The first is the full cost of making

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They need to be sold to different customers for different purposes. You need to create a different sales force. Inevitably they would respond Clay you have no idea how much it costs to create a new sales force. We need to leverage our existing sales team. The language of the disruptive attackers was completely different It s time to create the sales force. Hence the paradox.


Why is it that the big established companies that have so much capital find these initiatives to be so costly And why do the small entrants with much less capital find them to be straightforward The answer lies in their approach to marginal versus full costs. Every time an executive in an established company needs to make an investment decision there are two Heavy Construction Contractors Email List alternatives on the menu.  something completely new. The second is to leverage what already exists. Almost always the marginal cost argument overwhelms the full cost. When there is competition and this thinking causes established companies to continue to use what they already have in place they pay far more than the full cost—because the company loses its competitiveness.





As Henry Ford once put it If you need a machine and don t buy it then you will ultimately find that you have paid for it and don t have it. Thinking on a marginal basis can be very very dangerous. An Unending Stream Of Extenuating Circumstances This marginal cost argument applies the same way in choosing right and wrong it addresses a question I discuss with my students how to live a life of integrity—and stay out of jail. The marginal cost of doing something just this once always seems to be negligible but the full cost will typically be much higher.