Operations

Reverse Distribution
Reverse Distribution Jonathan Poland

Reserve distribution is the process of distributing a reserve, which is a reserve amount of money or other resources that are set aside for a specific purpose. This process typically involves identifying the individuals or entities that are eligible to receive a portion of the reserve, and then distributing the reserve among them in accordance with predetermined rules or criteria. The specific purpose of the reserve and the rules for its distribution can vary depending on the context. For example, a reserve may be set aside to provide financial assistance to individuals in need, to fund a particular project or initiative, or to serve as a buffer against potential losses or liabilities.

Returns

The end-to-end process of accepting returns of goods. For example, a fashion company that allows customers to try on clothes at home and return them within a week if they don’t fit.

Recalls

The process of recalling goods that are found to be defective in some way. For example, a bicycle helmet manufacturer that recalls a dangerous helmet due to a design flaw that allows a strap to easily come off in an accident.

Repairs

The handling of repairs that occur under warranty may involve reverse logistics whereby an item is returned to the manufacturer.

Unsold Goods

Distribution partners may have a contractual right to return goods if they are unsold. For example, goods that are on consignment can generally be returned by a retailer.

Damaged Goods

Goods may be returned if distribution partners or consumers determine that they have been damaged.

Excess Inventory

The process of reclaiming inventory simply because it hasn’t sold in a timely fashion. For example, a luxury fashion retailer that doesn’t discount may return unsold product when it goes out of season.

Disposal

The process of disposing of goods in a safe and environmentally friendly way including reuse, recycling and waste disposal best practices.

Extended Producer Responsibility

Laws, regulations and standards that call on a producer to accept goods at end of life to ensure they are properly reused, recycled and disposed. For example, an electric car manufacturer that is required to recycle batteries in a responsible manner when consumers are done with them.

Compliance

In many cases, reverse distribution is subject to a variety of laws that ensure that returned goods don’t become a problem to society. As such, reverse distribution often requires careful accounting, controls and reporting.

Refurbishing & Reconditioning

The process of restoring and testing the quality of goods so that they can be resold. For example, a mobile phone manufacturer that tests, repairs and repackages phones that have been returned so that they can be sold.

Reuse

Goods may be repaired, reconditioned and resold after being returned at end of life. For example, a clothing retailer that accepts clothes when consumers are done with them for resale in the second hand market.

Resale & Liquidation

The process of selling refurbished and reconditioned product. For example, an website that auctions returned product to resellers and/or directly to consumers.

Examples of Strategy
Examples of Strategy Jonathan Poland

A strategy is a long-term plan that an organization or individual develops to achieve a specific goal in a competitive environment. It involves defining the actions and resources that will be necessary to achieve the goal, as well as how they will be implemented and coordinated. A good strategy is carefully considered and takes into account the internal and external environments in which the organization or individual operates, as well as the potential risks and opportunities. By developing and implementing a strategy, an organization or individual can increase their chances of achieving their goal and succeeding in a competitive environment.

Striking Fear Into The Hearts Of The Competition

Communications or actions designed to invoke a response in the competition. For example, a technology company that announces a future product without much investment in actually developing the product. This may be done to distract the research & development efforts of competitors.

Do Nothing Strategy

The decision that doing nothing is your best strategic move such as a technology company that decides not to respond to a competitor’s aggressive price cuts because they feel they have a better product that can compete at a higher price.

Tit for Tat

Tit for tat is a decision to respond to a competitor in an equal way such that you push back but not so hard that you escalate things. For example, responding to a competitor’s price decrease with an equal price decrease that may help to avoid a price war.

Last Responsible Moment

Last responsible moment is the strategy of delaying a decision or action until the optimal time. For example, waiting to see if a competitor has any success with a bold new product line before rushing to compete with them at great cost.

Long Game

Long game is a strategy that optimizes for total long term gains over short term gains. For example, a firm that misses its profit targets because it invests in product development.

Cut and Run

Cut and run is a decision to abandon a failing strategy despite high costs to do so. For example, a city that bans fossil fuel burning vehicles such as cars on a large number of downtown streets as a measure to improve air quality.

