The shift is growing — from cost productivity to revenue productivity

20 years ago   •   1 min read

By Marcia Kadanoff

Little squeaks in the underpinnings of the economy are leading some economists and businesses to rethink and build on the top-line growth strategies that got them through the 1990s. Instead of the cost productivity focus they employed to sharpen efficiency, these businesses are looking toward revenue productivity, which combines an awareness of the need to spend (on things that will have a multiplier effect on sales) with the new discipline on how to spend. But shifting to a revenue focus requires a sharp swing in organizational attitude: People must open their minds about where to look for opportunities. One useful tactic is to exploit your market position by tapping into expanding markets or market segments—with a constant eye on shifts in customers’ buying criteria (e.g., customers who used to buy on price suddenly making quality their primary concern), leaps in customer value (the introduction of a product or service that draws customers into what had been a sleepy market segment), and demographic trends. If such opportunities don’t materialize, other riskier tactics include moving into adjacent markets or—riskier, but potentially more rewarding—into new lines of business that are unrelated to your core competency.

Harvard Business School Working Knowledge 15 Mar 2004


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