Interaction Paradigms

Plotting change/optimization v revenue/costs – where does your services firm fit?

Yesterday we talked about change consulting vs optimization, an idea Philip Morgan explores too.

We also looked at a framework for evaluating what it means to be a change business. How does a change business interact with its customers?

I said it asks 4 questions:

  1. What type of person is the change for?
  2. What’s the inciting incident(s) that leads them towards change?
  3. What is the outcome of the change?
  4. How is that change achieved?

You could add a 5th – is focus on revenue or costs? I wouldn’t add it, because I think it’s actually a separate category.

A change business can focus on either revenue or costs (or both). Same for an optimization business.

That makes it useful to plot the profitability-model category, costs vs revenue, against the impact-type category, change vs optimization.

Examples of Change/Optimization vs Costs/Revenue

Focused on Optimization and Revenue

  • Conversion rate optimization
  • Search Engine Optimization
  • Pricing

Focused on Optimization and Costs

  • Software speed optimization
  • Search engine optimization
  • Pricing 

Focused on Change and Revenue

  • Product design
  • Brand messaging
  • Sales coaching

Focused on Change and Costs

  • Digital transformation
  • Productivity consulting
  • Leadership coaching

The last example, Leadership coaching, is intentionally problematic. An effective leader probably fits all four categories above, though their emphasis should be on transformation.

In fact, most change/transformation businesses have some element of optimization in them – but not vice versa.

A side note on digital transformation – my former firm used to do this though I never used the term. The next time you meet someone who uses the term to describe their business, show them this chart – what they often don’t realize is how lopsidedly focused on costs/efficiency they are – versus focused on revenue. Nothing wrong with that focus, of course. But it’s good to realize where you land in the grander scheme.

Where does your business fit on this matrix?

My best