Failure is Not an Option

Failure is not an option is the decision to continue to invest in a failing strategy despite mounting costs such a military organization that continues to invest in the development of an aircraft despite ballooning costs and indications its design is deeply flawed.

Grand Strategy

Grand strategy is a complex strategy that is non-obvious and potentially long running. For example, a chess player who gives up pieces in order to establish a strategic position on the board.

Soft Power

Soft power is the ability to achieve goals using influencing techniques. For example, a nation that negotiates data sharing agreements to copy databases about foreign nationals directly from their government. This could be contrasted with spying methods that attempt to get the same data without permission.

Failure Demand

Failure demand is when you benefit from your own failures. For example, an unpopular telecom company that has extremely busy phone lines and an unusable website such that customers find it difficult to cancel their accounts.

Fail Often

Fail often is the practice of taking a large number of risks such that regular failures are expected. For example, an individual who pitches a business plan to many investors with the realization that each pitch has a high chance of failure. This may nonetheless work out eventually if the individual improves with each pitch.

Fail Well

Fail well is the practice of failing cheaply, safely and quickly. For example, business experiments that are inexpensive such that their failure doesn’t have much impact.

Marketing Myopia

Marketing myopia is a flawed type of strategy that involves focusing on a product as opposed to customer needs. For example, customers don’t need oil they need energy such that an “Oil Company” may not survive into the future where an “Energy Company” will if it adapts to the needs of society and remains competitive.

Camping Strategy

Camping strategy is the action of physically moving to a location that has some advantage. For example, a Japanese chocolate maker that opens a small office in Paris that then prints “Paris” under their brand name on their logo to associate the brand with the culture of this great city. The term camping strategy implies some small, temporary or superficial move to a location.

Economies of Density

Economies of density is the efficiency that is gained by being close to things. For example, a business that builds its distribution facilities within close proximity to large population centers.

Economies of Scope

Economies of scope are the efficiencies that are gained by variety. As a strategy, this involves offering variety to increase your value to the market. For example, a company that has millions of items in stock such that it represents a one-stop-shop.

Economies of Scale

Economies of scale is the tendency for your costs to drop as you produce more. For example, if you create a $1 million app for one user, your cost is $1 million per user but if you have 1 million users, your cost drops to $1 per user.

Essential Complexity

Essential complexity is the process of making something as simple as possible without making it so simple that it loses value. This is a common type of design strategy. For example, a clothes dryer with a single button that just works such that you need not input any options to get a satisfactory result every time.

Embrace, Extend and Extinguish

Embrace, Extend and Extinguish is the poor ethical practice used by large firms that involves embracing and working with emerging firms, standards and practices with the ultimate goal of destroying them. For example, a large firm that engages a small innovative firm as a partner but then squeezes them until they fail.

Underpants Gnomes

Underpants gnomes is a type of flawed strategy that includes a magical step that is unexplained.

Step 1: Write an app
Step 2: ?
Step 3: Big profits

Economic Moat

An economic moat, also known as competitive advantage, is a capability or asset that gives you a sustainable advantage in your business. Attempts to build a moat are a common type of strategy. For example, an organic farmer who seeks unusually productive companion plantings to develop far higher yields than traditional farms. This would make the farmer unusually profitable, allowing them to scale, allowing them to further reduce costs and improve yield.

Project Failure
Project Failure Jonathan Poland

A project is considered a failure when it does not meet the expectations of sponsors and other key stakeholders. This can be determined by a variety of factors, including cost overruns, missed deadlines, negative impacts on business operations, and damage to the company’s reputation. These symptoms can all be indicators that a project is not being delivered as intended and is therefore considered a failure. It is important for organizations to carefully monitor the progress of projects and address any issues that arise in order to avoid failure. Common causes of project failure include:

Acceptance Criteria

Undefined or open ended acceptance criteria.

Architecture And Design

Architecture and design that fails to support requirements or that is so problematic that it delays the project.

Assumptions

Incorrect or undocumented assumptions.

