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Breaking Compromises

1997 by George Stalk, David Pecaut, and Benjamin Burnett
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  • The idea of compromises can be a useful organizing principle to focus an entire company on growth

  • Compromises are inherent in any business. Even when a company breaks one compromise, it usually ends up creating another

  • When executives break with the conventional wisdom of their industry, faster growth and improved profitability are the result

 

Many companies today are searching for growth. How and where should they look? One powerful way to grow is through innovations that break the fundamental “compromises” of a business. When a company successfully breaks a compromise, it releases enormous trapped value. Breakaway growth can be the result.

Compromises are concessions demanded of consumers by most of the companies in an industry. They occur when the industry imposes its own operating constraints on customers. Usually, customers accept these compromises as just the way the business works—inevitable tradeoffs that have to be endured.

But a compromise is different from a tradeoff. In choosing a hotel room, for instance, a customer can trade off luxury for economy by choosing between a Ritz-Carlton and a Best Western. Until recently, however, most hotels forced all customers to compromise by not permitting checkin before 4:00 p.m. No law of nature or economics decrees that hotel rooms can’t be ready before late afternoon.