6.18.2012

One Man's Trash is Another Man's Treasure

Once upon a time there was a company that specialized in the production of outdoor and camping gear. They produced tents and sleeping bags, but in order to make their products strong enough to withstand the stresses of being used outdoors, they employed a detailed production process. Their process involved cutting expensive, high quality material into unusual shapes thereby resulting in a lot of waste. The CEO at the time was faced with the problem of trying to cut these costs without sacrificing quality. He was unfortunately unsuccessful and a new CEO was hired.

What did the new CEO do? Rather than cutting costs (since quality was what they used to stand out from the competition), he addressed how revenues could be increased. The company began producing high quality jackets from the scrap material. This company,  The North Face, has become one of the most popular outdoor product companies today.

In the example above the new CEO’s brilliant idea relied on basic principles of profitability. Profit is the difference between revenue and costs. Therefore when looking at any of these 3 concepts (profit, cost or revenue), it may be relevant to consider each of them individually as well as the ways in which they may influence one another


The moral of this story? Innovation and creativity are key to the success of any entrepreneur. It is important to constantly pay attention to your business and ways in which it can be improved. 

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