Benefits Realization

The project fails to deliver the benefits stated in its business case. In some cases, projects that deliver to cost, time and specifications are widely perceived as a failure because benefits fall short of promises made by the sponsor.

Big Bang Adoption

Successful projects typically ship often. Large launches that have significant impact to processes tend to fail.

Budget Commitment

A project that runs out of funding in the middle due to a lack of financial commitment.

Budget Control

Failure to control the project budget resulting in loss of financial confidence in the project and the need for an audit.

Business Technology Alignment

Implementing a technology that the business doesn’t need or implementing a business requirement without considering technology. For example, launching a new product without considering the need to integrate into customer management and billing systems.

Change Control

Change control issues and overhead. For example, a constant stream of change requests may distract the project team from meeting baseline commitments.

Communication

Under-communicating such as burying important information in documentation instead of communicating it verbally.

Contingency Reserve

A budget and timeline that lack reserves for the inevitable issues that projects face.

Corrective Actions

Management of issues when they occur. A project that quickly clears issues is far more likely to succeed than one that endlessly deliberates with each issue.

Cost Variance

Costs that exceed estimates.

Crashing

An attempt to speed a project up by adding more resources. Known to be a failure prone approach but organizations tend to do it anyway.

Data Quality

Analysis of data is a fundamental project planning step that’s occasionally neglected. In some cases, high impact data issues aren’t noticed until launch.

Due Diligence

Due diligence is a basic level of effort and care that’s expected of an organization or professional. Its neglect can cause serious project issues.

Engagement And Morale

A project team that is overworked or mistreated may have low engagement and poor morale. In some cases, poor morale is caused by a series of project failures. This can become a vicious cycle whereby project failures decrease morale causing more project failures.

Estimates

Accurate estimates for large projects are something of a rarity. As such, padding estimates is a common practice that may improve a project’s chance of succeeding.

Executive Commitment

Sufficient support at the executive level improves a project’s chance of success. In some cases, a single executive can throw up enough roadblocks to derail a project even when others support it.

Executive Sponsor

The executive sponsor plays a key role in championing a project and pushing through issues. When this doesn’t happen, a project may fail.

Feasibility

An approach or requirement that isn’t properly validated that turns out to be impossible or highly impractical.

Fixed Price

Fixed price contract projects are subject to a variety of problems. They tend to result in an adversarial relationship whereby the client pushes the vendor hard on every point in the contract and the vendor pushes hard against any changes. This results in a number of factors that may destroy the project such as refusals to accept deliverables and inability to implement change requests at a reasonable price.

Goal Setting

Stakeholders who don’t have the project properly reflected in their goals for performance evaluation.

Information Security

Information security is a critical component of corporate governance. As such, incorporating security into designs, testing and validations is basic due diligence. Failure to address information security may result in a project being halted by corporate governance bodies. In the worst case, a project creates a vulnerability that results in a security incident and reputational damage to an organization.

Integration Complexity

The complexity of integrating organizations, processes and systems is often underestimated and a common cause of project failure.

Issue Management

Issues that are covered up or mismanaged.

Leadership

Lack of a strongly committed and active leader who has the authority or influence to advance a project in the face of obstacles. In many cases, a strong technical leader with a solid architectural vision also greatly improves a project’s chances of success.

Loss Leader

A fixed price contract with a price below the vendor’s likely costs. Gives the vendor pressure to cut corners, overprice change requests and assign low cost resources.

Market Conditions

Market conditions such as a recession or the release of an innovative product by a competitor may lead to a sudden decline in commitment to a project as its business case starts to look less realistic.

Methodology

Project management methodology lapses such as a lack of risk management. For example, executives may impose shortcuts or an organization may lack mature project management capabilities.

Metrics And Measures

Project metrics that fail to represent the project in a balanced and realistic way. For example, a project dashboard that is somehow completely green when there are critical issues.

Mission & Vision

A project that lacks a mission and vision as motivating factors. People want to know what a project is trying to achieve.

