Purpose or profit

I came across quite an interesting dilemma reading Lars Kolinds blog "There is more to business than profit": When you are in the business of high perfomance pumps, but the actual customer need is clean water leading to your margin and hence your profit shrinking - should you then change your value proposition to meet the actual need of the customer?

In general terms management should always look out for the customer needs, and to survive it is critical that you manage to grow your profit. If your no longer can compete on costs, it is an option to look for an opportunity to grow from the knowledge intensive parts of your core competencies.

Without knowing anything about either the pump - nor the clean water industry I would argue that a transition as described above would require that you rethink your business model, and hence your setup.

Two different competitive scenarios

Pumps are (more or less) a generic item - my apologies to Grundfoss for my ignorance. But compared to clean water, the general experience with the product is rather limited, as the product is not as sophisticated as clean water = low complexity. All in all two important differences that calls for new thinking if you decide to change focus.

In a business with a limited experience with you product your customer interaction is equally limited to (small) group of experts who acknowledge the benefits of your offerings. On the opposite everybody has an opinion on the importance of access to clean water.

In agreement with Lars Kolind, I claim that clean water is a highly complex item - it requires that you have an unpoluted well, can retrieve the water, remove larger disturbing items and distribute it without infecting the product.  Many independent processes - many independent stakeholders, nevertheless the customer dont care!

In other words selling pumps fullfilling the needs of a group of experts who acknowledge the technical offerings. Being in the Clean Water Business is making profit from a general commodity, where everybody acknowledge it's purpose (survival), it is complex to provide - but nobody cares.

In the change process your operation - providing clean water - might end up with a network of suppliers, that might change over time dependent on your and your customers needs. In other words, it you today are providing pumps, you might tomorrow be buying a retrieval service, where someone is providing you with cost efficient water supplies. Whether you will survive this transition is a mater of whether you competitively can make your profit grow.

In business you will not get to profit without knowing how you are serving your customer, and it is meaningless to serve your customer unless you understand how this contributes to your survival.