It is always interesting to see how other people approach a task that in other circumstances I would be doing. So I was quite interested to see the ERIC Grid used to shape a transformation initiative.

The Technology department within the company I’m working with is going through a bit of a rejuvenation exercise. The guy leading the initiative – David – used a model that I hadn’t bumped into before, the Eliminate-Reduce-Increase-Create Grid (ERIC). This looks quite useful to me so after the workshop I did a bit of research on it.

ERRC for Industry Disruption

I’ll start with the Blue Ocean Strategy. The authors of the strategy claim that companies should not focus on fighting competitors, but instead should create a “blue ocean” of uncontested market space. The strategy includes a few techniques including the Eliminate-Reduce-Raise-Create Grid (ERRC) and the 4 Action Framework. Both of these look at four elements:

• Which factors that the industry takes for granted should be eliminated?
• Which factors should be reduced well below the industry standard?
• Which factors should be raised well above the industry standard?
• Which factors should be created that the industry has never offered?

In my view the aim of this model is industry disruption. The model encourages companies to eliminate factors that the industry has long competed on and that people now take for granted, but which no longer add value. Similarly, the model encourages the reduction of factors that come with high cost but provide little competitive advantage or profit.

On the other hand the model encourages companies to look for areas where they can raise the bar – go well above the industry standard. Finally companies need to introduce new elements that the industry has never offered in an attempt to create new demand and value. These types of changes give the company an opportunity to increase pricing.

ERIC for Departmental transformation

David made two key changes to ERRC grid when he used it with us.

• He changed the name from ERRC to ERIC (for Eliminate-Reduce-Increase-Create) to make it easier to pronounce and more memorable
• He made the focus the operating model of the department rather than the whole company / industry

David’s goal was to create a new Operating Model:

Operating model is an abstract representation of how an organization operates across process, organization and technology domains in order to accomplish its function.

The operating model becomes the centre of the Four Actions Framework:

The four questions become:

• Which activity that we take for granted should be eliminated?
• Which activity should be reduced well below what we are doing now?
• Which capability should be increased well above what we are have now?
• Which capability should be created that we have never done before?

Actually David didn’t use the Four Action Framework or those questions. He just put up an empty grid with the four headings and asked us to fill it in.

References

Blue Ocean Strategy