Narrative

A well communicated narrative that clearly illustrates the urgent business need for a project can improve commitment and reduce resistance to change. If a project doesn’t clearly present its own narrative, a narrative may develop in the realm of rumor and complaints. When a project is widely viewed as a mistaken strategy people may try to derail it.

Non-Functional Requirements

Missing non-functional requirements.

Operational Acceptance

Projects that engage operations too late or fail to establish or meet operational acceptance criteria.

Operational Capabilities

Deployment of a project to an organization that lacks the capabilities required to operate it.

Optimism Bias

It’s common for optimism bias to influence things such as requirements, estimates and designs in the early stages of a project.

Organizational Culture

A project that’s inconsistent with the values, ethics, norms, habits and expectations of its organization is likely to be rejected or derailed.

Overtime

Overtime can be effectively used to overcome project issues. However, when it’s overused and mandatory it can severely impact morale.

Performance Management

In some cases, projects are detached from performance management to the extent that low performance isn’t handled and exceptional performance isn’t rewarded. In many cases, performance management is administered by functional managers who may not collect or consider feedback for project work.

Political Infighting

Politics between stakeholders can lead to inefficient decision making, irrational approaches, secrecy and resistance to change.

Process Compliance

A project that fails to adhere to organizational processes such as budget approvals, financial reporting, audits or technology compliance reviews.

Procurement

A project that skips steps in procurement resulting in poor vendor selection or compliance issues.

Program Management

Coordination problems with related projects such as failed dependencies.

Project Complexity

Perhaps the greatest risk factor for project failure is project complexity. Projects that are decomposed into small work packages that are continually integrated and shipped are far more likely to be successful than projects that work with large releases.

Project Constraint

Constraints such as hard deadlines often generate significant risks that set a project up for failure from the start.

Project Expectations

Stakeholders including core team members commonly develop expectations that are out of line with project realities. In many cases, these are incorrectly assumed to be common sense or self evident. Invalid expectations can cause a broad range of project issues related to requirements, designs, deliverables and acceptance criteria.

Project Governance

Governance that is unwilling or slow to step in to handle issues of accountability or to clarify ground rules for decision making.

Quality Control

Factors such as low quality deliverables and poorly constructed test cases.

Requirements Quality

Requirements that are unclear, open-ended or contradictory. In many cases, requirements are validated individually without a sanity check or strong owner who ensures they make sense as a cohesive set.

Residual Risk

The risk that remains after you treat risk.

Resistance To Change

The general tendency for people to resist change, particularly when they aren’t engaged. Resistance to change can manifest itself as open opposition to a project or passive aggressive actions that attempt to derail it.

Resource Overallocation

Resources who are over allocated on the project, by their functional manager or both.

Return On Investment

In some cases, the return on investment presented in a project’s business case is invalidated resulting in declining commitment.

Risk Acceptance

When stakeholders accept significant levels of risk it becomes likely the project will fail.

Risk Identification

Failure to identify significant risks that go unmanaged until they cause an issue.

Risk Management

Risk management as a one time activity that fails to control risks from new sources such as change requests.

Roles & Responsibilities

Unclear or poorly structured accountability and responsibility for decisions and work.

Schedule Chicken

When multiple teams are behind schedule but nobody wants to be first to admit it.

Schedule Compression

Schedule compression is the practice of trying to deliver a project faster using techniques such as fast tracking and crashing. It typically puts a project at greater risk of failure.

Scheduling Errors

An error in a project schedule such as an invalid critical path.

Scope Creep

Uncontrolled change or continuous growth in scope.

Secondary Risk

A new risk that results from efforts to avoid, mitigate, transfer or share risk.

Secrecy And Subterfuge

A lack of open information sharing between stakeholders or between project leaders and working level teams.

Set Up To Fail

A project that has been intentionally designed to fail as a political strategy.

Stakeholder Analysis

Missing stakeholders that need to be consulted.

Stakeholder Commitment

Aloof stakeholders who fail to fulfill their role or who develop wild expectations due to a lack of communication such as skipping meetings.

Stakeholder Salience

A stakeholder who takes a dominant role in the project potentially shutting out other voices that have a more critical stake in the project.

