavioral trap identified by Drucker.

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