by Kenneth Rudich
Anyone who has ever tackled the task of organizing a cluttered space, such as a closet, probably already has a fundamental grasp of why it’s advantageous to fit the arrangement of the items inside the space rather than toss them in willy-nilly. A fitted arrangement — when items of different sizes and shapes jointly share a space — creates efficiencies for maximizing the holding capacity of the space, and it provides greater usability.
Joint-use attempts to achieve comparable results for a business (and its systems) in a somewhat similar (though admittedly more complex) fashion.
a joint-use strategy
Joint-use concentrates on pruning inefficiencies through the consolidation, standardization, automation and streamlining of an organization’s assets, technologies and processes. The purpose is to avoid unnecessary costs by extracting the biggest bang that can be had for the investment dollar. It typically offers greater economic efficiencies and/or improved productivity (without compromising quality).
Similar to re-use (as discussed in an earlier post), joint-use is neither a new nor novel concept, but the ongoing use of it keeps producing new and novel innovations all the time. In recent years, we have seen a large number of disruptive and/or transformative changes because of it.
Take the personal computer, for instance, which can perform multiple functions with different software applications all consolidated into one workstation. It is a prime example of joint-use.
Not all that long ago, it’s conceivable you would have had a separate workstation for each function. But through innovative designs – designs that incorporate concepts like economies of scale, economies of scope, modularity, inter-operability, networking, re-use and others – the way these functions are carried out today has been entirely transformed.
And yet despite the long list of innovations we’ve seen of late, one can only imagine how many untapped possibilities are still at-large all across the value chain (and within value systems) for any given business or industry.
The potential to more fully employ joint-use as a key business strategy makes it a powerful tool in value chain analysis. It involves keeping an eye out for implementing either technical efficiencies or allocative efficiencies.
On the technical side, the emphasis is on practices that concern the management of core technical resources like hardware, software, physical sites, physical facilities, delivery technologies, and even personnel. The primary objective is to lower incremental costs and make more efficient use of these technical resources.
Here’s a short list of examples that fall into this category:
- Are there opportunities for standardization, such as forms, shells, templates; shared hardware or software standards?
- Are there opportunities for joint absorption of costs, such as joint or bulk purchasing, or joint maintenance, joint production, or joint distribution (using networks or streamlining with automation, for example)?
- Can the performance of related activities be combined to reduce redundancy or unnecessary duplication of effort, such as with business process design improvements?
- Can space be used to improve efficiency and/or effectiveness, such as shared space for closely related activities?
- Can knowledge archival and sharing technologies help leverage learning curve effects or with the transfer of skills, such as shared databases, standardized training, or real-time process improvement tracking?
Allocative efficiencies occur when there is an optimal distribution of non-technical resources across the value chain. One common business practice example is to devote greater attention and resources to the best and most profitable customers.
Here’s a short list of other examples for this category:
- Is it possible to have different customer segments jointly shared by internal units or departments, such as the bundling or cross-selling of products and services (note: up-selling to an already existing customer may be more of a re-use strategy)?
- Can the products of different units or departments be distributed through a common channel or intermediary, such as the same wholesaler or retailer?
- Can product/services be marketed or promoted in similar ways?
- Can a variety of products fall under a common brand name (e.g., Johnson family of products)?
- Can related services/products be promoted together?
- Can support services be combined across products?
- Can there be joint promotional tie-ins?
joint-use and the value chain
In some cases joint-use may allow an organization to fashion a temporary competitive advantage, until others neutralize that advantage by copying it, thereby turning it into an industry norm.
Whether it’s to realize a competitive advantage or just stay competitive, identifying new and better ways of leveraging joint-use should be an innate part of the business strategy, and it should be carried out as an ongoing process.