Strategy Alignment

A project that is based on someone’s personal vision instead of organizational goals and strategy.

Subject Matter Experts

A lack of expert advice in a critical area such as architecture or security.

Technology Components

Failure of a key technology component.

Technology Platform

Problems with a technology platform can make deliverables late and result in quality issues. In some cases, a project budget fails to anticipate the costs associated with a particular platform such as the need for highly specialized resources.

Training And Development

Training failures related to the project team or end users.

Vendor Management

Failure to manage a vendor.

Vendor Relationships

A poor relationship with a vendor can result in severe issues and low productivity.

White Elephant

A project that becomes an escalating commitment as new money is spent to try to recover sunk costs. Has the potential to turn a minor failure into an impressive one.

Workarounds

Tactical actions that fail to address an issue or that make things worse

Product Development
Product Development Jonathan Poland

Product development is the process of designing, creating, and launching new products. It typically involves a number of different steps, including market research to identify customer needs and preferences, product design and engineering, testing and prototyping, and manufacturing and distribution. Product development can be a complex and time-consuming process, but it is an important part of a company’s growth and success. By developing new and innovative products, companies can expand their product offerings, meet the needs of their customers, and stay ahead of competitors. Product development can also help companies to generate new revenue streams and increase their market share.

The steps involved in product development can vary depending on the specific product and the needs of the company, but generally, the process will involve the following steps:

  1. Market research: This involves gathering information about customer needs and preferences, market trends, and competitor products. This can help the company to identify opportunities for new products and to understand what customers are looking for.
  2. Product design: This involves creating detailed designs for the product, including its features, functionality, and appearance. This may involve creating prototypes or mockups to test the product’s design and make any necessary adjustments.
  3. Testing and prototyping: This involves creating a sample or prototype of the product and testing it to ensure that it meets the desired specifications and performs as intended. This can involve both laboratory testing and field testing to gather feedback from customers or other users.
  4. Manufacturing and production: Once the product has been designed and tested, it can be manufactured and produced on a large scale. This may involve sourcing materials, assembling components, and packaging the finished product.
  5. Distribution and sales: The final step in the product development process is to get the product into the hands of customers. This may involve working with distributors and retailers to make the product available in stores, or developing an online sales platform to sell the product directly to customers.

The following are common product development techniques.

Market Research
Developing knowledge and data about markets and customers.

  • Competitive Intelligence
  • Competitor Analysis
  • Critical To Customer
  • Customer Analysis
  • Customer Expectations
  • Customer Interviews
  • Customer Needs
  • Customer Preferences
  • Customer Requirements
  • Feasibility Study
  • Marketing Experimentation
  • Proof Of Concept
  • Sensory Analysis
  • Target Market
  • Test Marketing
  • Total Addressable Market

Positioning
Product concepts and strategy typically revolve around the idea of positioning a product’s unique identity in a crowded market.

  • Augmented Product
  • Brand Theory
  • Business Models
  • Convenience Product
  • Cost Leadership
  • Customer Experience
  • Figure Of Merit
  • First-Mover Advantage
  • Latent Need
  • Market Fit
  • Marketability
  • Niches
  • Over-Positioning
  • Pain Points
  • Positioning
  • Premiumization
  • Product Analysis
  • Product Extension
  • Product Features
  • Product Objectives
  • Product-as-a-Service
  • Value Proposition

Design
Designing the product or service and elements of customer experience.

  • Creativity Of Constraints
  • Design Considerations
  • Design Driven Development
  • Design For Logistics
  • Design Philosophy
  • Design Principles
  • Design Thinking
  • Design To Value
  • Innovation
  • Naive Design
  • Principle Of Least Astonishment
  • Product Experience
  • Product Innovation
  • Prototypes
  • Service Design
  • Sustainable Design
  • Testbed

Operational Efficiency
Operational Efficiency Jonathan Poland

Operational efficiency is the degree to which a business is able to produce goods or services with the minimum amount of inputs, such as labor, materials, and energy. Operational efficiency is typically measured by comparing the output of a process or system to the inputs required to produce that output, and can be improved by reducing waste, increasing productivity, and optimizing the use of resources. Operational efficiency is an important part of many businesses, as it can help reduce costs, improve profitability, and increase competitiveness.

Here are some examples.

Revenue Per Employee: A basic business input is the labor of employees, human capital. The productivity of labor can measured by revenue per employee. For example, a manufacturer with revenue of $5 million per employee is generally more operationally efficient than a competitor with revenue of $2 million per employee.

Line Efficiency: The efficiency of a production line might be measured in units per hour.

Energy Efficiency: A key consideration in the operations of facilities is energy efficiency. In many cases, facilities have the space for more customers but don’t have enough power for them. Efficiency can be improved by installing energy efficient equipment and systems. It can be measured using metrics such as revenue per kilowatt hour (kwh).

Process Efficiency: Processes are the repeated cycles of business activity that can be optimized using techniques such as automation. For example, a company might view operational efficiency in terms of the order provisioning costs of its order-to-cash process.

Marketing Efficiency: Marketing efficiency such as customer acquisition cost.

Asset Efficiency: The efficiency of capital assets such as the occupancy rate of a hotel.

Equipment Efficiency: The efficiency of equipment such as an high speed train that is highly reliable and reasonably energy efficiency.

There are many ways in which businesses can operate more efficiently, including:

  1. Identifying and eliminating waste: businesses should strive to identify and eliminate waste in their operations, such as unnecessary steps, excess inventory, and unnecessary or redundant processes. This can involve implementing lean manufacturing or other process improvement methods, which can help businesses streamline their operations and reduce waste.
  2. Investing in technology and automation: businesses can improve operational efficiency by investing in technology and automation, such as robots, advanced manufacturing systems, and other automation tools. These technologies can help businesses reduce labor costs, increase speed and accuracy, and improve overall productivity.
  3. Standardizing processes and procedures: businesses can improve operational efficiency by standardizing processes and procedures, such as those used in production, logistics, and customer service. This can help businesses reduce variability and errors, and can make it easier for employees to follow best practices and work more efficiently.
  4. Training and developing employees: businesses can improve operational efficiency by investing in training and development programs for their employees. This can help employees acquire the skills and knowledge they need to perform their jobs more effectively, and can help them identify and implement process improvements and other efficiencies.
  5. Measuring and monitoring performance: businesses can improve operational efficiency by regularly measuring and monitoring key performance indicators, such as throughput, cycle time, and productivity, and by using this data to identify opportunities for improvement and to track progress over time. This can help businesses identify and address bottlenecks

Operations 101
Operations 101 Jonathan Poland

Business operations refer to the processes and activities that are involved in the production of goods and services in an organization. These processes typically include managing the supply chain, managing the production of goods and services, managing the distribution of goods and services to customers, and managing the financial aspects of the business, such as accounting and revenue generation. In short, business operations are the day-to-day tasks and activities that are necessary for a business to function and to produce the goods and services that it offers to its customers.

Here are some steps that can help ensure successful business operations:

  1. Develop a clear business plan: This should outline the goals and objectives of the business, as well as the strategies that will be used to achieve them.
  2. Identify and target the right customers: Businesses should carefully research and identify their target customers, and then tailor their products, services, and marketing efforts to meet their needs.
  3. Choose the right location: The location of a business can play a critical role in its success, so it’s important to choose a location that is easily accessible to customers and that offers a good mix of foot traffic and accessibility.
  4. Develop a strong brand: A strong brand can help a business stand out from its competitors and build customer loyalty. This can be achieved through consistent branding and marketing efforts.
  5. Offer high-quality products and services: Businesses should strive to offer high-quality products and services that meet or exceed customer expectations. This can help to build customer loyalty and encourage repeat business.
  6. Establish efficient business processes: Businesses should establish efficient processes for managing inventory, processing orders, and handling customer inquiries. This can help to reduce costs and improve customer satisfaction.
  7. Invest in technology: Businesses can benefit from investing in technology, such as point-of-sale systems and inventory management software, to improve their operations and increase efficiency.
  8. Monitor and adapt to changing market conditions: The market is constantly changing, so it’s important for businesses to monitor trends and adapt to changing customer needs and preferences in order to remain competitive.
  9. Prioritize customer service: Businesses should prioritize providing excellent customer service, as this can help to build customer loyalty and encourage positive word-of-mouth advertising.
  10. Continuously evaluate and improve operations: Businesses should regularly evaluate their operations and identify areas for improvement, and then implement changes to enhance their effectiveness and efficiency.

Channel Structure
Channel Structure Jonathan Poland

A channel structure refers to the way in which a company distributes its products or services to customers. It is the network of intermediaries, such as wholesalers, distributors, and retailers, that a company uses to bring its products or services to market.

There are several types of channel structures that companies can use, including:

  1. Direct distribution: This involves selling products or services directly to customers, without using intermediaries. This can be done through a company’s own retail stores, online sales platforms, or by selling directly to businesses.
  2. Indirect distribution: This involves using intermediaries, such as wholesalers or distributors, to reach customers. Indirect distribution can be used to reach a wider range of customers, or to tap into established distribution networks.
  3. Multiple channel distribution: This involves using a combination of direct and indirect distribution channels to reach customers. This can be an effective way to reach a wider range of customers, or to cater to different customer segments.
  4. Omni-channel distribution: This involves using a variety of channels, including online and offline channels, to reach customers. This can provide customers with a seamless shopping experience, as they can purchase products or services through the channel of their choice.

Overall, companies need to carefully consider their channel structure in order to effectively reach their target customers. Choosing the right channel structure can help a company to increase sales and grow its business. Here are some illustrative examples.

Direct

Selling directly to the customer using channels such as personal selling, retail or wholesale. For example, a fashion brand that uses its own shops, websites, and social.
producer → customer

Retail

Selling to retailers who sell to the end-customer.
producer → retail → customer

Value Added Reseller

Selling to firms that add value to your products or services before selling them. For example, a firm that sells components that are used in mobile devices.
producer → value added reseller → customer

Wholesale

Selling to wholesalers who distribute the product to retailers and sometimes direct to consumer (DTC).
producer → wholesaler → retail → customer

Agents

Using agents or brokers to manage your sales to wholesalers, retail and/or ecommerce sellers.
producer → agent → wholesaler → retail → customer

Complex

It is common for organizations to have many channel structures for different products and regions. For example, a fashion brand that sells direct in the United States but uses agents, wholesalers and retailers in other countries.
United States
producer → customer
France
producer → customer
producer → retail → customer
Japan
producer → agent → retail → customer
producer → agent → value added reseller → customer

Detailed

Channel structures may include details such as the types of channel that are involved. For example, a direct producer → customer structure might be expanded out with more details:
United States
direct retail → flagship → customer
direct retail → brand shops → customer
direct retail → outlet shops → customer
direct sales → customer

Market Expansion
Market Expansion Jonathan Poland

Market expansion is a business strategy that involves increasing the reach and presence of a company’s products or services in new or existing markets. This can be achieved through a variety of methods, such as entering into new geographic regions, expanding the company’s target customer base, or offering new products or services.

There are several reasons why a company may choose to pursue market expansion. For example, a company may be looking to increase its sales and profits, diversify its revenue streams, or enter into new markets to reduce its reliance on a single market or customer base.

There are several methods that a company can use to expand its market presence. These include:

  1. Entering new geographic regions: This can be done through a variety of methods, such as opening new physical locations, establishing distribution networks, or entering into partnerships with local companies.
  2. Expanding the target customer base: A company can expand its customer base by targeting new demographics or offering products or services that appeal to a broader audience.
  3. Introducing new products or services: A company can expand its market presence by introducing new products or services that meet the needs of new or existing customers.
  4. Acquiring other companies: A company can also expand its market presence by acquiring other companies that have established customer bases or distribution networks in new markets.

There are a number of risks and challenges associated with market expansion, including the cost of entering new markets, the need to adapt to local cultural and regulatory differences, and the risk of increased competition. It is important for companies to carefully evaluate the potential benefits and risks of market expansion before making a decision to pursue this strategy.

Consumer Service to Business Service
A movie theater rents out theaters during business hours for events, conferences and meetings.

Consumer Service to Consumer Service
A cafe in a business district is only busy on business days. In order to increase revenue on weekends they host community organized events such as a repair cafe.

Consumer Product to Business Product
A mobile device that is mostly purchased by consumers develops office productivity apps and begins to sell directly to businesses with personal selling techniques.

Customer Product to Consumer Product
Selling a product to a new market to serve a different customer need. For example, selling packages of baking soda as an air freshener for a refrigerator.

Customer Product to Consumer Service
Offering a product as a service such as a solar panel system that is sold as a utility service with a monthly electric bill as opposed to a upfront purchase of the system.

Business Service to Consumer Service
A corporate catering service begins to target weddings and other private events.

Business Service to Business Service
A customer service outsourcing firm begins to sell its service for internal processes such as an IT help desk that serves internal customers of a firm.

Business Product to Consumer Product
Marketing business products such as high-end office chairs known for their ergonomics to employees working from home.

Business Product to Business Product
Finding a new use for a business product. For example, offering to brand standard office stationery such as sticky notes such that they become promotional items that can be given to clients.

Business Product to Business Service
Offering business equipment with leasing, maintenance, management and other value added services. For example, selling a coffee service as opposed to a coffee maker.

Puffery Jonathan Poland

Puffery

Puffery refers to exaggerated or overstated claims in marketing communications. It is a legal concept that acknowledges that customers expect…

Net Nuetrality Jonathan Poland

Net Nuetrality

Net neutrality is the principle that all internet traffic should be treated equally, without discrimination or preference given to certain…

Systems Theory Jonathan Poland

Systems Theory

Systems theory is a field of study that focuses on the ways in which independent components or elements interact and…

Design Quality Jonathan Poland

Design Quality

Design quality refers to the value that a design holds for customers. It is a critical factor in the success…

Design-Driven Development Jonathan Poland

Design-Driven Development

Design-driven development is a product development approach that places a strong emphasis on design, with a focus on form, function,…

Bank Derivatives Jonathan Poland

Bank Derivatives

Bank derivatives are financial instruments whose value is derived from an underlying asset, index, or other financial instruments. They are…

Practical Thinking Jonathan Poland

Practical Thinking

Practical thinking is a type of thinking that focuses on finding timely and reasonable solutions to problems. This type of…

Brand Perception Jonathan Poland

Brand Perception

Brand perception refers to the way that a brand is perceived by its target audience. It’s important for companies to…

Product Demand Jonathan Poland

Product Demand

Product demand refers to the desire or need for a particular product or service in the market. It is a…

Jonathan Poland © 2026

Enter your
text here

Learn More

Taxes Jonathan Poland

Taxes

Taxes are mandatory financial contributions that are levied by a government on individuals, businesses, and other organizations. The money collected…

Program Risk Jonathan Poland

Program Risk

Program risk refers to the likelihood of a program failing to achieve its goals due to potential outcomes. This type…

Joint Ventures Jonathan Poland

Joint Ventures

A joint venture is a business venture or partnership between two or more parties. It is a collaborative effort in…

Quality Assurance Jonathan Poland

Quality Assurance

Quality assurance (QA) is the process of verifying that a product or service meets specific quality standards. This is often…

Loss Leader Jonathan Poland

Loss Leader

A loss leader is a product or service that is sold at a price below its cost in order to…

Target Costing Jonathan Poland

Target Costing

Target costing is a cost management approach that involves setting a target cost for a product or service and then…

Decision Trees Jonathan Poland

Decision Trees

Decision Trees are a popular machine learning algorithm used for both classification and regression tasks. They are part of a…

Organizational Structure Jonathan Poland

Organizational Structure

Organizational structure refers to the formal systems that define how an organization is governed, directed, operated, and controlled. It is…

Team Objectives Jonathan Poland

Team Objectives

Team objectives are specific goals that are established for a team in order to guide their work and track their…